Law and Political Economy of China’s Early Pandemic Response: Limited Economic Support and Insulation

Abstract

In this chapter we identify several significant aspects of the ongoing policy transformation in China. Firstly, combating the pandemic allowed for policy justification through a specific type of “state of war” narrative instead of referring to legal rules, which were unclear. It also led to a shift in the utilization of surveillance practices from a national, hierarchical and visible level, to a social, fluid, and less visible one. Moreover, unlike in the West, the least significant change has been observed in the domain of economic policy. Instead of a less discriminate liquidity supply approach taken in the West, China’s policy makers opted for a set of highly targeted fiscal, monetary and procurement measures in order to ensure the stability of the financial markets, relieve pressures on the real economy and secure employment. The measures were rolled out over a brief period of time (although not as large as in the EU or US) and were retracted significantly faster.

1 Introduction

People’s Republic of China was the first country to be hit by the Covid-19 pandemic. The outbreak was officially noticed on the 26 December 2019. Zhang Jixian, director of the Department of Respiratory Medicine at Hubei Xinhua Hospital, reported the emergence of an unidentified type of pneumonia (Gao et al. 2021). Within a month, the Chinese Communist Party general secretary Xi Jinping warned that China was facing a “grave situation” adopting a set of policies that were to evolve into China’s policy response to the pandemic over the next weeks and months (Munroe and Liu 2020). By the end of January 2020 all mainland provinces had launched the so-called Class 1 Responses to Public Health Emergency (Chappell 2020) This arrangement provided government at all levels with significantly extended powers which were deemed necessary to combat the pandemic. Within four months, relying on comparably more radical measures than observed in most of the rest of the world, China’s policy makers were able to control the outbreak, so that the death toll of the pandemic stayed under 5000 cases (Ritchie et al. 2021). Until the recent surge in Shanghai, two years later, China appeared to have been almost “Covid free”.

Beyond being defined by the objective of containing the pandemic as effectively as possible, China’s policy response to the pandemic fits into the wider historical context of China’s institutional evolution. In the face of the pandemic, China’s policy makers sought to continue and deepen their efforts in constructing a hybrid political-economic system with specifically Chinese characteristics (Boer 2021). On the path of combining and balancing socialist and market arrangements, China has developed legal and regulatory rules to strengthen state institutions. However, the COVID-19 pandemic has revealed various gaps in the operation of the state apparatus (i.e. the relationship between different branches of the government; the relationship between the party, the state, and the legal system; and the relationship between local, regional, and national authorities), which propelled the policy makers to continue developing specific legal and regulatory structures to fit China’s overall institutional design principles and policy goals. Furthermore, the pandemic has also reinforced a turn towards the “internal sphere”, which China’s policymakers have already opted for before the pandemic. This turn has involved the focus on internal circulation, domestic consumption, capital controls, debt deleveraging, and equitable rise of welfare standards, as well as attempts in further ideological, political, and informational control.

Since the outbreak of the Covid pandemic, a substantial body of literature examining China’s Covid management experience has emerged. One strand of literature studies China’s experience from the perspective of public health, examining the efficacy of various measures, such as lockdowns, travel restrictions, and disease monitoring in curbing the coronavirus (Tian et al. 2020; Tangcharoensathien et al. 2021). Another strand of literature looks at China’s reaction from the perspective of public policy, particularly highlighting unique features embedded in China’s pre-existing administrative structures, such as the “campaign-style” crisis management regime, which helped China mobilize social and human resources (Cai et al. 2022; Mei 2020); the role of individual and community volunteerism (Miao et al. 2021); and the use of social media (Xu et al. 2020; Li et al. 2020). A third body of literature examines the broader social, political, and economic impact of Covid-19 on China (He et al. 2022; Liu 2021a, b; Gao et al. 2021; Liu and Bennett 2020; Yang and Yang 2021). Given the specific disciplinary angles of each strand, no single entry in the current literature attempts to provide comprehensive picture of China’s Covid management experience and potential connections between different strands of policy.

This chapter aims to fill the gap in the literature by studying China’s policies across institutional domains and analyzing them from a law and political economy perspective. We pay particular attention to China’s legal structure, its role in and tension with anti-Covid policies. Our approach allows us to appreciate the specific legal-normative questions that China’s Covid-19 management has encountered, which cannot be fully addressed as an efficacy issue in public health. This approach also sheds light on the complex relations between different branches and levels of the government; between the government and the market; and between the government and the individuals/community. Last but not least, the law and political economy approach also allows us to place the Covid-19 pandemic within a longer trajectory of China’s social development, which reveals not only disruptions but crucial continuity of China’s policy, which is often omitted in the current literature.

We identify several significant aspects of the ongoing policy transformation. In the above mentioned context, the process of combating the pandemic has opened the space for policy justification through a specific type of “state of war” narrative instead of referring to legal rules, especially when those rules are unclear. It has also led to a shift in the utilization of surveillance practices from a national, hierarchical, and visible level to social, fluid, and less visible level. Unlike in the developed economies in the West, the least significant change has been observed in the domain of economic policy where China’s policy makers opted for a set of highly targeted fiscal, monetary and procurement measures. The measures were rolled out over a very short period of time but they were not as large as those seen in the developed world, and they were retracted significantly faster.

In this chapter we follow the structure of the questionnaire tracing the policy response across institutional domains. In Sect. 2 we focus on the legal framework around the state of emergency. In Sect. 3 we turn to the issues regarding surveillance and information flows. Section 4 focuses on different aspects of the economic policy such as those related to financial architecture, business, and employee relief. Section 5 concludes.

2 State of Emergency and Its Implementation

As we saw over the course of the initial months of the global spread of the pandemic, policymakers often referred to the exceptional nature of the problem that the jurisdiction was facing in order to empower their decision making to address the pandemic in an appropriate manner. That often included a reference to the statutory provisions on the “state of emergency” that could be found in the constitution and other high level legislative acts. In China, the “state of emergency” provision can be found in articles 67, 80, and 89 of the Constitution PRC, or “state of martial law” in the Martial Law of China. However, these articles were not invoked.

