A long halt of enterprises in China can lead to mass bankruptcies

Millions of Chinese companies are now stopped and suffer crazy losses, finding reserves for salvation.

a Private business that provides 80% of jobs in the country and 60% of GDP, has no means for payments on loans and salaries. In the absence of government support in the current quarter most of such companies may fail.

will Not help small and medium-sized businesses in China such incentives from the state, as lower interest rates on loans, increase lending by banks and a decrease in criteria for renewal of work of the enterprises.

But if the government already did everything he could to save the economy, then how can this situation help big business? Until now, banks helped the companies only in the immediate vicinity of the epidemic. Thus, the country's largest Bank Industrial & Commercial Bank of China proposed using 5% of their customers (which is 14 thousand enterprises) in the amount of 5.4 billion yuan, or 770 million $. In early February, several Chinese banks have allocated 254 billion yuan in loans to halt the spread of the virus.

However, the list of companies that can obtain credit is limited by strict requirements and special limits are set by local authorities and banks. To receive funds, the company must prove that at least 10% of the loan will be spent on combating the virus.

Even before the emergence of the virus the majority of small and medium-sized private firms threatened with bankruptcy through a trade war with the United States and credit pressure, which last year reduced the country's economic growth to a thirty-year low. Those at greatest risk are restaurants, travel agencies, airlines, hotels and malls, reports rating Agency Liahne Global Ratings.

Banks also face big problems due to the shortage of capital. If the epidemic drags on, the ratio of problem debts in the banking system of China will increase three times.