With much of China’s economy still idled as authorities try to contain an epidemic that has infected more than 75,000 people, millions of companies across the country are in a race against the clock to stay afloat, reported Bloomberg.
A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months. Without more financial support or a sudden rebound in China’s economy, some may have to shut for good.
“If China fails to contain the virus in the first quarter, I expect a vast number of small businesses would go under,” said Lv Changshun, an analyst at Beijing Zhonghe Yingtai Management Consultant Co.
As a group, Chinese banks had offered about RMB 794 billion ($112 billion) in loans related to the containment effort as of Feb. 20, according to the banking industry association, with foreign lenders such as Citigroup Inc. also lowering rates. To put that into perspective, China’s small businesses typically face interest payments on about RMB 36.9 trillion of loans every quarter.