Instead, policy makers invoked the provisions from the legal framework that was specifically designed for the purposes of dealing with public health emergencies. This framework has been established and progressively improved over the two decades before COVID-19, especially following the SARS epidemic in 2003, H1N1 flu in 2009 and H7N9 flu in 2013. The Law on Prevention and Treatment of Infectious Diseases (传染病防治法 hereinafter LPTID) was enacted in 1989, revised in 2004 and 2013. In addition to this special law, measures taken in public health emergencies are also described in the text of the Law on Emergency Responses (突发事件应对法 hereinafter LER), which was promulgated and entered into force in 2007. In addition to these two laws, a wide set of governmental policies, regulations, and emergency plans were designed to respond to public health emergencies, the most significant among them being the National Emergency Plan for Public Health Emergencies (hereinafter NEPPHE) made by the State Council (State Council 2006). Finally, at the local level, emergency plans were made by local executive authorities containing detailed administrative measures to guide their actions under a given set of conditions.¹

Articles 39–49 of LPTID specify the hierarchy of competences among different levels of authorities, which on its own seems to be clear. For example, article 42 provides that governments above provincial level may arrange manpower and cut down the spreading route of the infectious disease, according to the plans of prevention and control. They may also carry out certain measures by public declaration, after obtaining the central government’s permission. The controlling role of the State Council is reflected in such a design. Furthermore, according to articles 43 to 45, the State Council should have decisive power on inter-provincial response measures. In terms of article 43, for example, the State Council  is in charge of setting up inter-provincial pandemic areas; ordering a lock down of pandemic areas in large cities, middle cities, across provincial administrative areas and areas which might cause the breakdown of artery traffic or the closure of the state border.

While the hierarchy of general competences in this domain seems coherent, it became clear in the implementation of the policy response, that the legal framework for dealing with the public health emergencies had considerable gaps regarding the specification of who is supposed to do what and under which conditions. Both the LPTID and the LER provide measures for addressing public health emergencies. However, the text of these two laws does not include an explicit clarification of what should be considered as a public health emergency. Although we observe several similar ideas in the text of these two laws related to this concept. However, on their own, they are not sufficient in terms of framing the policy response that was put together against the pandemic. For example, article 19 of the LPTID requires that a system of early-warning should be made and article 20 requires relevant measures according to the plan should be taken after the legal subjects receive “early-warning”. However, that does not mean the “early-warning” can be regarded as “public health emergency”, for there are several measures that address such an emergency that can be initiated without such an “early-warning”. Articles 39 to 49 of the LPTID discuss the response measures. Among them, articles 42, 43, 45, 48, and 49 discuss measures against pandemic of influential diseases and the rest discusses measures that respond to the emergence of individual cases of infectious diseases. Most of these measures can be implemented at the discretion of relevant authorities in the context of a pandemic, while others neces from a higher position in the chain of command. An “early-warning” is not among the necessary pre-conditions. Thus an “early-warning” cannot be regarded as a general state of public health emergency that would initiate a specific set of emergency response measures. While in NEPPHE there are no further statements implying that “early-warning” would lead to any particular response measures, we find several clear provisions on the termination of emergency measures. Essentially, authorities who have adopted the measures are required to terminate them once the situation is under control (Article 47 of the Law on RE, Articles 41–43 of the LPTID). Specific conditions, requirements, and procedures for terminating emergency measures are provided by the National Precautionary Plan for Public Health Emergency (State Council 2006).

This ambivalent and incomplete framework came to be tested as the pandemic emerged, and the above mentioned gaps made the implementation of the policy response significantly more challenging. As commentators pointed out, the emergency responses taken in Hubei and other provinces revealed major shortcomings of the existing legal framework (J. Wang 2020). The lock-down measures in Wuhan, for example, were delivered without warnings or declarations in advance. According to Xianwang Zhou, the then Mayor of Wuhan, he could not issue such declarations or early warnings without authorization from the higher authority (Guancha 2020). Some opinions suggest that the design of the early-warning systems assumed that if the responsible parties knew what they were supposed to do they would do so (J. Wang 2020). The confusion emerged due to the uncertainties in the existing legal framework, such as the conflict between Article 19 of the LPTID and article 43 of the LER regarding who should issue early warnings. As some critics observed, such conflicts also led to selective compliance with the law (Z. J. Wang 2020).

In addition to legal uncertainties, in some cases the legal framework for public health emergencies was practically suspended. Several provinces activated the level-I public health emergency reaction which, according to the Regulation on the Urgent Handling of Public Health Emergencies, should have been activated by the State Council rather than provincial governments (Meng 2020). The incoherence of the law has been criticized by scholars and prompted the government to initiate the process of revision. An amendment of the LPTID has been published based on public comments by the National Health Commission (Nation Health Commission 2020). However, it remains to be seen how concretely the legal framework for public health emergencies will be improved.

Oftentimes, the emergency measures adopted, while lacking legal basis, had been legitimized by a popular slogan of “fighting a people's war” (China Daily 2020). This “war” narrative was initially invoked by local governments, first in Shiyan, Hubei.² It is important to notice that the narrative was not adopted in the initial central government's anti-covid instructions. The slogan soon became widely invoked by governments of various locales and media (Wang et al. 2021). While the war narrative had been criticized for being inappropriate for regions with only scattered cases, the official media, Xinhua, endorsed this narrative by calling the measures in Wuhan “the Battle Defending Wuhan”.

In that context, it becomes clear how, instead of sole reliance on police, medical staff, and other public enforcement bodies, the enforcement of the emergency measures such as movement limitation, health code checks, and others, was executed by a diverse set of actors that were often without specified public institutional roles such as security guards, company employees, and community council members.

Although the pandemic had been under control by mid-2020 and many measures related to the movement of citizens and limitation of economic activity had been withdrawn, Chinese policy makers kept some of the measures, primarily related to surveillance and inter-regional, international travel, in place until today. Despite the emphasis on the balance between surveillance and individual rights by the central government, more severe enforcement measures have been applied by local governments in communities, such as mandatory vaccinations, lock-down quarantines of people in epidemic areas, and severe restrictions on inter-regional traveling (Zhang 2020b). People also faced more frequent legal and extralegal interventions. For example, violations of control measures may be subject not only to criminal penalties but also to sanctions imposed through the national credit system (Luo 2020).³

Furthermore, justified by the nationwide zero-case policy, the authorities at all levels kept some of the facilities and bodies formed during the initial wave in place, albeit inactive, in order to be able to call upon them if the occasion arises. The wave of cases in Shanghai in the spring of 2022 is the most stark example of reactivation of the initial measures, such as localized lockdowns and mass testing (Shanghai Municipal Health Commission 2022). The continuation and re-application of such measures, just like their initial adoption, perpetuates significant legal ambiguities that end up being resolved, albeit with significant loss and delay, by discretionary use of power at different levels of the government imposing particularly stringent and encompassing measures. The rigidity and vast character of the measures in turn could be put into question insofar as they fail the requirement of article 27 of the Constitution which stipulates “the principle of simple and efficient administration”. The contrast between the law and war narrative shows the limitations of the former that are still to be overcome. However, systematic improvements at the constitutional level are unlikely. Technical and incremental solutions may, however, occur through the revision of specialized laws such as the LPTID.

3 Surveillance and Information Control

In the face of the pandemic, China adopted one of the most pervasive and technically sophisticated surveillance policy responses in the world. Furthermore, many of the surveillance measures adopted during the pandemic were retained even after the health crisis was fought off.

