1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?

Deferred Loan Repayment

Upon application by micro-, small- and medium-sized enterprises (“MSMEs”), and considering the impact of COVID-19 and the business situation, commercial banks shall grant temporary deferral of loan principal repayments due from 25 January 2020. Such deferral may be until 30 June 2020 at the latest. Payment of interest for such deferred loan repayments may also be deferred until 30 June 2020 at the latest without penalties for late payment.

(According to the relevant statutory criteria, MSMEs are defined by the industries they engage in, numbers of employees and (annual) business turnover. For example in the manufacturing industry, MSMEs are enterprises with less than 1,000 employees or less than RMB 400 million business turnover per year.)

Reduced Electricity and Gas Prices

From 1 February 2020 until 30 June 2020, power grid enterprises shall apply a 5% discount on original electricity prices for general industrial and commercial users (other than high energy-consuming industries).

During the same time period, as announced by the National Development and Reform Commission (“NDRC”), gas costs shall also be reduced by 5% for all non-residential use.

Industry-related Benefits

a) Manufacture of Medical Devices and Drugs

As of 1 January 2020 and until further notice according to the epidemic situation:

  • registration fees shall be exempted for medical device products being developed for the prevention and control of COVID-19 that enter the emergency examination and approval process for medical devices (e.g. novel coronavirus nucleic acid rapid detection reagents). (Registration fees for medical device products are regulated by the class of product and type of registration, and vary from approximately RMB 40,000-300,000 per registration.)
  • drug registration fees shall also be exempted for drugs to be used to treat and prevent the spread of COVID-19 that enter the special examination and approval process. (Drug registration fees are regulated by the class of product and type of registration, and vary from approximately RMB 10,000-600,000 per registration.)

b) Airlines

As of 1 January 2020 and until further notice according to the epidemic situation, the civil aviation development fund due from airline companies shall be exempted. (Civil aviation development funds are calculated according to the criteria of air routes, maximum full weight of aircrafts, flight mileage, etc.)

c) Travel Agencies

As of 5 February 2020 and until 5 March 2020, 80% of the security fund which a travel agency, having a Travel Business Operation Licence, has paid according to the law, shall be temporarily returned to such travel agency (except for those funds seized by a court of law). Travel agencies shall pay back the returned security funds before 5 February 2022.

d) Science-technology Enterprises

Local administrations for science and technology shall encourage enterprise incubators, maker spaces and university science-technology parks to appropriately reduce the rentals for incubated enterprises’ offices, laboratories, scientific research and manufacturing plants.

e) Transportation

  • Several fees charged at ports are exempted or reduced for both relevant entities and goods, including full exemption of port construction fee for all goods for exports and imports. Fee reduction policies include exempting port construction fees for imported and exported goods over a period of time, reducing harbour dues on cargo, port facilities security fees and compensation funds for oil pollution damage caused by ships.
  • From 1 March 2020 to 30 June 2020, the standards for cargo port service fees and port facility security fees shall be reduced by 20%; while the fees for compulsory emergency response services and non-tanker cargo vessels shall be abolished.

f) Cinemas

Cinemas in Hubei Province shall be exempted from contribution to the national cinematic development fund from 1 January 2020 until 31 December 2020; while cinemas in other provinces, autonomous regions and municipalities directly under the Central Government shall be exempted from such contributions from 1 January 2020 until 31 August 2020. Where cinemas eligible for the exemption have already paid contributions to the above-mentioned fund, the amounts paid shall be deducted from future payable contributions or returned to the payers.    

General/Local Subsidies

a) Rent exemption

Micro- and small-sized enterprises (“MSEs”) and individual businesses in the service industry that rent State-owned buildings to conduct business operations, but encounter difficult circumstances, were exempted from paying rent for three (3) months in the first half of the year.

(According to the related national rules, “State-owned buildings” include buildings owned by State-owned enterprises (“SOEs”), governmental departments and administrative units like universities and research institutions. However, some local governments like Beijing and Shanghai have implemented a broader definition of SOEs which also includes State-controlled enterprises.)

b) Employment subsidies

Entities that started production and distributed urgently-needed materials for epidemic prevention and control during the Spring Festival period (up to 9 February 2020) may be given one-off employment subsidies if they meet the requirements. In Shanghai, for example, qualified entities can receive a subsidy of RMB 1,500 per person (up to RMB 5 million).

