Original Title: Notice from the Municipal Commission of Economy and Information Technology et al. on the Issuance of the "Measures for Special Subsidies for Industrial Restructuring in Shanghai"

To the People’s Governments of All Districts, and Relevant Commissions, Offices, and Bureaus of the Municipal Government:

The "Measures for Special Subsidies for Industrial Restructuring in Shanghai," formulated by the Municipal Commission of Economy and Information Technology, the Municipal Development and Reform Commission, and the Municipal Finance Bureau, have been approved by the Municipal Government. They are hereby issued to you for strict implementation.

Shanghai Municipal Commission of Economy and Information Technology

Shanghai Municipal Commission of Development and Reform

Shanghai Municipal Finance Bureau

May 5, 2022

Measures for Special Subsidies for Industrial Restructuring in Shanghai

Article 1 (Purpose and Legal Basis)

To promote industrial restructuring in the municipality, optimize resource allocation and industrial layout, advance high-quality industrial development, promote energy conservation and emission reduction, and improve the ecological environment, these Measures are formulated in accordance with the “Notice of the State Council on Further Strengthening the Work of Eliminating Outdated Production Capacity” (State Council Document [2010] No. 7), the “Guiding Opinions of the State Council on Resolving the Contradictions Arising from Severe Overcapacity” (State Council Document [2013] No. 41),the “Shanghai Municipal Urban Renewal Regulations,” the “Several Opinions on Promoting Efficient Resource Allocation and Driving High-Quality Industrial Development in the Municipality” (Shanghai Municipal Government Document [2018] No. 41), and relevant municipal policies on special fund management, these Measures are hereby formulated.

Article 2 (Responsibilities of Departments)

Under the leadership of the Municipal Leading Group for Industrial Parks and Structural Adjustment (hereinafter referred to as the “Municipal Leading Group”), relevant municipal departments shall carry out their work in accordance with the following division of responsibilities:

The Office of the Municipal Leading Group for Industrial Park and Structural Adjustment Work (hereinafter referred to as the “Municipal Industrial Adjustment Office,” established within the Municipal Commission of Economy and Information Technology) is responsible for proposing the annual work plan for industrial structural adjustment in the municipality and the usage plan for municipal-level special subsidies for industrial structural adjustment (hereinafter referred to as “Municipal Special Subsidies”), as well as for coordinating and promoting their implementation.

The Municipal Development and Reform Commission, in accordance with the city’s relevant fund management measures for energy conservation and emission reduction, shall work with the Municipal Finance Bureau to ensure the balance of the municipal special subsidy funds and the issuance of the allocation plan.

The Municipal Finance Bureau shall review and allocate the municipal special subsidy funds in accordance with relevant regulations on the management of special funds.

The Municipal Bureau of Statistics is responsible for verifying the reduction in energy consumption achieved by industrial restructuring projects.

The Municipal Ecology and Environment Bureau is responsible for verifying the reduction of exhaust gases, wastewater, and hazardous waste in industrial restructuring projects, as well as reviewing and confirming the areas where industrial restructuring projects within water source protection zones are located.

The Municipal Human Resources and Social Security Bureau is responsible for reviewing and confirming the social insurance enrollment status of employees involved in the city’s industrial restructuring projects.

The Municipal Planning and Natural Resources Bureau is responsible for the secondary development and utilization of land in key areas for industrial restructuring, as well as for reviewing land use and subsequent utilization for industrial restructuring projects within ecologically designated areas.

Article 3 (Sources of Special Subsidy Funds)

Municipal-level special subsidy funds shall be allocated from the municipal energy conservation and emission reduction special fund. Each district shall allocate a certain amount of funds for subsidies related to industrial restructuring and the phasing out of outdated production capacity within its jurisdiction. Among these, districts receiving municipal-level special subsidy funds shall allocate matching funds at a ratio of no less than 1:1.

Article 4 (Scope and Conditions for Special Subsidies)

The scope of special subsidy funds covers individual and key regional adjustment projects, adjustment of buildings or facilities, demolition projects, and other projects mandated by the state or approved by the municipal government, all of which have been reviewed and approved by the Municipal Leading Group.

