China seeks to shield service sector from pandemic shock

BEIJING－While enterprises in the services sector are grappling with domestic resurgences of COVID-19, China has rolled out a host of measures to keep their businesses afloat in an effort to stabilize employment and the economy.

At the State Council's executive meeting on April 6, the country once again stressed intensified efforts to provide relief for market entities hit hard by the pandemic via fiscal and monetary policy tools.

China has announced plans for a record 2.5 trillion yuan ($392.6 billion) in tax rebates and cuts this year, including tax refunds of 180 billion yuan for sectors from catering to transport and tourism.

The country has also allowed the deferral of pension insurance payments to be implemented during the second quarter of 2022 to address the acute difficulties facing the service sector, while some enterprises can enjoy refunded unemployment insurance premiums and rent reductions.

In the meantime, China will guide banking institutions to lower interest rates and cut financial service fees, as part of efforts to ease burdens on small firms and individual businesses in the services sector.

Except for inclusive policy incentives, China has also funneled targeted support to different service industries to better address their pain points.

Online food delivery platforms are encouraged to lower service fees for virus-hit catering enterprises to help them tackle cash strains.

Zhang Qian, the owner of a dumpling restaurant in Tianjin, said now she can save about 0.8 yuan of the cost for each delivery order and the total will accumulate to a cost reduction of 1,000 yuan per month.

"Although the 1,000 yuan of cost reduction is not much, it is a precious help that comes at the right time for a small restaurant like ours," Zhang said.

Meanwhile, credit input to key culture and tourism market entities will be scaled up and value-added taxes for enterprises in the public transport sector will be exempted.

"The current series of preferential policies for service sector enterprises are more precise with greater power and more diversified methods," said Fan Ruoying, a researcher at Bank of China.

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

Liu noted that policy support should be strengthened to tide cash-strained enterprises over difficulties and help them realize sustainable development.

Although relief policies can stimulate market vitality, China's service sector still has a long way to go before recovery, according to industry insiders.

Fan said local governments should quicken their pace to release supportive measures in accordance with regional characteristics to ensure the implementation of national policies.

"The administrative approval process should be streamlined and coordination between different government departments should be enhanced to give full play to existing preferential policies," she said.

Xinhua