Almost 50 per cent of large retailers and 60 per cent of restaurants are in serious difficulty. Interest rates remain unchanged. In some provinces, coupons are given to people to encourage them to buy. Private spending and energy production are down sharply.
Beijing (AsiaNews/Agencies) – Almost half of China’s large retailers could run out of liquidity in six months because of the coronavirus outbreak. The same is true for restaurants, 60 per cent of which cannot cover costs, especially labour and rent, this according to Bloomberg.
Millions of Chinese businesses could close unless they get help from banks. Despite this, the People’s Bank of China (PBOC), the country’s central bank, left the one-year loan prime rate (LPR) unchanged at 4.05 per cent, whilst the five-year LPR remained at 4.75 per cent.
Most analysts were expecting a cut like in the United States. The unchanged rate suggests policymakers may believe that the recent measures are enough to help the economy in the short term.
So far, the PBOC has injected more than a billion yuan (US0 billion) and cut the amount of reserves commercial banks are required to hold. The government has also told the banks to provide easy loans to businesses.
Locally, action is also being taken to stimulate economic recovery. In some provinces, “consumption coupons” are being handed out so as to indirectly fund restaurants and shopping malls.
Overall, COVID-19 has reduced China’s economic activity. Most analysts expect negative growth in the first quarter of 2020, and a sharp slowdown throughout the current year.
Official data published on Monday show that retail sales in January and February fell by 20.5 per cent compared to the same period last year.
Electricity production fell by 8.2 per cent, a sign that manufacturing is struggling to recover.