The issue of mass surveillance has not always been controversial in China. Before 2000, due to the vast territory and limits in technology, state supervision was mostly realized through direct citizen supervision. The political movements of the 1950s and 1960s fostered a political culture of citizens’ mutual monitoring. Since the 1980s the liberal reform and cultivation of civil society have transformed the image of mutual supervision from a valued societal goal to an undesirable practice (Song and Lin 2018). In the 1982 Constitution, personal dignity, residence, freedom, and privacy of correspondence were protected under chapter II, which addresses “The basic rights and duties of citizens”. In the context of changing attitudes and limited economic and technological means, state monitoring penetrated people’s lives to a limited extent. Since the late 1990s, state monitoring entered a new stage. With economic reform and the rapid advancement of urbanization, the problems of social and national security have become particularly prominent. Mass surveillance was justified as a necessary means of managing public security. In terms of technology, the boom of domestic surveillance equipment production in the 2000s has enabled the mass use of monitoring tools (Chen et al. 2004). In terms of political justification, a series of incidences of violence and terrorism  in 2014 provided an opportunity for the adoption of national surveillance practices (Yu 2014; Zhao 2014), which were incorporated in the Anti-terrorism Law of the People’s Republic of China passed in 2015.⁴ In 2017, the government officially announced the establishment of the Skynet Project, aimed at real-time monitoring and facial recognition through the utilization of a network of over 20-million public and private street level cameras (Wang 2017). Furthermore, with the rising popularity of the Internet and smartphones since 2010, information on citizens’ behavior is also collected by enterprises (Yang 2021).

Measured against this historical background, the pandemic has only intensified the trend towards comprehensive surveillance that already existed in the country. The significance of the pandemic has to do with the pace at which further expansion of mass surveillance occurred; and the development of cooperation between corporate entities and the state. Mega-app providers such as WeChat and Alipay collected citizens’ data for the control of their movement. In turn, these mega-apps enabled state monitoring to evolve into a more social, fluid, and invisible form of control which penetrates into citizens’ daily lives on a capillary level.

At the outset of the pandemic, the most prominent change in terms of surveillance had to do with the use of digital technologies. As the pandemic emerged local governments and enterprises quickly engaged in significant cooperation (Zhao 2020). The Health code in smartphone applications such as Beijng's JianKangBao  which is based on the information on a citizen's ID card, location and tracking history, exposure history and health condition became a requirement for entrance in almost every public space (Sun 2020). The health code is established based on a calculation of the users’ virus exposure risk using the information users submitted and the data shared by the health department. This data is further verified using authoritative databases from the departments of health, transportation, communication, and other industrial authorities (Center For Information Technology 2020). The resulting assignment of the code color based on risk analysis by big data, can further be adjusted by the responsible official staff (Nanchang CDC 2021), allowing for discretionary intervention in the automated decision making. In this process, data that was not traditionally collected by the state such as the consumption and payment information, medical records and employment information became subject to state control. Among them, the location tracking history has received particular attention.

The operation of health code generation exemplifies how surveillance practices shifted from a national, hierarchical and visible level to social, fluid, and less visible level. The prevention of pandemic has shown the diversity in the public private and communal entities that have been mobilized (Zhao and Li 2022). Moreover, it was evident that large-scale implementation of surveillance depends on compliance with grid-based management (Central Committee of the Communist Party of China 2013).⁵ As a result, the relationship of control between the citizens and the government has been upgraded to multiple regulatory relationships between officials, non-official staff, and citizens. Not only government departments, but also non-government organizations such as real estate managers or security companies, have acquired power of surveillance and control (JPCMSC 2020). This is even more true of the community members who stood at the forefront of implementing control measures such as the management of visitors, access to public places, traffic patrol, and epidemic prevention education (China Security Association 2020).

The movement of an individual or a group was surveilled through the use of the smartphone code check at different locations by local personnel; and through the online transaction records. The surveillance has also been reinforced through additional infrastructure such as facial recognition in residential buildings and public places such as subways that was developed rapidly following the virus outbreak.

In the context of this novel surveillance reality, it is important to observe the absence of an appropriate response from the legal system and the public. The initial surveillance measures taken during the first months of the pandemic were not accompanied or justified by an explicit legal framework. Instead the law responded after the fact. On 28 May 2020, the Civil Code of the People’s Republic of China was passed, in which personal information i.e., personal biometric information and identifiable information are protected under the Personal Rights section (Art. 1034, Civil Code of the People’s Republic of China). However, given the nature of the civil code, it regulates the civil relationship between private parties and cannot restrain the power of the government. The Personal Information Protection Law of the People’s Republic of China passed in 2021 states in Chapter II that public data controllers are also subject to this legislation, but the enforcement of this chapter remains unclear. Despite such legislative development, legal scholars have expressed concerns for citizen privacy (Jiang 2020; Lao 2021).

Beyond the legal response, public reactions to the rapid development of surveillance measures have been rather scarce due to limitations on the freedom of speech. Although the surveillance measures taken for controlling the pandemic were not designed to regulate speech, such measures ended up going hand in hand with the inhibition of public expression. Information control that already existed before the pandemic due to various internet censorship mechanisms, was reinforced to govern the reaction to the lockdown and surveillance measures that were being taken.

We could see this trend clearly in the way media outlets operated during the pandemic. In China, local newspapers typically treat the issue of liberties and privacy rights by mounting a moderate criticism of local governments’ excesses in the enforcement of rules (Jing and Ma 2014). In contrast, in February 2020 one local newspaper in Wuhan asked citizens to “warm the mayor’s heart”, urging people to reduce their complaints about the inconvenience caused by the controlling measures (Zhang 2020a). This appeal to citizens was eventually criticized by the central government, but such media practice of praising and protecting instead of criticizing the government went on. For example, in border areas such as Ruili, local media seldom published news about local citizens’ living, medical, and employment difficulties under the long-lasting lockdown. Instead, it was the retired government officials and media in other regions that spoke on behalf of the silenced people, bringing their testimonies and opinions into the public sphere (Qin 2021). Even though a few media outlets such as Caixin Weekly and IFeng News played a fair role in expressing public opinions, their influence was limited because of the populist “war” narrative mentioned before. In many cases, the silence of official media created a regional information insulation, leaving the people in quarantine areas unnoticed by society.

There are many reasons for the lack of any adequate pushback on the expanding surveillance. The most prominent one being the controlling measures on inadequate speech on social media. For example, the “group chief responsibility system” on a WeChat group chat places an obligation on  the managers of a chat group to regulate and stop improper comments by group members (Cyberspace of Administration in China 2017), creating further chilling effects for public expression. In addition to the power exercised by the platforms, traditional legal means have been deployed to repress criticisms rather than to empower the public to express its opinion. The offense of “picking quarrels and provoking troubles” in the Law of the People's Republic of China on Administrative Punishments for Public Security⁶ has been used to target not only physical violations of the pandemic control measures but also speech criticizing those measures (a similar practice of repression through the use of the concept of “rumors” in the aforementioned Law was also observed) (Tongzhou District People’s Court of Beijing 2020). In this way, not only hate speech or insulting words, but ambiguous complaints concerning the controlling measures taken may fall under the scrutiny of the government.

