Shanghai takes 50 steps to support economy as city eyes full recovery from COVID-19

Shanghai on its way back to normal Photo: Feng Yu/GT

Shanghai authorities on Sunday sent a clear signal of economic stabilization by rolling out a total of 50 stimulus measures to support the local economy, with a focus on resuming business and stabilizing employment, as the city ​​is closing in on a full recovery after the most severe COVID-19 outbreak.

The measures are being rolled out at a time when the city is at a crossroads. The epidemic situation has largely eased after about two months of closed-loop management, but the economy has taken a relatively serious hit with lower consumption and limited production capacity, factors that will probably result in a contraction. of GDP in the second quarter, say some economists.

But economists noted that stimulus policies are expected to hasten the recovery of the city’s economy, which could take two or three months to reach pre-epidemic levels.

The measures, rolled out by the Shanghai municipal government on Sunday, contain 50 measures aimed at supporting the economy in eight aspects, ranging from encouraging work resumption and stabilizing foreign capital to boosting consumption.

In terms of production, starting Wednesday, Shanghai will remove the “whitelist” mechanism for resuming work and other restrictions on companies wishing to restart work or business.

In terms of employment, the city will provide enterprises with subsidies of up to 3 million yuan ($450,000) to help them maintain jobs. Companies that hire new graduates or unemployed workers will receive a subsidy of 2,000 yuan per person.

In terms of consumption, the city will add 40,000 non-commercial vehicle licenses to the total quota this year, as well as a 10,000 yuan subsidy to consumers who replace old cars with electric cars. Other measures include reducing property and property taxes for qualified businesses and starting eight or more urban village renovation projects this year.

According to Hua Yuan, head of the Shanghai Municipal Development & Reform Commission, this round of stimulus measures, in addition to the 21 stimulus policies set out by the city government at the end of March, is expected to reduce payments by more than 300 billion yuan for the market entities.

Shanghai’s plan to revive the economy follows an unprecedented meeting last week by the State Council, the cabinet, which focused on supporting a national economy beleaguered by recent outbreaks. of COVID-19.

Shanghai’s measures have drawn wide attention as the epidemic in Shanghai has recently been the most severe among national cities, and the economic blows Shanghai has suffered would be harsher than many other cities, experts said.

“The strength of policies is enormous and extraordinary,” Xi Junyang, a professor at Shanghai University of Finance and Economics, told the Global Times on Sunday. Xi added that the economic impact of the epidemic necessitates measures of such intensity.

Shi Jianxun, a professor of economics at the School of Economics and Management at Tongji University in Shanghai, told the Global Times on Sunday that it was necessary to launch such policies to prevent problems like unemployment do not deteriorate further.

In the long run, a sound economic situation is also necessary for the government to launch COVID-relief measures, as fiscal conditions will come under pressure if the economy slows down too much, he said.

However, on the positive side, experts noted that Shanghai’s economy is already starting to recover and the recovery process will accelerate with the support of government policies.

Many businesses in Shanghai have started operating again, and many are preparing for a full resumption of operations in June.

Information provided by United Overseas Bank to the Global Times showed that the bank has taken steps to prepare for a restart of work, such as carrying out stress tests, putting in place digital guards and health codes on place in the bank building in Shanghai to coordinate COVID-19 prevention work and develop contingency plans for coronavirus prevention and closed-loop management.

Standard Chartered Bank China also told the Global Times that it was actively preparing for on-site work.

Shi suggested that local officials send more signals to the market that they will “strike a balance between epidemic control and economic development to build long-term business confidence.”