2. Which medium- to long-term stabilisation measures are in place in your jurisdiction?

Medium- to long-term stabilisation measures in the PRC include preferential loans granted by the People’s Bank of China and commercial banks, interest discount funds granted by the central and local government’s finance bureaus and modified governmental financing guarantees/counter-guarantees, as well as the respective subsidies and tax benefits.

3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?

Loans and Subsidies

a) Special Loans by the People’s Bank of China and Preferential Loans by Commercial Banks (“Special Preferential Loans”)

The People’s Bank of China shall issue Special Loans to relevant national banks and local corporate banks in key regions for epidemic prevention and control, and support them in providing Preferential Loans for enterprises which are on the Lists of Key Enterprises Securing Supplies for Epidemic Prevention and Control. Such enterprises (“Key Enterprises”) include e.g. manufacturers of medical facial masks, medical protective clothing, goggles and other protective supplies. They shall be determined by the competent governmental departments in order to be listed and to enjoy the relevant benefits.

The interest rate of Special Loans issued each month shall be 250 basis points (BP) less than the loan prime rate (LPR) of one-year loans in the previous month. The term of loans shall be one (1) year. When financial institutions provide credit support with preferential interest rates for relevant enterprises, the upper limit of the loan interest rate shall be 100 BP less than the last one-year LPR released at the time that the loan was granted.

b) Interest Discount Funds for Special Preferential Loans

For Key Enterprises that are entitled to Special Preferential Loans, the PRC Central Government shall offer interest discount support. On top of the interest rates on Special Preferential Loans, the Central Government shall offer interest subsidies at 50% of the loan interest rate actually obtained by enterprises. The term of interest discounts shall not exceed one (1) year.

c) Startup Guarantee Loans and Related Governmental Interest Discount Funds

From 15 April 2020 to 31 December 2020, the following entities or individuals shall be included in the scope of Startup Guarantee Loans and related governmental interest discount funds (such benefits were originally mainly targeted at individuals having difficulty finding employment):

  • individual businesses temporarily losing income sources in industries/sectors greatly affected by COVID-19, i.e. wholesale and retail, accommodation and catering, logistic transportation, cultural tourism, etc.
  • individuals buying cars with loans specially for taxi operation
  • full-time drivers buying cars with loans to join online car-hailing platforms
  • eligible taxi and online car-hailing enterprises or their subsidiaries, and
  • individuals, having enjoyed policies on interest discount for Startup Guarantee Loans, having paid off loans on time and encountering business difficulties during the time of the epidemic, who can re-apply for Startup Guarantee Loans.

The maximum amount of Startup Guarantee Loans that an eligible individual can apply for is RMB 200,000; this may be raised up to 10% depending on the number of eligible individuals starting up business in a partnership. MSEs may apply for Startup Guarantee Loans up to RMB 2 million if the employees, newly-hired in a year who meet the application conditions for Startup Guarantee Loans, account for 15% of the existing employees (8% if the MSE has over 100 employees in total).

The period of Startup Guarantee Loans of MSEs and individuals/individual businesses temporarily encountering liquidity difficulties may be extended to 30 June 2020 at latest. In the extension period, interest discounts shall be granted by the local governments as usual. Where a borrower already provided with individual Startup Guarantee Loans has suffered from COVID-19, the extension period shall not exceed one (1) year in principle.

Financial institutions shall decrease the interest rates of newly- provided Startup Guarantee Loans with concrete standards such as: the upper limit of interest rate for Eastern China to be decreased from no more than LPR plus 100 BP to no more than LPR plus 50 BP.

