(Yicai Global) March 13 -- Nearly 70 percent of China's working class are unable to maintain their financial health as the Covid-19 epidemic continues to sweep the nation, according to a report from the Renmin University of China.

More than 2,000 workers and micro companies completed its survey on income, budgeting, debt and risk management, and the majority are in poor financial health, the university's Chinese Academy of Financial Inclusion said.

The coronavirus is dragging down personal earnings and bumping up outgoings among the working class, who do not have enough in savings, the report added. Some 70 percent believe they are going to lose money and 37 percent predict their household expenses will rise, while just 60 percent have an emergency fund that will allow them to maintain their pre-virus living standards for three months. 20 percent think they could last for half a year.

At least 530 million Chinese, more than a third of the population, in 180 million households are classified as low income and earn less than CNY2,000 (USD285) a month, according to the academy. More than 300 million Chinese households, about 63 percent, rely on sole trading or family-run businesses.

Bad for Business

It is these smaller companies that are really feeling the pinch from the virus, with most micro and smaller companies reporting they're current working capital is between CNY10,000 (USD1,423) and CNY1 million less than requirements. More than half of the surveyed firms are hoping to secure loans for at least one year, the report added, saying 30 percent need to apply for extensions and 9 percent are unable to repay some debts, which will likely end up as non-performing loans.

Many companies refuse to throw in the towel, however, with more than half believing they can get back to normal within three months and 95 percent predicting the same within half a year. Most are banking on beneficial fiscal policies over monetary policy changes to keep costs down, with nearly 50 percent of respondents saying government subsidies and anti-epidemic resource provisions are reducing operating expenses the most.

The epidemic has spelled an inevitable loss for the majority of these companies, though several that operate online are managing to ride it out and are inspiring brick-and-mortar businesses to go digital.

Micro and small business operators typically struggle in emergency situations, but the emergence of online business models and digital financial services have helped them a lot, the report said, adding that they have long-term customer resources and more than 10 years of experience in their field, so most are still confident.

Editor: James Boynton