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China’s monetary authorities to keep bank credits on tap to help companies survive the business slump caused by the coronavirus outbreak

  • The bank regulator will ensure that small and medium enterprises (SMEs) get access to the 537 billion yuan (US$77 billion) of credit lined up to help them pull through the business slump caused by the coronavirus outbreak
  • Companies that can restart production as soon as possible will receive the support of the People’s Bank of China, to the extent that a “small increase” of non-performing loans owed to banks will be “tolerated”

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Workers resume work at an electronic components factory after an extended Lunar New Year holiday in Sihong county of Jiangsu province on 10 February 2020. Photo: EPA-EFE

China’s central bank and financial regulators have offered additional funds to banks, prodding them to help manufacturers and businesses pull through an economy that is being hobbled by the twin burdens of a trade war and the nation’s worst health crisis in nearly two decades.

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The bank regulator will ensure that small and medium enterprises (SMEs) get access to the 537 billion yuan (US$77 billion) of credit lined up to help them pull through the business slump caused by the coronavirus outbreak, the China Banking & Insurance Regulatory Commission (CBIRC) said during a press conference in Beijing.

Companies that can restart production as soon as possible when their workers return from their extended Lunar New Year holiday, will receive the support of the People’s Bank of China, to the extent that a “small increase” of non-performing loans owed to banks will be “tolerated,” the central bank said at the same press conference.

“A financial credit support [system] has been offered to enterprises, while help for areas hit hard by the novel coronavirus has been strengthened,” the CBIRC’s vice-chairman Liang Tao said.

The joint press conference, also attended by the State Administration of Foreign Exchange (SAFE) is the latest round of state support that has been lined up to prevent the world’s second-largest economy from going into a tailspin. Economic growth, which already slowed to 6 per cent in the fourth quarter, is likely to sputter further in the three months ending in March, as an estimated 50 million workers were homebound since late January amid a viral outbreak, disrupting production of everything from clothing to toys and crucial components.

The viral outbreak, which sickened more than 66,000 people in mainland China and killed more than 1,500, has put consumer demand under pressure, and exerted a burden on price stability because of the delay in full production, said the Chinese central bank’s deputy governor Fan Yifei.

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