Individual adjustment projects shall meet one of the following conditions:

(1) It falls within the scope of national or municipal industrial park transformation and upgrading plans, or the national or municipal industrial restructuring guidance catalogs.

(2) Projects where environmental pollution is particularly severe, safety hazards exist, and the project meets the requirements of the municipal industrial restructuring work.

(3) It is located within the city’s water source areas, the vicinity of water bodies, or the ecologically designated areas as defined by planning.

Adjustment projects in key areas must simultaneously meet the following conditions:

(1) The area has clearly defined boundaries, is designated within a range of 2,000 to 5,000 mu, and contains 30 or more enterprises;

(2) Outdated production capacity or inefficient enterprises within the area should be relatively concentrated, with more than 70% listed in national or municipal industrial park transformation and upgrading plans or industrial restructuring guidance catalogs;

(3) The total land area occupied by enterprises within the area reaches 300 mu or more.

Municipal special subsidy funds shall support adjustment tasks assigned by the state or adjustment projects and urban renewal projects approved by the municipal government; plots or areas that, following adjustment, meet the requirements for efficient resource allocation and high-quality industrial development, or that have achieved effective reuse of existing resources to develop industries, shall be included in the scope of subsidies, with support strengthened through a post-subsidy mechanism. Projects involving the adjustment of buildings or facilities, as well as demolition projects, that have complete plans shall receive strong support.

Article 5 (Allocation and Standards of Special Subsidy Funds)

The Municipal Industrial Restructuring Office shall determine the annual allocation of municipal special subsidy funds based on factors such as the current year’s special fund budget, district-level industrial restructuring targets, the availability of district-level matching funds, and the implementation progress of adjustment projects, in accordance with the subsidy standards for municipal special funds.

The subsidy standards for municipal special funds for project shutdowns and business suspensions are as follows: no more than 500 yuan per ton of standard coal for energy savings; no more than 40,000 yuan per ton for reduced emissions of exhaust gases, no more than 30,000 yuan per ton for reduced wastewater, and no more than 4,000 yuan per ton for reduced waste; and no more than the previous year’s average annual wage of urban employed personnel in the city per insured employee.Subsidies for the adjustment of relevant buildings or facilities, as well as for demolition, shall not exceed 500 yuan per square meter.

The maximum subsidy amount for production and business suspension for a single adjustment project shall not exceed 50 million yuan. For adjustment projects in key areas covering 500 mu or more, the maximum subsidy for production and business suspension shall not exceed 50 million yuan; for other eligible projects, the maximum subsidy shall not exceed 30 million yuan. The maximum subsidy for the adjustment of relevant buildings or facilities and their demolition shall not exceed 50 million yuan.

Article 6 (Use of Special Subsidy Funds)

Subsidy funds for municipal-level key area adjustment projects and district-level matching funds may be pooled by the district for expenditures on projects that have passed review. Funds for individual adjustment projects shall not be pooled. The use of municipal-level special subsidy funds shall adhere to the following principles:

(1) Adjustment projects utilizing municipal special subsidy funds shall, in accordance with established procedures, be reviewed by the Municipal Industrial Adjustment Office, included in the annual adjustment plan, and implemented and completed within the prescribed timeframe.

(2) Municipal special subsidy funds shall be used for the following purposes: compensation for employee relocation and resettlement, production conversion, debt resolution, suspension of production or business operations, equipment dismantling and relocation, fixed asset losses, adjustment of relevant buildings or facilities, and demolition-related expenses for enterprises and owners included in the adjustment plan after review by the Municipal Industrial Adjustment Office; as well as other purposes determined by the Municipal Leading Group. These funds shall not be used to balance local fiscal resources.Municipal special subsidy funds shall be prioritized for employee resettlement and the dismantling and relocation of assets within adjustment projects.

The use of district-level funds shall adhere to the following principles:

(1) District matching funds shall be fully allocated.

(2) Each district shall formulate practical and feasible implementation rules for fund management and plans for fund allocation and use, and shall implement them after filing them with the Municipal Industrial Restructuring Office.

(3) Each district shall, in accordance with the requirements for efficient resource allocation and high-quality industrial development, separately allocate incentive funds to encourage the owners of adjusted areas or plots to revitalize and utilize the vacated spatial resources. For projects included in the industrial restructuring scope that reuse resources in accordance with the policies and regulations of the competent industrial authorities, each district shall provide incentive support.

