Nearly half a million companies in China shut shop as Covid-19 batters economy: Report
Nearly half a million firms in China have shut shop due to the coronavirus pandemic which devastated the country in the past few months, the local media there reported.
Media outlets in China quoted data from Tianyancha, a commercial database that compiles public records, to say that 4,60,000 firms closed permanently in the first quarter ending March.
The data also showed that the pace of new firms being established has also slowed significantly, media reports said.
Mainland China reported a drop in the new coronavirus cases after closing its borders to virtually all foreigners to curb imported infections, while the central city of Wuhan, the epicentre of the outbreak, saw no new deaths for the first time.
Overall, China is stepping up its domestic counter-cyclical measures to combat the epidemic’s hit. The People’s Bank of China (PBOC) on March 30 lowered the seven-day reverse repo rate to 2.20 per cent from 2.40 per cent, the largest cut in nearly five years. The PBOC cut its one-year loan prime rate by 10 basis points to 4.05 per cent on February 20, after various liquidity injections and other policy easing earlier in the year.
The PBOC cut the amount of cash that banks must hold as reserves for the second time this year on March 13, releasing 550 billion yuan.
The government is set to unleash trillions of yuan of fiscal stimulus. It aims to spur infrastructure investment, backed by as much as 2.8 trillion yuan of local government special bonds, according to news agency Reuters. The national budget deficit ratio could rise to record levels, Reuters reported quoting sources.
The ruling Communist Party’s Politburo had said on March 27 that it would step up macroeconomic policy changes and pursue more proactive fiscal policy. It called for expanding the budget deficit, issuing more local and national bonds, guiding interest rates lower, delaying loan repayments, reducing supply-chain bottlenecks and boosting consumption.
Beijing had earlier introduced various small measures and fiscal expenditure such as tax breaks, reduced power charges and fee reductions.