Central bank lends support as Shanghai eyes reopening
Manufacturers likely to receive easy credit to help them resume operations as new cases drop
About 2,000 key manufacturers in Shanghai are likely to obtain fresh funds from banks to help speed up business reopening as the mainland’s financial capital edges closer to putting the latest Covid-19 outbreak under control.
The People’s Bank of China (PBOC) has asked commercial lenders to grant easy credit to so-called “white-listed” companies, including car producer Tesla and chipmaker Semiconductor Manufacturing International Corp, to reinforce their operations, after reeling under 37 days of citywide lockdown.
“The PBOC is encouraging financial institutions to better use the additional liquidity to extend loans to those companies,” Yu Wenjian, director of the financial consumer protection bureau at the central bank, said yesterday.
The financial support could help them accelerate the pace of business resumption, he added.
Guan Xiaojun, deputy director of the Shanghai financial regulatory bureau, said some firms hard hit by pandemic curbs would be allowed to delay loan repayment until the end of this year to help ease the strain on cash flow and production hiccups.
The PBOC lowered major banks’ reserve-requirement ratio by 25 basis points last month, unleashing 530 billion yuan (HK$624 billion) of additional liquidity into the banking system to support the economy as the Omicron variant plagued more than 70 cities nationwide.
Shanghai, the nation’s main commercial and financial hub and gateway for foreign capital and the current epicentre of the outbreak, reported a fall in new Covid-19 cases for the 15th consecutive day.
The city detected 3,975 new infections over the previous 24 hours, 5.7 per cent fewer than a day earlier, according to data released by city officials yesterday. Symptomatic cases fell 15 per cent to 215 while eight patients died, the lowest single-day toll since April 22.
Yesterday evening, the Beijing Centre for Disease Control and Prevention said 22 new cases had been discovered, taking the total to 727 since the Omicron variant surfaced in the capital on April 22. Nationwide, the total cases reported amounted to 4,452.
Cumulative cases in Shanghai’s, a city of 25 million people, stood at 604,000 since the outbreak began on March 1, accounting for the bulk of new infections nationwide.
Shanghai has yet to unveil a time frame for lifting the citywide lockdown that started on April 1.
“Damage to the local economy by the lockdown is huge and the city government is pinning hope on the bellwether manufacturers to play a leading role in recovering losses,” said Ivan Li, a fund manager with Shanghai-based Loyal Wealth Management.
“Thousands will lose their jobs if some of the small and medium sized firms cannot survive the shutdown of more than a month.”
Shanghai published a white list on April 16, allowing 666 manufacturers to reopen their factories to operate under the so-called “closed loop” system – workers essentially sleeping on site to avoid contact with outsiders.
Another 1,188 manufacturers were given the go-ahead last weekend to resume operations.
Most of the white-listed firms involved the automotive, life science and chipmaking industries, dubbed as the backbones of Shanghai economy.
The first batch of express companies including courier giants SF, YTO, STO and Yunda were allowed to restart operations, the Shanghai Postal Administration announced yesterday.
Shanghai targeted a 5.5 per cent growth of economic output this year, slower than last year’s 8.1 per cent. It is set to miss the target owing to the effects of lockdown on production and supply chains, said analysts.
Tesla’s Gigafactory 3 factory, for example, lost about 50,000 vehicles in production since March 28.
Shanghai is strengthening control measures, aiming to achieve the societal zero-Covid goal, a situation when new cases are limited to people already in quarantine.
Rumours about a new variant were false, Zhao Dandan, deputy director of the Shanghai health commission., said “The BA2 variant and the BA. 2 subvariant are still the dominant variants in Shanghai,” he said. “We have not found any new variant that is more transmissible than them.”
Thousands will lose their jobs if some … firms cannot survive the shutdown
IVAN LI, FUND MANAGER