As of 1 January 2021, the part of interest below LPR minus 150 BP of Startup Guarantee Loans to be newly provided to individuals and MSEs shall be undertaken by the borrowers, while the remaining part will be discounted by the government’s finance.

d) Local Loans

In accordance with local regulations (for example, the Several Measures of the Shanghai Municipal People’s Government on All-out Efforts in Epidemic Prevention and Control to Support and Serve Enterprises for Their Stable and Sound Development), local governments such as the Shanghai Municipal Government intend to provide low-cost finance assistance to affected enterprises including foreign-invested enterprises (“FIEs”) with the interest rate reduced to at least 25 BP below the prime rate. Shanghai’s guaranteed loans in policy finance will increase by at least RMB 3 billion in 2020, while the fees for new applications lodged by qualified MSMEs shall be cut to 0.5% yearly.

Financing Guarantees

The PRC Ministry of Finance requires that:

  • for Key Enterprises and MSEs greatly affected by COVID-19, governmental financing guarantee and re-guarantee institutions at all levels shall, inter alia, cancel counter-guarantee requirements and reduce the rates of guarantees and re-guarantees
  • the National Financing Guarantee Fund shall halve the re-guarantee fees charged by governmental financing guarantee and re-guarantee institutions in the regions severely affected by the epidemic
  • for MSEs which are incapable of repaying loans due to COVID-19, governmental financing guarantee institutions at all levels that provide financing guarantee services shall perform the obligation of subrogation in a timely manner, properly extend the period of recovery depending on the actual situation of the epidemic, and write off losses arising from the subrogation that meet the conditions of write-off in accordance with relevant provisions.

Social Insurance Contributions

a) Basic pension, unemployment and work-related injury insurances

In light of the epidemic impact and fund affordability, as of February 2020 in all provinces, autonomous regions and municipalities directly under the Central Government (excluding Hubei Province) and Xinjiang Production and Construction Corps (hereinafter collectively referred to as “provinces”), MSMEs can be exempted from paying the employer’s part of contributions to three kinds of social insurance schemes, i.e. basic pension insurance, unemployment insurance and work-related injury insurance, for a period of not more than five (5) months (i.e. from February 2020 to June 2020); while large enterprises can be exempted from paying 50% of the employer’s part of contributions to the above-mentioned three kinds of social insurance schemes for a period of not more than three (3) months (i.e. from February 2020 to April 2020).

b) Insurances in Hubei Province

As of February 2020, all enterprises in Hubei Province can be exempted from paying the employer’s part of contributions to the three kinds of social insurance schemes, i.e. basic pension insurance, unemployment insurance and work-related injury insurance, for a period of not more than five (5) months (i.e. from February 2020 to June 2020).

c) Medical insurance

As of February 2020, enterprises in all provinces including Hubei Province are entitled to be exempted from the employer’s part of contributions to the medical insurance scheme by 50% for a period of no more than five (5) months (i.e. from February 2020 to June 2020).

d) Social insurance premiums and housing fund

Enterprises suffering from operational difficulties due to the epidemic can apply for deferred payment of social insurance premiums and/or housing fund for no more than six (6) months in principle without paying late payment penalties.

e) Employment stabilisation subsidy

If an enterprise meets the requirements, including having duly paid unemployment insurance premiums according to law in the past, and its lay-off rate in the previous year is lower than the urban unemployment rate of the location where the enterprise is located, the enterprise can receive subsidies from the Government for stabilising employment relationships. The amount of such subsidy varies with locations – for example, in Shanghai it is 50% of the unemployment insurance premium paid by the enterprise and employees in the past year.

f) Training subsidy

Eligible enterprises that provide qualified offline and/or online occupational training for employees during the periods of work suspension and resumption of operation can enjoy training subsidies. In Beijing, for example, entities that are eligible for a refund of unemployment insurance premiums can receive RMB 1,000 per person for providing qualified occupational training to employees. In Shanghai, eligible enterprises can enjoy a 95% subsidy of actual training costs.


a) Policies in respect of key protective supplies

  • if enterprises producing supplies for preventing and controlling COVID-19 (“Key Supplies”) acquire new equipment in order to increase production capacity, the cost of equipment can be deductible in a one-off manner for PRC Corporate Income Tax (“CIT”) purposes
  • revenues obtained by taxpayers for transporting Key Supplies are exempt from VAT.