Article 7 (Application)

The people’s governments of each district shall be responsible for industrial restructuring within their respective administrative regions. The district economic and information commissions (or commerce commissions, science and technology commissions), in conjunction with the district finance bureaus, shall submit applications for municipal-level special subsidy funds to the Municipal Industrial Restructuring Office and shall be responsible for the authenticity and completeness of the application materials. Rewards for resource reuse projects in each district must be filed with the Municipal Industrial Restructuring Office prior to implementation.

Article 8 (Review)

The Municipal Industrial Restructuring Office shall organize a thematic review of the materials submitted by each district in accordance with the annual work requirements of the Municipal Leading Group.

Article 9 (Fund Allocation)

Upon approval of the materials submitted by each district, the Municipal Industrial Restructuring Office, in conjunction with relevant member units, shall determine the amount of the special subsidy.

Article 10 (Budget Management and Allocation of Funds)

The budget management process is as follows: Each year, the Municipal Industrial Survey Office will notify the districts of the approved projects. Subsidies will primarily be provided through a post-subsidy mechanism to support projects already implemented by the districts. Based on the settlement results of the current year and the project budget for the following year, the Office will submit a proposal for district subsidies to the Municipal Development and Reform Commission and the Municipal Finance Bureau.After review by the Municipal Development and Reform Commission and the Municipal Finance Bureau, the funding requirements will be incorporated into the municipal fiscal budget for energy conservation and emissions reduction special funds for the following year in accordance with established procedures. The Municipal Finance Bureau will include the subsidy amounts for each district in the municipal transfer payments to districts for the following year. The relevant district finance departments shall fully allocate the budget for the following year based on the total municipal and district subsidy amounts approved by the Municipal Industrial Adjustment Office.

At the beginning of each year, the Municipal Development and Reform Commission issues the annual special fund utilization plan in accordance with the budget; the Municipal Finance Bureau, based on the issued special fund utilization plan and the review opinions submitted by the Municipal Industrial Restructuring Office, allocates the municipal subsidy amounts to the finance bureaus of each district.

For projects involving the suspension of production or business operations, 70% of the approved amount shall be disbursed in advance upon approval; the remaining balance shall be disbursed after completion, following verification and acceptance. For adjustments to buildings or facilities, as well as demolition projects, the full amount shall be disbursed in a single payment upon acceptance.

Article 11 (Supervision and Management)

For industrial restructuring projects receiving municipal special subsidies, district governments shall strengthen supervision to ensure the funds are used in a standardized, secure, and effective manner; if any major issues are discovered, they shall promptly report them to the Municipal Industrial Restructuring Office.

The Municipal Industrial Restructuring Office shall organize relevant departments to conduct follow-up management of the implementation of industrial restructuring projects in each district and the use of municipal special subsidy funds.

The Municipal Audit Bureau is responsible for supervising the use of municipal special subsidy funds and organizing audit spot checks.

The Municipal Development and Reform Commission and the Municipal Finance Bureau, in conjunction with the Municipal Commission of Economy and Information Technology, shall conduct post-evaluations and entrust relevant units to carry out periodic spot checks and special evaluations of districts or project units that have received municipal-level special subsidy funds.

Municipal special subsidy funds shall be earmarked for specific purposes and accounted for separately.In cases of poor implementation, such as failure to use funds in full as planned or the return of funds, project review shall be suspended for one year. For cases of fraud, fraudulent claims, withholding, misappropriation, or violations of regulations regarding the application for and use of municipal special subsidy funds, once verified, the project’s eligibility for application shall be revoked; the Municipal Commission of Economy and Information Technology and the Municipal Finance Bureau shall recover the special subsidy funds already disbursed, and the relevant units and personnel shall be held accountable in accordance with the law.

The Municipal Industrial Adjustment Office shall entrust relevant agencies to conduct on-site inspections of projects receiving municipal-level subsidy funds, and the Municipal Industrial Adjustment Office shall confirm the acceptance results based on the inspection findings.

Article 12 (Supplementary Provisions)

These Measures shall come into effect on May 5, 2022, and remain valid until December 31, 2026.