Mar 06, 2020 (China Knowledge) - China will offer ‘benevolent credits’ on a large scale by lower financing costs, and allow deferred loan repayments for qualified businesses, to enable speedy resumption of economic momentum and production. The core to able to increase the acceleration is to help companies to tide over the current financial woes caused by the novel coronavirus outbreak.
At the forefront, China’s central government, as of Mar 3, has forked out RMB 1.25 trillion (USD 180.3 billion) to support enterprises that were actively participating in epidemic prevention and control during the compulsory homestay quarantine. Six largest state-owned commercial banks and 12 national joint-stock commercial lenders together contributed 59 percent of the total supporting such initiative. City commercial banks and privately-owned banks contributed 17.5 percent, according to data from the China Banking Association.
Many businesses that were closed from Lunar New Year, declared public holidays from Jan 24 to 31, and weeks of homestay quarantine have returned to work, said Li Junfeng, director of China Banking and Insurance Regulatory Commission. Li expects to see a higher demand for loans from small companies and individually-owned businesses in March and April.
China has launched targeted measures to assist the micro-, small- and medium-sized enterprises, which have good business prospects but cannot repay loans that are due from between Jan 25 and June 30. The country's top banking and insurance regulator has urged the banks and other institutional lenders for extended repayment plans, and the deadline has been set till June 30.
During this period, the businesses will not be charged any penalty interest on overdue loans and their credit standing will not be affected.
Besides the banking regulators’ heavy-handed intervention to ‘pull up’ the affected enterprises from financial woes caused by the epidemic many other ministries, the government departments in each municipality, province, city and special administrative region (SAR) will orchestrate an all-rounded inter-offices to offer assistance to reduce economic damage.
A plethora of stimulus from across all governments may witness not just a rapid recovery, but possibly a strong enough rebound to reset its GDP’s growth on the positive territory, if not higher than 6%, in 2020.
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