China Funnels Credit Support for Companies Hit by Coronavirus

Last Saturday, February 1, 2020, the Central Bank of China announced its plans to provide additional credit and financial support for companies hit by the coronavirus epidemic. To aid companies and prevent an economic slowdown, the central bank of China intends to funnel in 1.2 trillion yuan.

Under the said initiative, the People’s Bank of China is slated to make investments in varying securities and industries, states The Guardian. This would grant companies looking for cash and monetary aid the help they need, while also preventing the said firms from selling their businesses following the coronavirus outbreak.

The securities and investment opportunities that the PboC is planning to acquire will range from businesses from the retail and wholesale sector to catering, logistics, and transportation firms, reports Reuters. The additional source of credit support will also cover tourism sectors in the country.

Credit Support for Companies Hit by Coronavirus

Following the announcement, the People’s Bank of China revealed that it would immediately start the operations come Monday, February 3, 2020. This would reportedly allow a “reasonable and abundant liquidity” within its system and provide a more stabilized form of currency, notes The Guardian.

Apart from targetting the virus-hit business, the PBoC will also provide additional monetary funding for key institutions that are directly fighting against the Wuhan coronavirus. These include hospitals and other medical organizations, as well as companies and businesses fighting the disease on the frontlines. For these sectors, the People’s Bank of China will “maintain reasonable and sufficient liquidity,” while also urging financial institutions to extend credit for these medical firms.

As per Channel News Asia, other financial institutions are also expected to provide flexible repayment terms and additional credit loans for companies hit by the disease.

With the coronavirus expected to affect the Chinese economy, market analysts at Nomura say they can “expect more detailed measures in the coming days. RRR cuts, rate cuts, various lending facilities, and open market operations all are possible options,” reports Reuters.

Due to the coronavirus outbreak in the country, the economic growth of China may drop by 5 percent, states Reuters.