In general, the surveillance measures taken during the early stage of the pandemic, the justification based on necessity prevailed over considerations of adequacy. Furthermore, many temporary surveillance measures, such as the health-code-related data collection, health-code scanning and temperature measuring in public places, reporting of new-comers and monitoring of focus groups, have become the new normal (Xi’Ji Police 2022). These measures are again justified with a reference to the fact that the pandemic is still ongoing—even if the health emergency has been overcome. Be that as it may, the absence of an adequate public discussion and legal articulation of these measures reinforces an undesirable atmosphere of silence and voluntary use of power.

4 Economic Policy

4.1 Economic Conditions and Policy Before the Pandemic

At the precipice of the pandemic China’s economic policy makers faced a specific set of economic challenges. For about four decades, China has been the best-performing economy in the world. However at least since 2010, the phase of the so-called miracle growth ended (Naughon 2018). China faced diminishing supply of cheap labor force inflow, relative saturation of global markets and lower returns on investment in capital. In this context, Chinese policy makers did not follow the policy direction of letting private financial institutions select investment opportunities worthy of their support and stir the economy as was the case when Japan and South Korea faced similar conditions. Instead, they engaged in activist industrial policy based on government spending (see Fig. 1) and central bank support (see Fig. 2). Some of the policies targeted the supply side by supporting “strategic emerging industries”, such as industrial automation, internet-based services and green energy. The focus was on research and development as well as on supporting state backed or owned “national champions”. Agriculture and demographic growth were also supported. On the demand side, the policy focused primarily on supporting the growing population of domestic middle-class consumers. This direction became even more pronounced as China confronted US-led western policy elites in the trade war. This policy direction is often described as a turn away from the market, but it can alternatively be understood as an attempt at a more active re-design of legal foundations of markets with a case specific treatment of different types of market participants and shifting of roles of different markets within the overall hierarchy and conditionality in creating economic growth. Below is a short survey of economic conditions across the financial architecture, business, and employment as they were before the pandemic.

Fig. 1

(Source Statista)

Government spending

Fig. 2

(Source Dan Neilsen, https://www.soonparted.co)

People’s bank of China balance sheet

In terms of monetary policy and financial architecture it is important to notice that for many decades, interest rates in China were tightly controlled and played almost no role. The People’s Bank of China (PBC) used quantitative monetary policy instruments regularly and much more aggressively than any of the developed market economies. In addition, there were large changes in base money, driven by changes in foreign-exchange reserves. Against this background, monetary policy framework has been evolving, following two key themes: migrating from direct control to indirect control; and moving from quantitative regulation to price regulation (Amstad et al. 2020). Furthermore, it is important to mention that since the reform in the 1980s, China’s financial system has developed from complete inexistence into a system which today involves a dominant state-owned banking sector and capital markets with diverse financial institutions. Even if China’s capital markets have grown to be among the largest in the world, the majority of funding in the financial system comes from the banks (ibid.).

In terms of business conditions in China before the pandemic, there are two specificities that became significant during the pandemic. First is the role and the presence of the State-owned enterprises (SOEs) and small and medium-sized enterprises (SMEs). Since the reforms in the early 1980s China has been moving in the direction of shrinking the SOE presence although that has slowed down in recent years. The 2019 government work report proposed to promote mixed ownership and market-oriented reforms to strengthen SOEs’ competitiveness in the fields of electricity, oil and gas, and railways. For SMEs, the Law of Promoting Small and Medium-sized Enterprises enacted in 2002 requires the State Council to make plans and strategies to promote the development of SMEs. Since then, multiple measures were taken to reduce, or exempt SMEs from, various fees, charges, or taxation. These measures were accompanied by detailed policy plans that guided the treatment of the SMEs. Within the central and local budgets special funds were allocated to purchase SME products and services. In order to minimize the difficulties of SMEs accessing finance, articles 14 and 16 of the above-mentioned law provided that the PBC and other financial institutions shall provide them with special funding channels and facilitate application process. In 2019, a set of policies on SMEs was enacted with the main purpose of further reducing the financial burden they faced. Specifically, the Ministry of Finance and the State Taxation Administration proposed that taxpayers of small-scale value-added tax with monthly sales of less than 100,000 yuan should be exempted from value-added tax, and the annual taxable income of small and micro enterprises should not exceed 1 million yuan (Ministry of Finance and State Administration of Taxation 2019). In 2019, China Development Bank issued more than 100 billion yuan of loans to small and micro enterprises and industrial poverty alleviation by means of on-lending, and issued a total of 100 billion yuan of special loans for private enterprises, supporting more than 120,000 small and micro enterprises in the process (Xinhua News Agency 2021).

In addition, the government engaged in breaking down the monopolies in the financial and data economy. It initiated legal actions to limit their operations and  divide their activities into separate entities (Huang 2020). Promoting employment has been a fundamental policy of China improving people’s livelihood (Article 42 of the PRC Constitution). In the last 15 years, the general guiding policy in employment has been focused on “encouraging self-employment, relying on market economy, with the assistant of government” (The State Council Office of the People’s Republic of China 2004). Overall, the central government mainly has adopted three approaches to job creation. First, the government boosted investment and domestic consumption by supporting internal circulation to strengthen the economy, in such a manner that growth would lead to the creation of more jobs. Secondly, the government aimed at creating job opportunities through its’ support for the SMEs using financial and fiscal subsides. Thirdly, the government has been providing unemployment insurance and subsidies by setting up the Unemployment Insurance Fund. It has also created public employment agencies to help people find jobs under the “Regulations on Unemployment Insurance”.

Finally, poverty and lack of education have been identified as one the main obstacles for employment. Since 2011, China's poverty alleviation standard (poverty line) has been raised to 2300 yuan, and by the end of 2011, population under poverty line was about 128 million people, accounting for about 13.4% of the rural population. People of ethnic minorities, women, and people with disabilities in the rural areas are even more likely to be living below the poverty line (Che and Lin 2011). Therefore, the government had included these groups in the “China Rural Poverty Alleviation and Development Program (2011–2020)” (State Council 2011). As for the lack of education, the central government has made effort to raise the education standard across the country and created education facilities for pre-employment and on-the-job training. In this context, the government provided occupational education for vulnerable groups like children of poor families, junior and senior high school graduates who have not yet advanced to higher education, migrant workers, unemployed, transferred workers, and retired soldiers for free. It has also incentivized companies to cooperate with universities to provide additional education and training opportunities.

