Shanghai will step up efforts to ease financing difficulties and reduce operation costs for private companies.
On Saturday, Shanghai released a raft of measures in response to the call of Chinese President Xi Jinping for supporting the private economy.
President Xi assured more tax cuts and bailout funds, promised equal treatment of the private and public sectors and guaranteed protection of personal and property rights at a meeting with several dozen private entrepreneurs on November 1.
The city’s new measures will address the pressing issues that private enterprises face, such as high costs, financing difficulties and lack of growth vitality, aiming to develop the private economy as a new pioneer in scientific and technological innovation.
To alleviate the financing difficulties and lower costs for smaller-sized private companies, a total of 30 billion yuan (US$4.35 billion) will be offered by the Shanghai government.
Among them, 10 billion yuan will be used to establish a bailout fund for listed private enterprises, 10 billion yuan will be provided as loans for private small and medium-sized enterprises with good market performance, and the rest 10 billion yuan will be used to expand the financing guarantee funds for SMEs.
Financing guarantee will also be offered to large and medium-sized private enterprises, and a special fund of government assistance is planned to be set up.
Shanghai will also cut the costs for private enterprises in tax, land use, employment, electricity use, social security payment, and institutional transactions.
Preferential tax policies will be made full use of as tax rates in the local jurisdiction will be reduced to the lowest levels within the range set by the state.
Innovative private SMEs are offered rent concessions in the state-owned industrial parks to reduce their cost of rent.
The city will also gradually adjust the minimum wage standards and further reduce the proportion of social security contributions paid by these private enterprises.
Meanwhile, Shanghai will pull out all stops to enhance the core competitiveness of private enterprises by supporting their mergers and acquisitions and reorganization, technical transformation and innovation. The government will also help private companies to recruit and train employees and support them to expand in domestic and international markets.
The city will make strong efforts to create a fair market environment, in which state-owned, private and foreign enterprises will be treated equally.
In recent years, the city’s private economy has been developing robustly. Private companies accounts for over 80 percent of the total number of companies in the city and the new employment accounts for more than 70 percent, contributing over one-third of the city’s overall tax revenue, according to Rong Zhiqin, deputy director of the Shanghai Commission of Economy and Informatization.
In the first half of this year, newly-established private companies accounted for 96.4 percent of the total number of new enterprises in the city, indicating that the private economy becomes an indispensable engine to boost Shanghai’s economic and social development, Rong said.