Since publicly revealing the spread of the coronavirus emanating from the city of Wuhan, the Chinese government has worked to bring “sizeable and targeted” economic aid to entrepreneurs, individuals, and businesses. This aid has particularly focused on companies making necessary equipment for the world to deal with the pandemic, write Chicago Booth’s Zhiguo He and Tsinghua University’s Bibo Liu, in a March survey of China’s responses.

China’s attempts to shore up liquidity, support debt and equity financing, and reduce fees and taxes have helped keep small and midsize companies in business, workers employed, and medical supplies and other necessities in production, He and Liu determine. Nevertheless, they write, the efforts haven’t been able to entirely stem the pain.

To help companies and individuals with liquidity, China ordered banks to extend loans or roll over debts without penalty or negative credit reporting. It eased rules for borrowers that use corporate stock as collateral, effectively loosening margin requirements so that these borrowers aren’t forced to sell equities while valuations are depressed.

On the financial front, the People’s Bank of China (China’s central bank) made sure some companies have access to borrowing by capitalizing regional banks and instructing them to “relend” the money to frontline companies manufacturing supplies or providing logistics used in the COVID-19 fight. Regulators also loosened listing standards for companies seeking equity financing. Finally, the government slashed value-added-tax rates for companies in the Hubei Province (where Wuhan is the capital city), exempted small businesses from paying into China’s social-security system for the time being, and suspended local tolls and tariffs.

In some ways, China’s actions set the tone for the global response to the crisis, as other governments used the same policy tools to confront the shock to their economies. One notable difference is that China didn’t make the same direct cash infusions to workers. The United States passed a $2 trillion relief package that included a one-time $1,200 direct payment to adults making up to $75,000, while the United Kingdom, Japan, and Denmark all promised funds to crisis-hit companies to help cover salaries.

While many economists have criticized China for not including worker payments, the critics are overlooking some important facts, He and Liu write. First, state-owned enterprises in China serve as a financial safety net for many workers. And second, unlike in the US, where many households and small businesses have little to no savings, about 60 percent of Chinese companies have cash on hand to sustain operations, and current employment levels, for three months. “This effectively buys some time for [the] Chinese government to launch a bigger wave of subsidies in the near future,” they write, adding that such subsidies could take the form of coupons, to get people to shop rather than add to their savings.

But the Chinese government’s efforts can’t prevent pain, a fact that almost all countries have to accept. “Chinese firms are largely paralyzed,” the researchers write, and the industrial value added (a measure of private companies’ contributions to GDP) dropped by 26 percent in February as unemployment rose.

The challenge is due in part to the space China occupies in the global economy. Even if the COVID-19 outbreak is contained in China, as the government has reported, the country is an export-heavy economy, and as such, is acutely vulnerable to how well the rest of the world is able to weather the pandemic. If the global recession outlasts the savings that Chinese companies and households have, China could be particularly badly affected.

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