4.2 Economic Policy During the Pandemic

After the outbreak of COVID-19, in order to stabilize the economic conditions, the government immediately launched a series of financial relief measures. This phase lasted about five months. Instead of a less discriminate liquidity supply approach taken in the West, in the first phase China’s policy makers launched a set of highly targeted fiscal, monetary, and procurement measures in order to ensure the stability of the financial markets, relieve pressures on the real economy, and secure employment. The measures were rolled out quickly, but they were not as large as in the case of the EU or the United States. After the five months of implementation of relief measures, the government reduced direct assistance to enterprises and maintained other measures, letting the existing institutional structure and markets operate without support.

4.2.1 Legal Financial Architecture During the Pandemic

In contrast to the usual focus on preventing “market failure”, the Chinese pandemic response policy was more proactive insofar as it was intended to support the banking sector, financial markets, and the real economy as they faced the effects of the pandemic. The policy involved a set of short term, top-down, targeted measures that were worked out further on departmental and local levels.

The main policy documents that enabled this approach are the following: Among the earliest policies related to economic relief, the Circular on Financial Security Policy issued on January 25 (MOF & NHC 2020), which called for governmental financial subsidies for patients, healthcare workers, and medical institutions; the Circular on Securing Epidemic Supplies issued on January 30 (GOSC, Jan. 30, 2020), which required local governments to secure supplies and serve enterprises that produce epidemic supplies; and the Circular on Optimizing Tax Payment Services, which states that taxpayers could apply for an extension of their tax payment service (SAT, Jan. 30, 2020). Later on, the People's Bank of China (PBC), the Ministry of Finance (MOF), the Banking and Insurance Regulatory Commission (CBIRC), the Securities Regulatory Commission (CSRC), and the State Administration of Foreign Exchange (SAFE) released a joint notice, titled “Notice of strength for the financial support of preventing and controlling COVID-19”. According to this Notice, China was to adopt a “flexible” national monetary and fiscal policy for the first half of 2020. SAFE also launched a notice for establishing a Green Channel for Foreign Exchange Policy to Support the Prevention and Control of the COVID-19. MOF issued a specific notice to support financially and to Strengthen financial services for the prevention and control of COVID-19.

Based on this framework, the People’s Bank of China has taken a series of measures expanding money supply, enhancing the implementation of structural monetary policy, and creating monetary policy tools to directly increase liquidity and reduce the financing cost in specific sectors. The policy response included medium-lending facilities rate cut by 30bps, 7-days Reverse Repo rate cut by 30bps (see Fig. 3); standing lending facilities rate cut by 30bps, loan prime rate cut by 30bps, Excess reserve ratio cut from 0.72–0.35%, three reserve ratio cuts of 150bps in total which released 1.75 trillion RMB, re-lending and re-discount programmes that amounted to 1.8 trillion RMB, the extension of SMEs loans to RMB870 billion and support for SME financing programme at RMB170 billion.⁷ These cuts effectively facilitated interbank lending, by pushing the interbank repo rate below 1.7% as can be seen in Fig. 3. We consider specific business-related measures in detail in the next session. In order to set limits to the channels of accessing these relief measures, the Supreme People's Court’s “Guiding Opinions on Several Issues Concerning the Proper Trial of Civil Cases related to the COVID-19 (II)”, included six articles that addressed financial support during the epidemic.⁸ According to the Guiding Opinions, claims of loan repayment acceleration and unilateral termination of the contract made by financial institutions violated the financial support policy. Instead, the court would extend the repayment period according to the principle of fairness for those in need of COVID-19-related hospitalization or quarantine, those who participated in the epidemic prevention and control work, those temporarily lost their income due to the pandemic as well as those liable for disputes related to their housing mortgages, credit card loans, etc. As the pandemic was contained, those short-term financial policies had been gradually retracted, returning to the previously established regime. This was marked by the establishment of the Beijing Stock Exchange on September 3, 2021.

Fig. 3

(Source Wind)

Interbank lending rate

However, these temporary policies did not disappear completely. An element of legal change due to the pandemic that has economic consequences is that the “epidemic” has become one of the legal reasons for “change of circumstances” in civil law. Specifically, the No. 1 Notice of the National Health and Health Commission in 2020 approved by the State Council, stipulated the COVID-19 as one of the Class B infectious diseases, which means that the COVID-19 became a new type of infectious disease in the “Prevention and Control of Infectious Diseases Law”, making the COVID-19 a force majeure factor according to Article 180 and Article 533 of the Civil Code.⁹ If the purpose of the contract cannot be achieved due to the epidemic, the parties may request to terminate the contract and share the losses according to fair responsibilities.

4.2.2 Business Relief and Protection During the Pandemic

In terms of business relief, the Government's economic support measures targeted individuals, enterprises, public institutions (such as government departments and hospitals), and local financial arrangements (Ministry of Finance and State Administration of Taxation 2021). These measures can be separated into three domains: (1) financial support; (2) tax incentives and relief; and (3) government procurement.

(1) Within the 1.7 trillion RMB expansion, PBC provided 300 billion RMB for lending to maintain the supply chains of products involved in the management of COVID-19, such as critical medical materials and daily necessities. It increased the re-loan and rediscount quota to 500 billion to assist SMEs in resuming production. As SMEs were seriously weakened by the pandemic, the PBC encouraged the medium and small-sized banks to strengthen their support for SMEs. Additionally, another 100 billion re-loans and rediscount quota were set for all groups of enterprises.

The central government’s increased credit support allowed local governments to work with financial institutions to promote lower lending rates and to increase credit loans and medium- and long-term loans for SMEs whose development prospects have been affected by COVID-19. The government also introduced a stage-by-stage deferral of payment for the electricity, water, and gas required for the production and operation of SMEs during the pandemic and enforced the “non-stop supply of arrears” measure during the deferral period. Banks and financial institutions were prohibited from withdrawing, postponing, or stopping loans for enterprises, particularly micro ones, and those in the industries hardest hit by COVID-19, such as wholesale and retail providers, hotels, restaurants, airline operators, and travel agencies.

The general aim of this set of measures was to ensure that the actual financing costs of companies falls below 1.6% and to increase emergency sub-lending funds while reducing emergency sub-lending rate. Local governments also received financial support from the central government, including increasing the proportion of local fiscal funds retained and increasing transfer payments to ease the financial pressure on local governments, especially in relatively underdeveloped regions. As of June 2020, the amount of transfer payments reached 6.28 trillion yuan, an increase of 1.26 trillion yuan over the same period last year. At the same time, fiscal funds were tilted towards areas with severe epidemics (such as Hubei) and the focus of government work (such as environmental protection).

