Categories: Market Overview

For some Chinese businesses, there’s no going back to life before the coronavirus

As the second quarter begins in China, it’s an altered landscape in the coronavirus-stricken economy with businesses that remain shut — some for good. The official resumption of work rate has crept steadily higher since early February, when more than half the country extended a Lunar New Year holiday by at least a week in an effort to limit the spread of the disease known officially as COVID-19.

As of March 29, small and medium-sized enterprises nationwide had resumed work at a rate of 76.8%, up from around 60% about two weeks earlier, according to the Ministry of Industry and Information Technology’s monitoring of about 2.2 million smaller businesses’ use of cloud computing platforms.

But it’s unclear how quickly or whether that figure can reach 100%. “Further increase in the resumption of work rate for medium, small and micro-sized enterprises may hit a bottleneck, because some small, medium and micro-sized enterprises may have collapsed, and the data may not increase much,” Bruce Pang, head of macro and strategy research at China Renaissance, said Monday, according to a CNBC translation of his Chinese-language comments.

As of Monday, more than 429,000 business have dissolved or suspended operations for the year so far, according to analysis from Qichacha, which runs a Chinese business information database. Wholesale and retail had the largest share of business that dissolved operations, at about 38%, the data showed. Leasing and business services were second, at roughly 15%, followed by manufacturing, at around 8%. However, relative to the more than 126 million businesses still operating, the closures accounted for well below 1%, according to the data.

In the meantime, China’s largest companies, such as major industrial enterprises, have official resumption of work rates of 98.6% as of March 28, with a slightly lower rate of workers returning to work at 89.9%. Those major industrial businesses have an annual revenue of at least 20 million yuan from their primary business operations. Some regions have also reported 100% resumption of work rates for specific industries. For example, Guangdong province said that as of the end of March, 77 publicly listed companies had a resumption of work rate of 100%.

For some Chinese businesses, there’s no going back to life before the coronavirus, CNBC, Apr 2

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This team of professional journalists announces the most interesting and influential articles from the major financial media as a brief summary. All such news may have sufficient potential to affect the course of trading assets.

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