Corona's ghost ... millions of Chinese companies threatened with collapse

A report by Bloomberg Agency stated that millions of Chinese companies are threatened with collapse, in light of the measures taken by the Chinese authorities to reduce the spread of the Corona epidemic, which has reached 75 thousand people so far.

Millions of companies across China are struggling to survive, given their declining cash reserves and the banks ’refusal to extend deadlines for paying their debts due in the next few months, which are estimated at billions, the agency said.

A study conducted this month on a number of small and medium-sized Chinese companies showed that a third of the companies surveyed had cash liquidity covering their fixed expenses for one month only, while the other third would run out of cash within two months.

Despite the measures taken by the Chinese government to support companies, which included reducing interest rates, issuing orders to banks to increase loans and easing related standards to enable companies to restore their activities, the owners of many private companies expressed their inability to obtain the necessary financing to meet the outstanding debts, the report said. And pay the salaries of employees.

He added that many companies may have to close their doors forever and exit the market if it does not provide them with the necessary financial support or if the Chinese economy does not witness a sudden recovery.

Chinese economic analyst Lv Changchun predicted a large number of small companies would decline if China failed to contain the virus during the first quarter of the year.

According to the Bloomberg report, Chinese banks have made a contribution to fighting the Corona virus. The Industrial and Commercial Bank of China, the country's largest bank, has provided relief services to about 5% of its small business customers.

The bank was quoted as saying that it has allocated 5.4 billion yuan (770 million dollars) to help companies fight the virus so far.

Last Thursday, estimates by Standard & Poor's Global Credit Ratings said that China's banking sector may face an increase in non-performing loans of up to 7.7 trillion yuan ($ 1.1 trillion) this year, unless the outbreak of the Corona virus begins to recede before next April. .