China rolls out biggest virus relief measures yet for SMEs, low-income families

China on Tuesday rolled out another batch of robust measures aimed at helping small businesses with hundreds of billions of dollars in extra funding and hundreds of millions of dollars in subsidies for low-income households.

As part of the latest measures to revive the economy battered by the coronavirus epidemic, Chinese banks have been granted 1 trillion yuan ($140.87 billion) in extra re-lending for small and medium-sized enterprises (SMEs), the largest amount of funding so far amid this epidemic, according to a statement following an executive meeting of the State Council, China's cabinet, on Tuesday.

Additionally, financial institutions will extend loans totaling 300 billion yuan to small and micro firms, among other measures. The meeting also asked for further targeted cuts to the reserve requirement ratio, the amount of cash banks are required to take as reserves, to release more liquidity for SMEs.

Other loan programs will also be developed, including using SMEs' business orders and potential revenue as collateral, to help small businesses raise as much as 800 billion yuan in capital by the end of the year.

"It is safe to say that these are the most robust measures since the epidemic to help SMEs, and rightly so," Cao Heping, a professor of economics at Peking University in Beijing, told the Global Times, noting that the move, along with support for low-income families, will help "those most vulnerable" in the country.

As many major businesses have resumed operations, top officials are focused on helping SMEs, which have been hit hard by the epidemic and are one of the country's biggest employers.

Before Tuesday's move, China had already extended extra funding of 800 billion yuan to SMEs by raising re-lending and re-discounting quotas.

Also coming out of the State Council meeting on Tuesday was a measure to increase subsidies to low-income families to help them cope with rising prices of food and other necessities.

The meeting said that China would increase the baseline for such subsidies by 100 percent between March and June and others, such as unemployed workers, will be included in the program. That could mean more than 3.38 billion yuan in extra subsidies for these groups, when added to the 1.69 billion yuan in subsidies delivered in the first two months of this year.

"Helping low-income households and others living under extreme difficulties is absolutely vital during this difficult time because not only will this help these people in dire need, it will also help boost consumption and economic activity," Cao said.

At Tuesday's meeting, top officials also announced several measures to help boost auto consumption, including extending subsidies and tax cuts for purchasing new-energy vehicles (NEVs) for another two years, offering incentives for companies and individuals to replace diesel trucks that fail to meet emission control regulations and cutting sales tax on used cars.

The move was also significant after car sales in the country plummeted 80 percent year-on-year in February. Auto sales account for a big chunk of China's total consumption - the biggest growth driver.