Supportive policy measures
The Chinese local governments rolled out supportive policies to ease the economic burden on small enterprises. For instance, the Shanghai local government now exempts SMEs in Shanghai from paying rent on state-owned assets for production and operation. It also allows owners of commercial properties to apply for tax reduction on property or land use. Furthermore, local banks can provide loans to SMEs at lower rates and make repayment adjustments. Shanghai has released 28 measures to fight the negative impact of COVID-19 on businesses. The detailed information which includes incentives and financial support can be found here.
Meanwhile, Beijing announced 16 measures to assist SMEs including foreign enterprises. Some of these measures include reducing rental fees, waving administrative fees and deferring tax payments. Guangdong also decided to let eligible enterprises apply for a delay in tax payments for up to three months.
Moreover, the People’s Bank of China stands ready to provide credit support to enterprises. This goes especially to manufacturing sectors and SMEs heavily affected by the COVID-19 outbreak. It released 30 policy measures in this regard and allotted RMB 300 billion worth of loans to various banks in all affected provinces. The credit support comes with preferential interest rates mostly for manufacturers of medical supplies and daily necessities.
Private firms assist small enterprises
Amidst the effect of the coronavirus outbreak on small businesses, huge firms also promised financial-related assistance.
For instance, Alibaba’s MYbank under Ant Financial has offered RMB 20 billion worth of loans to firms hit by the coronavirus outbreak. MYbank will give out RMB 10 billion to firms located in Hubei province, the epicenter of the outbreak. Other firms across China can avail of the remaining RMB 10 billion. MYbank also plans to give a 20% discount on the interest rate.
Furthermore, other well-known Chinese companies such as Huazhu Group, Wanda, China Resources Group, Trip.com Group Limited, and Meituan-Dianping also pledged to support struggling firms. According to the Xinhua report, these companies offered to cut fees related to franchise, rent, management, and commission.
The Chinese government media have so far reported nearly 80,000 infected cases and 2,747 deaths from the coronavirus epidemic. Based on this record, COVID-19 now surpasses the number of SARS cases from 2002. However, the World Health Organization noticed a decline in the number of COVID-19 infections in the past few days. Yet, the WHO is still concerned by the global spread as numbers surged in other countries such as South Korea, Japan, Italy, Iran, and Lebanon.
Despite the looming impact of COVID-19 on China’s overall economy, policymakers predict rapid recovery after it is contained. They remain optimistic due to strong policy measures designed to counter the economic effect of the epidemic. Further, some observers point to the lessons from the SARS crisis as evidence of how China saw a boost in its economy after the epidemic.