Service sector

Economic watch: China seeks to shield service sector companies from pandemic shock

As service-sector companies grapple with nationwide resurgences of COVID-19, China has rolled out a series of measures to keep their businesses afloat, in a bid to stabilize jobs and the economy.

At the State Council executive meeting on Wednesday, the country again underscored stepping up efforts to relieve market entities hard hit by the pandemic through fiscal and monetary policy tools.

China has announced plans for a record 2.5 trillion yuan (about $392.72 billion) in tax rebates and reductions this year, including 180 billion yuan tax refunds for sectors from catering to transport and tourism.

The country has also authorized the implementation of the deferral of pension insurance payments in the second quarter of 2022 to address the acute difficulties facing the service sectors, while some companies can benefit from the reimbursement of insurance premiums. unemployment insurance and rent reductions.

In the meantime, China will guide banking institutions to cut interest rates and reduce fees for financial services, as part of efforts to ease burdens on small and sole proprietorships in the service sector.

Except for inclusive policy incentives, China has also channeled targeted support to different service industries to better address their weak spots.

Online food delivery platforms are being encouraged to lower service fees for virus-hit catering businesses to help them cope with the cash crunch.

Zhang Qian, owner of a dumpling restaurant in north China’s Tianjin Municipality, said she can now save about 0.8 yuan in cost for each delivery order, and the total will reach 1,000 yuan. per month.

“Although the 1,000 yuan cost reduction is not much, it is a great help that came at the right time, for a small restaurant like ours,” Zhang said.

At the same time, the provision of credit to the main entities in the culture and tourism market will be increased and the value added tax for companies in the public transport sectors will be exempted.

“The current legion of preferential policies for enterprises in the service sector are more precise with greater power and more diverse methods,” said Bank of China researcher Fan Ruoying.

“Challenges such as a complex domestic and external economic environment and the COVID-19 pandemic weighed on market entities,” said Liu Xiangdong, a researcher at the China Center for International Economic Exchanges.

Liu noted that political support should be strengthened to help cash-strapped enterprises overcome difficulties and help them achieve sustainable development.

Although aid policies may boost market vitality, China’s service sector still has a long way to go before recovery, industry insiders say.

Fan suggested that local governments speed up their pace to issue support measures based on regional characteristics to ensure the implementation of national policies.

“The administrative approval process should be streamlined and coordination between different government departments should be strengthened to give full play to existing preferential policies,” she said.
Source: Xinhua