Banks to support small business
► Regulator seeks to extend loan maturities, lower rates
The Chinese banking regulator ordered Friday banks to offer more loans covering a wider range of small and micro-sized businesses amid the outbreak of novel coronavirus pneumonia, as many face a cash crunch due to business suspensions.
“The banking sector should step up credit offerings to small and micro-sized businesses in line with the principle of raising loan quantity and quality, covering more companies and reducing loan costs to guarantee that loans to these businesses are not shocked by COVID-19,” Li Jufeng, an official at the China Banking and Insurance Regulatory Commission, said at a press briefing on Friday.
Affected by the abrupt outbreak of the COVID-19, the normal operations of China’s labor-intensive industries, including agriculture and animal husbandry, retail, catering and hospitality, and manufacturing, have been disrupted, with many companies struggling to survive.
In these sectors, a large number of small and micro-sized businesses have suspended operations but still pay salaries and rent, while many of those that resumed operations may also need additional loans.
Chen Hefeng, manager of an online and offline beverage retail firm in Hangzhou, capital of East China’s Zhejiang Province, told the Global Times on Friday that his company is estimated to lose around 5 million yuan ($715,830) during the epidemic.
While his five offline stores have been temporarily shut, a delayed recovery in the logistics industry and return of the labor force to cities pose an obstacle to online sales growth, Chen said. “We still pay our employees and rent, which is about 55,000 yuan per day,” he said. Chen’s company hires almost 100 employees.
Chen’s plight is not uncommon. A chemical materials company based in Xuhui district, Shanghai may see its funding broken if the epidemic lasts several months, a senior executive of the firm surnamed Fu told the Global Times on Friday.
The manufacturing base of Fu’s company is in Nanjing, East China’s Jiangsu Province, and the products are mainly used in property and infrastructure.
“As property and infrastructure construction hasn’t restarted, projects will be delayed and we can’t get paid for our products used in these projects,” Fu said. He said the company’s facility in Nanjing resumed manufacturing on Thursday, but transportation of raw materials and products is still a problem due to disrupted logistics.
By now, a number of cities have released policies to support small and microsized businesses, but many are still calling for more specific policies. Shanghai, for example, has released policies, including extending the collection period of social insurance premiums from companies.