A new portion of central government budget deficit amounting to 1 trillion yuan (RMB) was added, and a special national bond of 1 trillion yuan (RMB) was issued to fight against the epidemic, all 2 trillion yuan of which was transferred to local governments, supporting local governments to fight the epidemic and to give subsidies to companies. In addition, 3.75 trillion yuan (RMB) of new special bonds were arranged for local governments, an increase of 1.6 trillion yuan over the previous year (Ministry of Finance 2021a, b). For the whole year of 2020, the Chinese government invested more than 400 billion yuan in financial resources for COVID-19 prevention, control, and relief (Ministry of Finance 2021a, b).

(2) On 30 January, 2020, the State Administration of Taxation published a policy document titled: “Notice on Optimizing Tax Payment and Payment Services to Cooperate with the Prevention and Control of COVID-19” (State Administration of Taxation 2020b). The document effectively extended the period for paying taxes to fit the needs of epidemic prevention and control. Furthermore, according to the guidance of the central government, all municipalities were to give more tax benefits to SMEs in stages (in Hubei province, these were extended to all enterprises). The policy also paid attention to those SMEs which had faced comparatively better benefits conditions before the epidemic and could restart operation quickly once receiving additional support. For these SMEs, the government extended social subsidies to 6 months after their resumption of operation.

Overall, four types of tax incentives were put in place. The first type targeted the enterprises, entities (such as hospitals, etc.), or materials related to the epidemic. The government directly exempted or deducted most of their taxes (such as corporate income tax, value-added tax, import tax). From January to November 2020, a total of 65.2 billion yuan (RMB) in tax and fee reductions for enterprises producing anti-epidemic materials (Ministry of Finance 2021a). The second category involved SMEs and privately or individually owned businesses. The government had given these businesses tax relief in areas such as VAT and social insurance contributions to help them reduce costs and get through difficult times. The reduced tax rate was determined by respective local governments. The third category involved the enterprises that are affected by the epidemic more directly, such as the transportation, catering, accommodation, and tourism industries. For example, the maximum carryover period for losses incurred by companies in these difficult industries in 2020 has been extended from 5 to 8 years. A portion of VAT was exempted for them, with a total of 38.2 billion (RMB) in tax exemptions for these industries from January to November 2020 (Ministry of Finance 2021a, b). Finally, the fourth category included public transportation or industries that are highly related to residents’ life services. According to the announcement issued by the Ministry of Finance and the General Administration of Taxation in February 2020, taxpayers are exempted from VAT on income derived from the provision of public transportation services, living services, and express delivery and collection services of essential living materials for residents (State Administration of Taxation 2020a, b, c, d). In 2020, tax reductions and exemptions increased by 2.6 trillion yuan (RMB).

(3) Final part of the financial relief policy for business was based on procurement measures. These had two specific targets: the entities involved in pandemic prevention supply chain and the SMEs. The government was involved in procuring large quantities of epidemic prevention materials from domestic suppliers. Firstly, the government subsidized the cost of purchasing epidemic prevention materials for medical institutions, with the local government approving the amount of the subsidy and the central government paying the subsidy (MOF & NHC 2020); and secondly, the government made bulk purchases itself and committed to the overall procurement of all epidemic prevention materials that companies fail to sell in the market, such as masks and protective clothing (China Government Procurement 2020). On the other hand, it guaranteed that the purchase and sale of supplies are timely through streamlined competition and approval procedures. At the beginning of the epidemic, it opened a “green channel” for the procurement of epidemic prevention materials, exempting them from the procurement procedures stipulated in the government procurement law and eliminating the need for approval for the procurement of imported materials (Ministry of Finance 2020a, b, c, d, e). In addition, it shortened the procurement process by promoting electronic procurement and moving the procurement process online (Ministry of Finance 2020e).

The government also guided budget units at all levels to support SMEs and increase the amount and proportion of procurement from them (Ministry of Industry and Information Technology 2020). In 2020, the contract value awarded to small, medium, and micro enterprises in national government procurement was 2791.80 billion yuan (RMB), accounting for 75.5% of the national government procurement scale (Chinese Government Procurement Website 2021). They have also intensified efforts to clear the accounts owed to SMEs by administrative organizations, institutions, and state-owned enterprises to speed up the completion of clearing arrears without any new overdue arrears being formed. In 2019 and 2020, the government conducted a centralized clearing of arrears within a time limit, and accumulated more than 850 billion yuan in overdue arrears owed by administrative, public institutions and large state-owned enterprises to private enterprises and small and medium-sized enterprises (Guo 2021).

4.2.3 Employment Relief and Protection During the Pandemic

Covid-19 caused severe employment-related problems in 2020. According to the report of the National Bureau of Statistics, in 2020, there were over 11.6 million unemployed people and the unemployment rate in cities was 5.2%, the highest it has been in  the past five years. In order to cope with the upcoming unemployment wave as quickly as possible, the central government issued a guiding policy starting from March 2020 to provide relief to both enterprises and employees (State Council of People’s Republic of China 2020). The general idea in the early phase of the epidemic was to resume production quickly, minimize layoffs, and raise the unemployment benefits.

According to the “Notice of Properly Handling Labor Relation Issues During the Covid-19 Prevention period” (Ministry of Human Resources and Social Security of the People's Republic of China 2020), during the initial phase of the epidemic in 2020, enterprises had the legal obligation to pay wages even if they stopped working. Furthermore, this policy specified the obligations in the context of a force majeure in the following manner. Firstly, enterprises should not terminate the labor contract with employees who could not work as normal due to the pandemic. Secondly enterprises that stopped operation for less than one wage payment period should pay normal wages. If the operation stopped for more than one wage payment period, the wage would be evaluated on the basis of the type of work that was being performed. Namely, if employees worked normally, they were to be paid not less than the minimum salary as set by the local government. If employees did not work as normal, enterprises were obliged to compensate them with alimony payment. In the context of the pandemic, these rules were combined with other policies. For instance, the General Office of the State Council issued an Opinion, emphasizing the implementation of anti-epidemic measures in workplaces, canteens, and workers’ residents to ensure workplaces are non-virus, (The General Office of State Council of People’s Republic of China 2020). It also encouraged enterprises to shoulder the social responsibility to maintain the living of employees and reduce prospective layoffs. Apart from the incentives used above, some scholars also proposed that the financial risk of enterprises due to unemployment should fall on the public budget (Sheng 2020).

Beyond these measures there were additional subsidies for the unemployed. The central government announced that individuals whose unemployment insurance had expired or who were unqualified to receive it, could get additional subsidies up to 6 months. In addition, the standard of unemployment insurance was raised by local governments. From March to June in 2020, the temporary subsidies for recipients of unemployment insurance and unemployment benefits increased two times (Ministry of Human Resources and Social Security and Ministry of Finance 2020).

