Mitigating Epidemic Fallout

China has introduced policies to boost small and medium-sized firms, which have borne the brunt of the epidemic.

- ZHANG XIN

THE spread of the novel coronavirus nearly brought the Chinese economy to a standstill in January 2020 as the country focused on combatting the epidemic. As part of the containment measures, the seven-day Spring Festival holiday beginning on January 24 was also extended, leaving urban factories closed when thousands of migrant workers were kept at home. The epidemic then began to subside after prompt preventative measures were put in place during the month of February. Production resumption became as an important agenda as the epidemic prevention and control. In the process, difficulties faced by industrial enterprises, especially small and medium-sized enterprises (SMEs), have become a matter of grave concern to the government.

SMEs Needing Help

SMEs, which account for 99 percent of total enterprises in China, are a significant segment of China’s economy. They contribute about 60 percent of the national GDP, 50 percent of tax revenue, 75 percent of technological innovation, and 80 percent of new products. However, SMEs, being especially prone to risks, were hit the hardest during the epidemic.

According to a survey conducted jointly by Tsinghua University and Peking University in mid-February, more than half of the 995 SMEs interviewed saw their operating income drop by more than 20 percent, while most of them face a cash crunch.