(ATF) – China has cut the cost of electricity and gas for small and medium-sized companies hit by the coronavirus outbreak - and is implementing a range of measures to soften the economic impacts of the epidemic.
A working group set up by the State Council to deal with the impacts of the Covid-19 outbreak said a range of tactics would be employed to assist small businesses.
On Tuesday, February 25, the State Council decided to encourage financial institutions to provide temporary deferred repayments on loans to SMEs, with preferential interest rates to increase support for individual industrial and commercial entities.
The People's Bank of China (PBOC), the country’s central bank, took the lead by setting up a special rejigged loans of 300 billion yuan for epidemic prevention, and launching new loans that will have phases of ‘preferential interest rates’.
China’s Development and Reform Commission is also encouraging financial institutions to provide temporary repayment of principal and interest on loans to small, medium and micro enterprises. China’s Agricultural Bank, for example, launched a new bond to fund small loans to its customers.
Premier Li Keqiang has demanded that all regions and departments should establish special assistance mechanisms for businesses in response to the epidemic, and alleviate difficulties that companies face, especially private, small and micro enterprises.
Zhang Kejian, the Deputy Minister of Industry and Information Technology told a press conference that data from the Fourth National Economic Census, at the end of 2018, showed there were more than 18 million registered small or medium-sized businesses in China and that they account for 99.8% of large and legal corporate entities.
“Therefore, if SMEs are stable, employment is stable and the economy is stable,” he said.
PBOC chief Liu Guoqiang said it had “speedily deployed and implemented increased credit support for the resumption of production and production of small, medium and micro enterprises.”
Small businesses “are currently the focus of orderly promotion of the resumption of production and production of enterprises".
SMEs faced problems resuming production after the outbreak and extended Lunar New Year holiday “such as labour difficulties, start-up difficulties, and difficulty in supporting the industrial chain” — and relatively large capital pressure, Lui said.
“Providing modest preferential support for small, medium and micro enterprises can stimulate the vitality of the real economy, help promote high-quality economic development, promote sustainable financial development, and open a virtuous cycle of economic and financial development,” he said.