(Yicai Global) May 6 -- China has set out a raft of measures to ease the operating pressures on smaller companies and the self-employed amid Covid-19 outbreaks in the country, including large state-owned banks extending CNY1.6 trillion (USD240 billion) of new inclusive small and micro loans this year.

The lenders should renew loans, extend loan periods, adjust repayment arrangements, and waive default interest for micro, small, and medium-sized enterprises and self-employed households, according to a decision made at an executive meeting of the State Council, China’s cabinet, chaired by Premier Li Keqiang yesterday.

The big six state commercial banks had outstanding inclusive loans in the region of CNY6.6 trillion at the end of last year, up CNY1.7 trillion, or nearly 36 percent, from a year earlier. A single such loan to a small or micro firm is less than CNY10 million (USD1.5 million).

To help Covid-hit firms get back to work as soon as possible, while ensuring stable energy prices along with smooth transport and logistics, efforts to relieve operating pressures need to be stepped up, Wen Bin, chief researcher at China Minsheng Bank, told Yicai Global.

Moreover, domestic demand should be expanded and the recovery of consumption promoted, Wen added, noting that infrastructure investment’s role in shoring up the economy also needs to be given full play.

Two company-related economic Indicators took a tumble last month. The purchasing managers index for manufacturing fell to 47.4 in April from 49.5 in March, contracting for a second month in a row, according to data the National Bureau of Statistics released on April 30. The non-manufacturing PMI dropped to 41.9 from 48.4 the month before.

The State Council also decided that local governments will set up special relief funds for MSMEs and self-employed households to subsidize rents, guarantee fees, and loan interests of those in difficulty. The meeting also emphasized the need to increase credit to foreign trade firms, ensuring production, logistics and employment, and the orderly resumption of cargo transport capacity at seaports and airports.

The reduced ability of China’s foreign trade firms to accept orders may lead to them being placed with other countries, Wen said. China’s new export orders index fell to 41.6 percent in April from 47.2 in March, while Vietnam’s tally hit new highs over the past two months, he noted.

Editors: Dou Shicong, Futura Costaglione