Millions of Chinese businesses face turmoil and strife in the wake of the coronavirus outbreak and are looking to the banks for lifelines and loans.
A survey of small to mid-sized businesses (SMBs) in China found that only one-third of respondents would be able to stay afloat with monthly expenses. Another third would run out within two months.
The shortages in workers and customers and the quarantine effects from the virus have many places shut down, such as one car dealership where the director says her firm’s 100 outlets have been closed for roughly a month due to the disease. With cash reserves circling the drain and banks reluctant to extend deadlines on billions of yuan due in debt, she says things have become dire.
Support from banks has been moderate thus far. Banks have mostly set aside funds to directly combat the virus. Industrial & Commercial Bank of China has offered relief to about 5 percent of its clients running small businesses. ICBC said in an email that it approves qualified loans for SMBs “as soon as they arrive.”
U.S. Treasury Secretary Steven Mnuchin said that central bankers will explore options for responding with haste to the quick-spreading virus.
He told reporters it was too early to speak about the long-term impact of the virus. But he said more would be known in the coming weeks, promising that “various different options” would be explored.
Bank of Japan Governor Haruhiko Kuroda said the bank is fully prepared to begin actions to prevent the impact of the virus on the country’s economy.
Kuroda said the bank’s initial projection that Japan’s economy would recover at a steady pace was still in play. He said an expected rebound in growth later this year should help with that‚ too.
He added that while the bank is prepared to ease monetary policy if it has to, it doesn’t see an immediate need for that.
The epidemic has cast a pall over the G20 meeting this weekend, with leaders all looking at how to navigate economic recovery.