b) Policies supporting adversely affected industries

  • enterprises in industries/sectors such as transportation, food serving, catering and tourism can carry the tax loss of 2020 forward for the following eight (8) years, compared with five (5) years under the CIT Law, for credit
  • revenues obtained by taxpayers from providing public transportation services, lifestyle services and courier services delivering life necessities are exempt from VAT
  • starting from 1 March 2020 to 31 December 2020, small-scale enterprises in Hubei Province can be exempt from VAT. In other provinces of China, the VAT rate on small-scale enterprises will be reduced from 3% to 1%.

c) Policies on donation for preventing and controlling COVID-19

  • when donating cash and supplies for preventing and controlling COVID-19 through social welfare organisations, governments at county level or above and other government bodies, the cost can be fully deductible for CIT or Individual Income Tax (“IIT”) purposes
  • when directly donating supplies to hospitals which prevent and treat  COVID-19, the cost can be fully deductible for CIT or IIT purposes.

d) Relevant IIT policies

Medicines, healthcare supplies and protection supplies offered by employers to employees for the prevention of COVID-19 are exempt from IIT.

e) Property tax and urban land use tax reduction policies

Property tax and urban land use tax on landlords are reduced or exempted to encourage landlords to reduce or exempt rent for tenants.

4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?

Not applicable.

5. Which prerequisites are necessary to qualify for a programme?

To apply for the above-mentioned Special Preferential Loans and/or related interest discount funds, the application shall meet at least the following prerequisites:

  • the applicant should be a Key Enterprise, engaging in, inter alia, the manufacture of important medical products and necessities of life, as acknowledged and filed by the relevant competent governmental authorities
  • the purpose and quota of granted loans shall match the increased production capacity due to epidemic prevention and control
  • all granted loans shall be used for production and business for the purpose of epidemic prevention and control.

To apply for Startup Guarantee Loans and/or related interest discount funds, the applicant shall provide evidentiary materials proving that they belong to the defined group of beneficiaries.

For instance, to apply for the above-mentioned tax policies supporting adversely affected industries, the applicant shall meet at least the following prerequisites:

  • to enjoy the extended period on the tax loss carry forward policy, the main business of affected industries shall fall within the scope of the four severely affected industries/sectors, i.e. transportation, catering, accommodation and tourism
  • only revenues obtained by taxpayers from providing public transportation services, lifestyle services and courier services delivering life necessities can be exempt from VAT, and
  • taxpayers in the affected industries need to be small-scale enterprises to enjoy the VAT reduction policy from 1 March 2020 until 31 December 2020.

Since the respective prerequisites are implemented by the competent authorities and banks at a local level, details of implementation and requirements may vary from location to location.

6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?

Generally no such major reasons.

Please specify

The applicant must prove its eligibility to obtain certain benefits or measures successfully.

For instance, if an application cannot meet the criteria of a Key Enterprise or prove it is a startup business which deserves special financing due to the impact of COVID-19, it will not be eligible to apply for the above-mentioned loans and/or the related interest discount funds.


Under the special circumstances of COVID-19 and the post epidemic period, cases of misuse, embezzlement and fraud have been detected and might arise further. Therefore, the competent governmental and financing bodies have announced examination and verification requirements to better evaluate and double-check the qualification of applicants (e.g. whether an application fulfills all conditions of being a Key Enterprise).

7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?

Yes, they are. 

Please specify

The relevant statutory provisions and policies on granting of preferential measures do not differentiate between domestic-invested enterprises and FIEs. Therefore, as long as an FIE is able to meet the respective requirements, it shall also be entitled to apply for and be granted the respective benefits.


National treatment of FIEs has recently been expressly stipulated in the new Foreign Investment Law effective as of 1 January 2020. While the practical implementation of FIEs’ national treatment may vary from location to location and in different aspects, no obviously differentiating measures discriminating against FIEs have been observed since the outbreak of COVID-19.

8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?

No, not specifically due to COVID-19. However, there were already certain restrictions in place before COVID-19.

Please specify

As far as loans are concerned, PRC law generally requires that loans shall be used for the purpose agreed between the lender and the borrower. Depending on the terms and conditions applied by the banks, if the borrower uses the loan for purposes other than agreed, it will breach the loan contract which may entitle the lender to require immediate repayment and claim damages.

