China’s Covid-19 lockdowns still weigh heavy on small firms, despite promise of more bank support

Chinese authorities have begun rolling out a raft of measures to help micro- and small-enterprises (MSE), including extending loan repayments

But that may not be enough for the country’s MSEs, who are struggling with revenue and cash flow due to wide-ranging coronavirus restrictions

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China’s small firms have borne the brunt of weakening demand and repeated lockdowns under Beijing’s stringent zero-Covid policy. Photo: Bloomberg

Published: 8:00pm, 19 Nov 2022Updated: 9:40am, 21 Nov 2022

Not even a three-month grace period on his fast-maturing loans is enough to brighten the day of small business owner Jason Wang.

With debts of more than 7 million yuan (US$982,000) to multiple banks, the extension is of little help when repeated Covid-19 lockdowns are disrupting the cash flow of his medical supply company.

“You still have to pay it back when the time comes,” said the resident of Liaoning province in China’s northeast.

Wang’s company is one of more than 40 million micro- and small-enterprises (MSE) regarded as the backbone of China’s private sector and a major source of jobs. This segment of the economy has borne the brunt of weakening demand and repeated lockdowns under Beijing’s stringent zero-Covid policy. Many small firms are also struggling to borrow from banks as the economy slows.

To help them reduce their financing burden, authorities have begun rolling out a raft of measures to help. Banks have been urged to offer more credit support by increasing lending of “inclusive loans” tailored for MSEs, which are capped at 10 million yuan.