Chinese city offers firms 6-figure subsidies to keep fires burning for Lunar New Year holiday
- Dongguan, a major exporting hub in China’s south, is offering up to 600,000 yuan (US$84,289) for manufacturers to remain open during the long holiday
- Move is seen as an effort to spur activity and begin the year strongly after a troubled economic recovery in 2023
China’s southern export hub of Dongguan has announced it would issue sizeable subsidies to local enterprises over the coming two months to maintain stable production over the course of a long holiday period, mitigating disruptions and ensuring a robust start to the year.
The city will offer subsidies of up to 600,000 yuan (US$84,289) each to manufacturers that maintain full-scale production for the whole of February, according to a 14-point plan released by its development and reform bureau last week.
The city government will organise trains or buses to pick up incoming migrant workers, and extend consumption vouchers to encourage them to stay for the holiday.
Manufacturers will also be eligible to receive 1,000 yuan per person for each new recruit from outside the city, with the cap on this benefit set at 300,000 yuan for each enterprise.
“[These measures] are designed to further support enterprises to stabilise industrial production during the Lunar New Year, and to promote the city’s stable economic start and sound growth momentum,” the bureau said.
If manufacturers … can get sufficient orders to generate labour demand, this policy will achieve better results
“Such a subsidy indeed has a positive effect on maintaining production for Dongguan. However, what ultimately determines the city’s labour demand is the number of orders,” said Peng Peng, executive chairman of the Guangdong Society of Reform.
“If manufacturers in Dongguan can get sufficient orders to generate labour demand, this policy will achieve better results.”
Dongguan, China’s fifth-largest urban area by exports, has struggled after a drop in overseas orders.
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Its gross domestic product grew only 2 per cent in the first three quarters of 2023, the lowest in Guangdong province.
Its manufacturing sector also saw a 0.3 per cent year-on-year decrease in added value during the period, according to the city’s statistics bureau.
Coastal provinces often experiment with incentives to ensure the stability of industrial production and facilitate worker recruitment as this period approaches.
Yiwu in the eastern province of Zhejiang, renowned as a global hub for small commodities, brought its first batch of migrant workers in on a dedicated bus on Saturday, three days earlier than last year.
Southeast China’s Fujian province, which specialises in electronics and advanced equipment, announced a range of subsidies last week for industrial firms that achieve substantial growth in the first quarter and sustain production through the holiday.
Dongguan, like other parts of China, has been undergoing an economic transition, focusing on technological innovation and sectors higher on the value chain to adapt to downturns in demand.
To kick-start activity, the city’s government is offering up to 400,000 yuan to industrial firms which report 25 million yuan in revenue increases for the first quarter compared with the same period last year.
