Recuperation space for firms boon for economic recovery

In a recent interview, Beijing's acting mayor Yin Yong said the government should increase support for enterprises and give them space to recuperate so that they can see further development.

It is necessary for the authorities to implement some policies to reduce the burden on enterprises that have experienced economic shocks and to give them more assistance, so that they resume production and promote sustainable development once the pandemic has peaked.

In the more than three years since the pandemic broke out, Beijing's economic development has suffered considerably. Only 12 of the 38 major industrial categories saw a year-on-year profit growth from January to November last year, the rest suffering varying degrees of losses. For example, in the first three quarters of 2022, the operating revenue of small and medium-sized enterprises above the designated size in Beijing fell by 1.7 percent year-on-year, with the total profit decreasing by 2.4 percent, and the jobs offered by them declining by 4.3 percent.

Beijing has introduced a series of policy measures to stabilize growth and ensure people's livelihood. Last year, Beijing launched a number of policy measures to help enterprises, including by further reducing their operating costs, increasing financial support, stabilizing industry and supply chains, and optimizing the business environment.

In 2022 alone, the extra tax reduction and tax rebates in Beijing reached nearly 200 billion yuan ($29.53 billion). The implementation of these measures has not only made a positive contribution to Beijing stabilizing its overall macroeconomic market but also boosted the confidence of its market players.

However, it should be noted that although the pandemic has peaked, the fundamentals underpinning economic development have not fundamentally changed. The overall environment for China's economic development remains severe, and demand contraction, supply shocks and weakening expectations have not been reversed, making it necessary to give enterprises space for "self-recuperation".

In the past three years, enterprises have borne a large portion of social costs for the entire pandemic prevention and control, and their production and operation have been significantly hit. This will restrict the country's overall economic growth. Therefore, the authorities should continue to reduce the burden on enterprises, cut taxes and fees on them, provide them with necessary subsidies, and create a better business environment so that they regain vitality in a loose and friendly market environment.