Furthermore, the government also took measures to protect domestic migrant workers. By the end of 2019, domestic migrant workers accounted for nearly 40% of workers in cities (National Bureau of Statistics 2019). As their jobs are more precarious and flexible, these workers enjoy lower levels of social security and employment protection. According to 2017 statistics, only 36.22% of domestic migrant workers were enrolled in the city unemployed insurance programmes (Z. Wang 2020), which means that they were more vulnerable than urban workers to the shock of the pandemic. In this case, the Hunan provincial government adopted several detailed measures to ensure the rights of domestic migrant workers. For example, from March 1, 2020, the newly enrolled domestic migrant workers were required to pay the same insurance premium as city employees, so that both migrant and city workers would be equally insured. Municipal governments also started to encourage domestic migrant workers to enroll in the city unemployment insurance programs (Hunan Provincial Department of Finance 2020).

Finally, strengthening labor protection was identified as another vital effort necessary to support the return of enterprises to production. The government sought to survey and publish information on enterprises’ labor demands and promote online supply and demand matching, as well as remote recruitment. Strengthening of local supply and demand matching, was expected to tap the potential of local supply to meet the phased labor demand of enterprises (Ministry of Human Resources and Social Security of PRC 2021).

4.3 Economic Policy Direction in the Aftermath

In 2020 China's domestic product indicators formed a V shape. The spread of COVID-19 in late 2019 and early 2020 posed a great challenge to China's economy. The quarterly GDP data largely shows the impact of the epidemic on the economy (see Fig. 4): in the first quarter, GDP fell sharply to the negative growth level of 6.8%. Public budget revenues fell by 3.9% while public budget expenditures increased by 2.8%. National finance and state-owned capital have filled a part of the economic gap caused by the epidemic. However, the bounce back was quick and most of the relevant macroeconomic indicators were rising already in the second quarter—Fig. 5 shows the recovery of the stock market indices and some evidence of the come back in the sovereign bond market price. In the face of the challenge, China’s specific combination of socialist and market arrangements, has showcased a significant degree of resilience and stability. China’s economic growth rate of 2.3% surpassed the IMF's initial optimistic prediction. The secondary industry and the tertiary industry are the main forces of economic development, and their added value accounts for 37.8% and 54.5%, respectively, of this growth record. The gross national income was 10,095.1 billion yuan, an increase of 1.9% over the previous year.

Fig. 4

(Source Wind)

China’s gross domestic product

Fig. 5

(Source Wind)

Stock market performance

In this context, joint stock companies, foreign-related companies, and private companies have all achieved growth in revenue and profit growth, but the growth rate of companies controlled by state-owned capital has declined. Excluding the price factor, the per capita disposable income of residents actually increased by 2.1%; however, the epidemic may also make people's consumption views more conservative. After deducting the price factor, the per capita consumption expenditure of residents fell by 4%.

After the first wave was controlled in the spring of 2020, China’s policy makers unwound the pandemic economic response measures and turned to setting longer term economic policy direction. At the beginning of COVID-19, relief measures focused on helping businesses to survive. In April and May, some of the fees and payment obligations were reintroduced (Ministry of Transportation and Communications 2020), while the relief focus shifted to supporting businesses to resume production and operations, such as tax filing extensions for taxpayers in difficulty (SAT 2020).¹⁰ The central government encouraged local governments to provide different types of guarantees for businesses to resume production and operations. For example, local governments were to work with the relevant departments to help enterprises coordinate the return of employees to work, the supply and transportation of materials, and the implement of COVID-19 prevention measures and supply of equipment such as masks, disinfection supplies, and thermometers. Most of the tax benefits lasted until the end of 2020.¹¹ In February 2021, the process of unwinding the relief measures provoked a reaction from the investors so that interbank rate spiked and PBC representatives in turn decided to slow down with the contraction. The donation tax relief was extended until March 31, 2021, and some other, such as tax deductions for the individually owned business and the film industry were further extended until March 31, 2021 (SAT 2020). Thus, financial subsidies given to those in need did not end in 2020 either, with total funding amounting to 1.7 trillion yuan in 2020 and further increasing to 2.8 trillion yuan in 2021 (MOF 2021).

As the employment conditions started improving, the government turned towards the design of the new employment policy. In that context, the government formulated the 14th five-year plan for promoting employment and set a goal for 2025 (The State council, August, 2021). The plan focused on increasing both quantity and quality in employment. According to the plan, over the next five years, new urban jobs are to increase by 550 million, with the unemployment rate staying within 5.5% limit. Workers would be provided with additional educational opportunities so that the average education period of working-age population would reach 11.3, and more than 55% of the new labor force will have received higher education. As the situation of domestic migrant workers shows, the Covid-19 pandemic has had a greater impact on those who had already been disadvantaged in the job market before the pandemic. Similarly, women were relatively more affected by the epidemic, with slower return to work and higher risks of unemployment. The employment situation of college graduates is severe, and low-skilled workers are more vulnerable to the impact of the epidemic (Qu and Cheng 2020). It remains uncertain to what extent the employment conditions of these disadvantaged groups will improve in the post-Covid era.

Finally, as soon as the pandemic wave was under control, the efforts to redesign the legal foundations of the markets and reshape the hierarchy of the roles different markets play in creating economic growth that were interrupted during the pandemic were continued. This is true of the regulatory pressure on the real estate sector, where companies such as Evergrande have been allowed to default on some of their debt and are in the process of restructuring. It is also true of the digital economy monopolies, where regulators banned the merger of Huya and DouYu on the basis of their relationship with Tencent, an anti-trust case against Meituan, the company behind a large food delivery app has been initiated and Didi, the dominant car hailing company. Furthermore, in November 2021, the Anti-Monopoly Bureau, which was a subdivision under SAMR, was promoted to the deputy ministerial level.

There is no clear evidence that the 14th five-year (2021–2025) plan in 2020 was affected by the Covid-19. However, researchers cite the profound impact of the epidemic on economic conditions faced by diverse stakeholders such as increased economic vulnerability, industry hit, and neglect of safety and health risks (Chen et al. 2020). In that context policy goals related to increasing resilience to risk, developing core technologies and key industries, and addressing climate change are even more important (Yang et al. 2020). The 14th five-year plan has made a tilt towards these areas (Xinhua News Agency 2021). In order to cope with possible threats and external challenges, scientific and technological self-reliance has taken center stage (Smriti 2021). Beyond the measures that go in this direction, the plan has also decided to promote a new credit reporting system. By collecting and analyzing multi-dimensional big data, this system can prompt companies to disclose necessary information and solve the information asymmetry problem between banks and companies (Chu and Chen 2021). High-quality SMEs can obtain more loans more easily by improving their credit scores while the financial risk of banks will be reduced (Zhou et al. 2022).

