China leans heavily on subsidies to blunt coronavirus impact
China is unleashing a new wave of subsidies to bolster the seafood sector, as it struggles with closed factories and migrant workers stranded far away from their workplaces due to fallout from the COVID-19 coronavirus.
China is waiving taxes and payments to seafood buyers who take up the supply sitting in the country’s aquaculture ponds, and the powerful Export Import Bank has offered up to CNY 1.5 billion (USD 210 million, EUR 195 million) in loans to distant-water fishing firms and processors in Fujian Province as a way to prop up the sector.
The provincial branch of the China Export Import Bank (EXIM Bank) – one of the government’s key policy banks – has been brought into action to provide low-cost loans to fishing firms. The Ocean and Fisheries Bureau is cooperating with the EXIM Bank “to lend support during the virus period” by providing CNY 1.5 billion (USD 210 million, EUR 195 million) in financial support to the sector, with CNY 760 million (USD 106.40 million, EUR 96.8 million) available immediately. The cash will “ensure the province’s fishery companies get back to work and back to production and to ensure an adequate supply of seafood.”
The subsidy payments follow a pledge from Jiang Kai Yong, deputy head of fishery market regulation at the Ministry of Agriculture earlier this month, when he assured consumers that government measures would be forthcoming to guarantee adequate seafood supply.
Elsewhere, authorities are seeking to reduce “people-to-people” contact by shifting customs procedures online. One firm, Zhuhai Guo Yang Foodstuffs Co, declared on its social media account that it had processed the paperwork through the WeChat messaging service to ship 19.5 tons of frozen shrimp through the Man Kam To border processing point into Hong Kong. A “no-touch” policy at Beihai – a key shrimp producing region in southerly Guangxi province – has seen cameras installed to monitor customs with less inspectors.
Also in response to the coronavirus outbreak, the People’s Bank of China (China's central bank) cut its lending rates, which in turn lifted the Shanghai composite index by 4.1 percent. A weaker RMB – 7.02 to the dollar – could increase the competitiveness of exports and give listed seafood companies give a lift.
In Fujian, one of the leading regions for aquaculture and distant-water fleets, the provincial office of the federal Oceans and Fisheries Bureau offered a 50 percent subsidy of the total cost of building or modernizing seafood processing plants in officially designated "demonstration zones," or government-backed and approved industrial parks. Among the beneficiaries is Fuzhou Rixin Aquatic Foods Co, which markets the “Captain Jiang” seafood brand, according to the Fujian Ocean and Fisheries announcement.
Cash has also been rushed forward for a program of fishing port renovations across the province, with CNY 600 million (USD 84 million, EUR 78 million) being made available for works this year as part of an overall CNY 1.42 billion (USD 198 million, EUR 184 million) spending bill on fishery port modernization in Fujian.
Subsidies are also being rolled out by authorities in Doumen region of Zhuhai in Guangdong Province – a key region for the production of sea bass.
“We will waive unemployment or social security payments and will also reduce or waive rents [for companies operating in government-owned industrial parks]” a document published by the local Ocean & Fisheries Bureau said.
Other subsidies are being geared toward relieving overstocked aquaculture farms. Food and beverage and cold-chain companies are being paid to buy and store seafood products, with CNY 0.15 (USD 0.02, EUR 0.019) per 500 grams in public funds paid to companies buying the product.
The latest suite of subsidies may add further to worries that China’s fisheries sector is subsidized to such a degree that its products amount to unfair competition for fishing industries elsewhere, which are forced to compete with cheap Chinese filets.
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