Shanghai Financial Authorities to Support Businesses Affected by COVID-19 Lockdown

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Shanghai Financial Authorities to Support Businesses Affected by COVID-19 Lockdown

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China’s financial regulators, the People’s Bank of China (BoC) [3988:HK] and the State Administration of Foreign Exchange (SAFE), have rolled out 23 fiscal policies to support epidemic prevention and control and stabilize economic growth, as reported by Shanghai Securities News on April 23. Specifically, BoC’s Shanghai unit has ordered financial institutes to provide preferential loans to businesses impacted by the outbreak and allow them to delay their payments by up to three months. In particular, the policies highlighted financial support for the companies that supply essential goods to residents. The policies also called on financial institutes to meet the financing demand of core enterprises in supply chains.

Shanghai’s lockdown has entered its sixth week under China’s dynamic-zero COVID-19 policy. The city’s outbreak has affected both the financial hub’s economy and people’s accessibility to basic living provisions. In March, Shanghai’s industrial sector witnessed a 7.5% YoY decline in output and an 18.9% drop in retail sales. In the first quarter, Shanghai’s gross domestic product (GDP) grew 3.1% YoY, compared with a 4.8% growth during the same period of last year. According to BoC’s Shanghai unit, the banks within its jurisdiction have issued loans of RMB31bn (USD4.72bn) to 681 enterprises that supply materials used in epidemic prevention and control and loans of RMB62.8bn (USD9.56bn) to over 9,200 firms in the industries hit by the outbreak, including catering, retailing, tourist, transport, and civil aviation.