Published on : 02/09/2020 – 20:16
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The new coronavirus has killed more than 800 people, almost all of them in China. The results now exceed that of SARS worldwide. WHO nevertheless said this weekend that it saw “good news”: the daily number of infections has stabilized. But it is still too early to conclude that the peak of the epidemic has passed. And China’s efforts to halt its expansion continue. The Central Bank will release $ 43 billion.
This aid is directed to companies involved in the fight against the epidemic. A first tranche of special funds will be offered this Monday. Funds which will help financial institutions to grant loans to these key companies. The process will be closely monitored by the Central Bank, which has promised sanctions for breaking the rules.
In total, nine large national banks and local banks in ten provinces and cities will be able to share this envelope. They will have to study loan applications very quickly and make the money available within two days.
For its part, the province of Hubei promises to cover 30% of the electricity bills of small and medium-sized enterprises which supply medical equipment.
Beyond the companies that have become strategic for the occasion, Beijing seeks to limit the impact of the epidemic on the entire economy. The Central Bank called on financial institutions to avoid “automatically” stopping lending to industries and small and micro enterprises. A week ago, it also announced the injection of $ 173 billion into the financial markets to support the economy.
Many provinces and municipalities have also taken accompanying measures, tax deductions for example.
■ What consequences for emerging economies ?
China exports a lot, but it is also an avid customer of raw materials. In the event of a lasting crisis, emerging countries could find themselves without the engine that drove their exports for 20 years. China concentrates ” nearly 50% of global steel demand “Explains a Coface economist. Russia, South Korea and even Turkey could therefore be affected.
Natixis, for its part, believes that Asian countries which supply their large neighbor, such as Malaysia, will be the first to be affected.
Another region which would be particularly penalized: Latin America, China being the main trading partner of Brazil and Chile, among others.
Already, shipments of Chilean fruit could not be delivered due to difficulties in ports. No problem, however, to send the copper, but Chile, like Peru, is already suffering from the effects of the coronavirus which has plunged copper prices by 10%. Fears of slowing demand also drove oil prices down.
As for Brazil, its companies are preparing for possible stock-outs of components. Its mining and oil companies may not be spared. Finally, soybean revenues may decline, but not only because of the coronavirus.
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