Specifically for Special Preferential Loans, the applicant must use them in accordance with increasing production capacity due to and solely for the purpose of epidemic prevention and control.


The above-mentioned restrictions are based on statutory provisions and also in accordance with common financing practice. Particularly due to COVID-19 and during the post epidemic period, cases of misuse, embezzlement and fraud have been detected and might arise further. Therefore, the competent governmental and financing bodies have announced examination and verification requirements to trace the utilisation of granted loans and funds in a stricter way. For instance, the finance administration will be responsible for checking applications for Special Preferential Loans and the related interest discount funds, with a focus on enterprises that have applied for/received loans above RMB 50 million or from several financial institutions, etc.

9. How are insolvency application deadlines handled in times of Corona?

No special statutory rules, provisions or court interpretations have been issued so far for COVID-19 related cases.

PRC law does not stipulate an obligation or statutory deadline for an existing company or its management to file for insolvency. According to the PRC Enterprise Bankruptcy Law, if an enterprise legal person cannot pay off due debts, and its assets are insufficient to clear all debts or it is obviously insolvent, it may apply to the court of law for reorganisation, reconciliation or bankruptcy liquidation. If a debtor is insolvent, its creditors may file an application to the court of law for reorganisation or bankruptcy liquidation.

An obligation to file a bankruptcy liquidation only applies in the case where an enterprise legal person has been dissolved but not been liquidated or has not completed the liquidation, and its assets are insufficient to pay off the debts. In such case the person responsible for the liquidation shall apply for bankruptcy liquidation. However, the law does not stipulate a deadline for such obligation.

According to the current PRC laws and regulations, however, an enterprise applying for reorganisation with the People’s Court shall, within six (6) months of the date of the ruling by the People’s Court, submit the draft reorganisation plan to the People’s Court and the creditors’ meeting, with a possible three (3) months’ extension with justified reasons. Otherwise, the People’s Court shall rule to terminate the reorganisation procedure ex officio and declare the enterprise bankrupt.

On 16 April 2020, the Supreme People’s Court promulgated the Guiding Opinions (I) on Several Issues concerning the Proper Trial of Civil Cases Related to the Novel Coronavirus Pneumonia (COVID-19) Epidemic. According to these Opinions, enterprises applying for reorganisation may apply for further extension beyond the nine (9) months’ statutory time limit as mentioned above.

10. To what extent have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?

There are no specific changes in local insolvency/restructuring laws. However on 31 March 2020 the PRC Supreme People’s Court issued its second batch of eight (8) civil and commercial cases related to the resumption of work and production during the epidemic prevention and control period. All of the eight (8) typical cases are reorganisation- and reconciliation-related cases, and they may guide the work of local People’s Courts.

Further, on 26 April 2020 the Supreme People’s Court issued Opinions on Advancing Efficient Trials of Bankruptcy Cases According to the Law, to enhance efficient trials of bankruptcy cases. These Opinions call for:

  • optimising the procedures and processes regarding case-related announcement and case acceptance
  • improving the ways to take over and probe into the property of debtors
  • enhancing the efficiency of convening and casting votes at creditors’ meetings
  • instituting a quick trial mechanism for simple cases, and
  • intensifying coercive measures and crackdown upon attempts to dodge repaying debts.

The People’s Courts may adopt the quick trial mechanism to those liquidation and reconciliation cases in which the debtor-creditor relationship is explicit, property information of debtors is clear and case facts are simple.



No such rules exist so far.

No special measures exist for COVID-19 related cases or for different treatment of FIEs.

In general, PRC law provides for reorganisation and reconciliation as alternatives to insolvency liquidation. In both cases the debtor (/the creditor in case of reorganisation) may directly apply for reorganisation or reconciliation to the People’s Court and prepare a respective draft plan for ruling by the court and subsequent resolution by the creditors’ meeting. In case of failure to execute a reorganisation or reconciliation plan, the People’s Court shall declare the debtor insolvent. 

Picture of Ulrike Glueck
Dr. Ulrike Glueck
Managing Partner