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February 16, 2020

China says lenders to tolerate higher bad loans from virus-hit firms

Business

February 16, 2020

Ag AFP

BEIJING: China’s central bank said on Saturday the country’s lenders will tolerate higher levels of bad loans, part of efforts to support firms hit by the coronavirus epidemic, Reuters reported.“We will support qualified firms so that they can resume work and production as soon as possible, helping maintain stable operations of the economy and minimizing the epidemic’s impact,” Fan Yifei, a vice governor at the People’s Bank of China, told a news conference.

He added that the problem will be manageable as China has a relatively low bad loan ratio.

Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, told the same briefing that lending for key investment projects will be sped up.

Separately, Xuan Changneng, vice head of the country’s foreign exchange regulator, said China was expected to maintain a small current account surplus and keep a basic balance in international payments.

More than 2,600 new cases were confirmed in mainland China, health officials said on Saturday, a day after people returning to the capital from holidays were ordered to quarantine themselves for 14 days.

Meanwhile, China is disinfecting and isolating used banknotes as part of efforts to stop the spread of the new coronavirus that has killed more than 1,500 people, AFP reported.

Banks use ultraviolet light or high temperatures to disinfect yuan bills, then seal and store the cash for seven to 14 days -- depending on the severity of the outbreak in a particular region -- before recirculating them, China´s central bank said at a press conference.

The virus, which has infected more than 66,000 people in China and spread to more than two dozen other countries, has sparked a rush to disinfect public places and minimise contact between people.

Pharmacies across the country sold out of disinfectants and surgical masks in just days after a lockdown was announced in late January on Wuhan city, where the COVID-19 illness is believed to have emerged.

Office buildings have installed packets of tissue in elevators that tenants are encouraged to use when pressing buttons, while ride-hailing company Didi exhorts drivers to disinfect their cars daily.Fan Yifei, deputy governor of China´s central bank, said Saturday that banks

have been urged to provide new banknotes to customers whenever possible.

The central bank made an "emergency issuance" of four billion yuan in new notes to Hubei province, the epicentre of the outbreak, prior to the recent Lunar New Year holiday, Fan added.

The measures are intended to "secure the public´s safety and health when using cash", Fan said. But it is unclear how wide an impact the central bank´s disinfection work will have, with increasing numbers of Chinese people preferring mobile payments over cash in recent years.

In 2017, nearly three quarters of Chinese respondents told an Ipsos survey they could survive a whole month without using more than 100 yuan in cash.

According to the World Health Organization, COVID-19 can be spread through contaminated objects in addition to droplets and direct contact with infected patients.