Lately, the Ministry of Finance ("MOF") has issued the Administrative Measures for Special Awards and Subsidies for Structural Adjustments of Industrial Enterprises (the "Measures"), immediately effective from the issue date.
The Measures provide that, the special awards and subsidies will be mainly used by local governments and central enterprises for the placement of employees of state-owned enterprises, and may be used in an overall manner for the placement of employees of eligible non-state-owned enterprises as well. Such special awards and subsidies are comprised of two parts, namely the special awards and subsidies for the local government and special awards and subsidies for central enterprises. Meanwhile, the Measures clearly state that, special awards and subsidies are divided into basic awards and subsidies and the progressive awards and subsidies. The former represents 80 percent of funds offered for the current year, while the latter accounts for the rest 20 percent. The basic part will be distributed by factor, while the progressive part will be linked to the over-fulfillment of the overcapacity reduction quota by each province or central enterprise. Moreover, the Measures require local governments and central enterprises to solicit from different sources and ensure funds needed for the overcapacity cut.