COVID-19: Chinese preferential policies in favor of SMEs
China Corporate Commentary
The Chinese central and local government have issued a series of preferential policies in order to ease the burdens of the enterprises in mainland China, in particular, the SMEs, which are affected by the Novel Coronavirus Pneumonia (NCP).
SMEs refers to the medium enterprises, small enterprises and mini enterprises established in China, including the foreign invested companies. The specific standards have be formulated on the basis of employees, business income, total assets and other indicators and in light of the characteristics of the relevant industry.
The summary of the supporting policies nationwide and in Beijing and Shanghai are as follows:
Exemption on the social security
Circular of the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration on Provisionally Reducing and Exempting the Social Insurance Contributions Borne by Enterprises (Ren She Bu Fa  No.11), entering into force on February 20, 2020.
Beginning from February 2020 medium enterprises, small enterprises and mini enterprises in provinces, autonomous regions, municipalities (except Hubei Province) and the Xinjiang Production and Construction Corps (collectively referred to as the provinces below) can be exempted from the payment of three social insurance borne by enterprises according to the impact of the coronavirus outbreak and fund affordability, the exemption period shall not exceed 5 months; the payment of three social insurance for large enterprises and other units (excluding government agencies and institutions) can be halved, and the reduction period shall not exceed 3 months.
Enterprises affected by the coronavirus outbreak with severe difficulties in production and operation may apply for deferred payment of social insurance, and the deferred payment period shall not exceed 6 months in principle.
Beginning from February 2020, for Hubei Province, all units (excluding government agencies and institutions) can be exempted from the payment of three social insurance borne by the units, the exemption period shall not exceed 5 months.
Exemption on rental payment
Several Measures of the Beijing Municipal People's Government in Response to New Coronavirus Infections to Promote the Sustainable and Healthy Development of Medium, Small and Mini Enterprises (Jing Zheng Ban Fa  No.7), entering into force on February 5, 2020. (“Beijing Measures”).
Medium, small and mini enterprises lease real estate in Beijing owned by state-owned enterprises to engage in production and operation activities, if such enterprises continue operating in accordance with government requirements or close operations in accordance with coronavirus prevention regulations with no layoffs or fewer layoffs, the rent for February will be exempted, for office buildings will be given a 50% reduction in rent in February.
Notice of the Shanghai Municipal People's Government on Printing and Distributing Several Policies and Measures to Prevent and Control the Epidemic Situation and Support the Stable and Healthy Development of Enterprises in Shanghai (Hu Fu Gui  No. 3) (“Shanghai Measures”)
Medium and small enterprises that lease operating property of state-owned enterprises in Shanghai (including various development zones and industrial parks, entrepreneurial bases, and technology business incubators, etc.) to engage in production and operation activities are exempted from February and March rents.
Credit preferential policies
For science and technology small and mini enterprises in the Zhongguancun National Independent Innovation Demonstration Zone, according to the actual situation of R&D investment, a subsidy of up to RMB 200,000 for R&D expenses will be provided.
Beijing Measures and Shanghai Measures
For qualified medium, small and mini enterprises, provide credit preferential policies.
Refund of unemployment insurance premium
Refund the unemployment insurance premium for enterprises that have been affected by the coronavirus outbreak, face temporary production and operation difficulties, expected to recover and with no layoffs or fewer layoffs. Provide subsidy for enterprises that the average number of employees is flat or increased compared with the average number of the previous year.
Refund the unemployment insurance premium for qualified enterprises that have been affected by the coronavirus outbreak and with no layoffs or fewer layoffs.
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In other provinces such as Guangdong, Jiangsu, and Zhejiang, similar policies such as reducing the cost for renting and enhancing support of finance subsidies to help enterprises with the basic operation, enhancing support to enterprises regarding credit finance and financing guarantee to help enterprises with the case flow, reducing the prices for natural gas and water for industrial use, etc.
If you would like to know the classification standards of SMEs in various industries or further information on the policies of other provinces, please feel free to contact Garrigues China offices.