China commits $16bn to fund fight against coronavirus

Chinese officials expect government revenue and consumer demand to recover once the outbreak is curbed.

Coronavirus China
Nurses distribute meals to patients at a temporary hospital at Tazihu Gymnasium in Wuhan, in China's Hubei province, which was the initial epicentre of the coronavirus outbreak [File: Yuan Zheng/EPA]

Various Chinese government entities have allocated 110.48 billion yuan ($16bn) in coronavirus-related funding as of March 4, Vice Finance Minister Xu Hongcai said at a news briefing on Thursday.

Of that amount, about 71.43 billion yuan ($10.3bn) has been used, leaving 39.05 billion yuan ($5.63bn) to spend, Xu said.

China would ensure the smooth operation of local governments amid the coronavirus outbreak and the finance ministry will ensure the funding needs of Hubei province, the epicentre of the outbreak, Xu said.

He warned that the outbreak could temporarily affect the government’s revenues but he expected the pressure on the government’s fiscal position to ease as the economy recovered.

He added that Beijing would roll out targeted and phased measures to help virus-hit sectors, without elaborating.

The virus has also limited employees’ movements, caused blockages in international logistics and reduced global trade, especially of intermediate goods, said Li Xingqian, director of the foreign trade department at the commerce ministry in a separate media briefing on Thursday.

But consumer goods sales stabilised in late February as people gradually returned to work after efforts to curb the outbreak had succeeded in some places, Wang Bin, another commerce ministry official, said at the briefing.

Li said exporters are facing great difficulties maintaining orders, securing market share and delivering on their contracts, but fluctuations in trade growth, triggered by a public health emergency, are still within a reasonable range.

Amid concerns that the spread of the virus in South Korea and Japan could mean a second wave of disruption at Chinese factories, he added that imports of electronic products and parts – for which China relies heavily on its neighbours – have so far maintained steady growth.

National imports and exports have shown positive momentum as businesses reopen, said Li.

China has said it would study phased tax cuts to help struggling small- and medium-sized firms facing difficulties because of the outbreak.

China saw an uptick in new coronavirus cases on Thursday driven by more cases in Wuhan, the provincial capital of Hubei, where the virus is believed to have emerged in a market late last year.

Some local governments were facing funding difficulties, said Liu Jinrun, an official at the finance ministry, during the briefing.

Xu said fiscal revenues in Hubei were relatively stable in January, but the situation worsened in February, when the province only had “sporadic” revenue.

He added that the ministry is stepping up transfer payments to local governments, especially those hit hard by the virus outbreak.

Source: Reuters