Most small businesses in China have yet to reopen and are struggling with supply chain obstructions after the new coronavirus epidemic triggered a national shutdown, officials said today. Authorities extended January’s Lunar New Year holiday and ordered the closure of schools, factories and railways to try and halt the spread of the outbreak, which has killed more than 2,500 people.
Some industries have since resumed operations but only around three in 10 small and medium-sized enterprises were back to work, industry ministry spokesman Tian Yulong said today. Ongoing transport disruptions make it hard for workers to travel and has prevented the shipment of raw materials, he added.
Officials pledged finance and aid for smaller enterprises today, including preferential tax treatment for transport, catering and tourism businesses. Key industries dominated by larger firms appeared to be in stronger shape. Cong Liang, an official at China’s top economic planning agency, said the steel industry was operating at nearly 70 per cent capacity while rail freight had almost returned to normal.
Small and medium-sized businesses account for around 60 per cent of China’s economy, and the crucial sector is reeling from the impact of the global public health crisis. At least six in 10 small firms risked running out of cash to cover regular payments in the next two months, the Economic Daily state media outlet reported last week, citing a survey by a national representative body for small business.
President Xi Jinping said yesterday the overall economic impact of the virus would be “short-term” and manageable. But economists have forecast a significant hit to overall growth, with Moody’s Analytics revising full-year GDP projections down from 6.1 to 5.4 per cent — the lowest rate in three decades.