The limited scope and impact of relief provisioning in confronting the pandemic can be best understood if we compare this intervention to the one mounted to fight the effects of the global financial crisis. At the time, 4 trillion yuan in 2008 provided in order to deal with the crisis made up about 12.5% of China’s GDP in 2008, to be spent over 27 months—and this is a conservative account as according to some estimates the total stimulus went up to 9.5 trillion, 27% of the GDP (Yifu and Wang 2021). In 2020, the rescue package of 4 trillion yuan in 2020 is about 4% of the GDP. Pandemic-related support was based on the six guarantees—employment, basic livelihoods, operation of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments, and the six stabilities - stability in employment, financial operations, foreign trade, foreign investment, domestic investment, and expectations. Thus the government’s plan this time was much more targeted. This contrasts with 2008 when the 4 trillion were mostly spent on large-scale infrastructure investment, that flooded the economy across sectors. It appears that the consequences of the 2008 liquidity injection—real estate price hikes, unsustainable local government spending, and the rise of shadow banking—were an important concern that policymakers want to avoid in 2020.

5 Conclusion

A good way to begin painting the picture of China’s pandemic policy response is to identify it as crisis management by primarily “non-economic” means. As we have seen, the speedy resolution of the problems brought about by the first wave of the pandemic from December 2019 was based on a novel form of cooperation among public, private, and communal bodies to curtail citizen’s movement with significant aid of surveillance techniques and data collection. This in turn enabled China’s policy makers to use the economic relief measures for a shorter period and to a lesser extent than they would have had to use them otherwise.

This leads to the second important point, which is about the discrepancy in duration as the short term nature of pandemic was reflected in the short term of economic relief measures but not in the short term character of the above mentioned “non-economic” measures. Instead of the pandemic affecting the direction of China’s economic policy, it seems that the zero case policy response to the pandemic, in particular in relation to international travel, provided advantageous conditions for pursuance of “internal circulation”. As Chinese citizens were disincentivized to leave the country and the internal zero case environment was established, China saw a rise in domestic consumption of goods and services and interprovincial tourism.

What looms large in this use of the pandemic as the occasion to enhance the internal turn is the role of the law. Legal ambiguity and incoherence have plagued the process leading to significant costs and losses. At the same time, this type of legal environment has opened space for “people’s war narrative”, discretionary executive power, above mentioned involvement of non-public actors in surveillance and enforcement of the policy.

We see the interplay of these elements again in what seems for now to be the 2022 Shanghai pandemic wave (although it might appear to be more). The first 100 days of pandemic response have defined the response that we are seeing now almost to the smallest detail. The usual analysis of the significance of the initial choices made by China’s policy makers paints a picture in which policy makers have cornered themselves by their initial choices of vaccine, lockdown, and zero case target and thus lost the opportunity to develop herd immunity of the population for what they pay the price, and will pay even more as they stick to that initial approach. Be that as it may, this type of analysis misses the important point about the way in which the crisis brought about the pandemic has created an opportunity for China’s policy makers to push harder in the policy direction set out in the years before. Switching their approach in the current situation, confronting the additional sequences of crisis emergency on the one hand would imply abandoning that course, while despite the high economic and human cost it can be seized as a further opportunity to push in the same direction.

Notes

• 1. For example the Guangdong Emergency Plans for Public Health Emergencies, 广东省突发公共卫生事件应急预案 2013.8.9.

• 2. See Zhangwan District, Shiyan city, Hubei, enters the state of war from Feb 13, closing down all buildings. (湖北十堰张湾区 13 日零时起战时管制 所有楼栋封闭管理), People (人民网), http://hb.people.com.cn/n2/2020/0213/c194063-33790226.html, accessed 10 March 2022.

• 3. “The national credit system” means the National Credit Information Sharing Platform, which records people’s behaviours violating certain credit rules. It functions with a punishment mechanism. People listed on the credit blacklist cannot take high-speed rails or flights for five years, sign up for examination of staff of civil servant and institutions, or get a loan from the bank.

• 4. Art. 27 of the Anti-terrorism Law of the People’s Republic of China passed, 2015.

• 5. “Grid Management” means to divide jurisdictions of grassroots self-government into grid patterns and connect them into informatization platforms for more precise management and inspection.

• 6. Art. 26, Law of the People's Republic of China on Administrative Punishments for Public Security, 2005 (amended in 2012).

• 7. 国家新闻办公室, 2021 年 1 月 15 日: 国新办 2020 年金融统计数据新闻发布会 The State Council Information Office of the People’s Republic of China,15th,Jan, 2021: The State Council Information Office held a press conference on financial statistics in 2020, Retrieved from: http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/44687/44760/wz44762/Document/1697045/1697045.htm.

• 8. 最高人民法院, 2020 年 5 月 15 日: 《最高人民法院关于依法妥善审理涉新冠肺炎疫情民事案件若干问题的指导意见 (二)》 SPC, May 15, 2020: Guiding Opinions on Several Issues Concerning the Proper Trial of Civil Cases related to the COVID-19 (II) Retrieved from: https://www.court.gov.cn/fabu-xiangqing-230181.html.

• 9. Article 180: “A person who is unable to perform his civil-law obligations due to force majeure bears no civil liability, unless otherwise provided by law. “Force majeure” means objective conditions which are unforeseeable, unavoidable, and insurmountable”. Article 533: “After a contract is formed, where a fundamental condition upon which the contract is concluded is significantly changed which are unforeseeable by the parties upon conclusion of the contract and which is not one of the commercial risks, if continuing performance of the contract is obviously unfair to one of the parties, the party that is adversely affected may re-negotiate with the other party; where such an agreement cannot be reached within a reasonable period of time, the parties may request the people’s court or an arbitration institution to rectify or rescind the contract.

  The people’s court or an arbitration institution shall rectify or rescind the contract in compliance with the principle of fairness, taking into account the actual circumstances of the case”.

• 10. 国家税务总局, 关于明确 2020 年 5 月纳税申报期限有关事项的通知, [State Administration of Taxation (SAT), Notice on matters related to the clarification of the May 2020 tax return deadline]. Retrieved from: http://www.gov.cn/zhengce/zhengceku/2020-04/29/content_5507327.htm.

• 11. Referring to the Notice of the General Office of the Ministry of Industry and Information Technology on the Key Service Activities of the Public Service System of Small and Medium Enterprises to Help Resumption of Work and Production in 2020 (2020.4.9), the Guidance of the Central COVID-19 Leading Group on Active and Orderly Promotion of Resumption of Work and Production While Effectively Preventing and Controlling the Epidemic (2020.4.7), and the State Council's joint prevention and control mechanism for coping with COVID-19 on Notice on issuing guidelines on measures to prevent and control the epidemic in enterprises and institutions resuming work and production in different risk areas nationwide (2020.4.9).