“The newly published policies focus on serving [manufacturing] businesses,” Li said. “We hope the incentives can spread some sunshine among the companies that qualify.”
04:43
China’s slow road to economic recovery after dropping its zero-Covid policies
The announcement comes just two days after the city government said it had encouraged district-level authorities to award cash to newly established foreign-invested projects.
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During a press conference on attracting foreign direct investment (FDI) on Tuesday, Hua Yuan, another of the city’s vice mayors, said Shanghai would embark on a series of favourable policy initiatives to attract fresh funds, stabilise existing FDI projects and improve the quality of foreign-invested businesses.
Shanghai is sometimes dubbed the “dragon head” of China’s economy, which is highly dependent on multinational businesses for jobs and taxes. Foreign businesses account for a quarter of the city’s gross domestic product (GDP), and their taxes represent a third of Shanghai’s total.
Furthermore, foreign firms account for one in every five jobs in the city of 25 million people.
Shanghai has set a post-pandemic GDP growth target of 5.5 per cent for 2023, half a percentage point higher than the national goal.
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But it still faces an uphill battle to restore investor confidence after a two-month citywide lockdown a year ago brought the economy to a standstill.
The European Union Chamber of Commerce in China said in February that Shanghai must offer a predictable business environment and take action to ease the financial burden on small companies if it is to regain foreign investors’ confidence in the local economy.
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Shanghai attracted 641 new FDI projects in the first two months of this year, 22.4 per cent fewer than a year ago, according to data from the city’s statistics bureau.
Local officials have been striving to sign new investment agreements with domestic and multinational firms since March and pledged the authorities would go all out to address their needs.
“It is not just a process of promoting investment opportunities in Shanghai,” said Yin Ran, an angel investor. “It is a process of rebuilding investors’ confidence in the city.”
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Liu Ping, deputy director of the Shanghai Commission of Economy and Information Technology, told reporters at a briefing after Thursday’s announcement that new manufacturing projects requiring 550 billion yuan of investment are expected to be signed this year. He did not disclose last year’s number.