Shanghai's financial system helps firms restart

With its citywide lockdown, Shanghai's financial professionals and regulators have stepped up efforts to help companies resume production and operations as soon as possible.

They have been working nonstop during the latest COVID-19 outbreak to ensure stable operations of various markets as well, observers said.

For instance, the Shanghai Office of the China Banking and Insurance Regulatory Commission has set up two independent mechanisms. One monitors the credit supply and loan renewal at the local financial institutions. The other watches the turnover and wages of more than 4 million company accounts in the city, said Jin Zishou, head of the Inclusive Finance Division of the CBIRC's Shanghai Office.

By evaluating the pandemic's impact on the financial system and companies, the local financial regulators can facilitate systematic resumption of operations and production at companies in Shanghai, he said.

On April 21, the CBIRC's Shanghai office released a guideline of 15 favorable financial measures to help companies resume production.

More credit will be provided to companies operating in segments like livelihood supplies, pandemic control and medicine. For certain business segments hard hit by the pandemic, like tourism, restaurants, retail, transportation, logistics, entertainment and exhibitions, banks should be meticulous before deciding to suspend fresh loans as well as loan repayments, said the guideline.

For the small and micro-sized enterprises severely affected by the pandemic but still willing to hire new employees later this year, banks should extend loans to help them weather the current difficulties, the guideline stated.

CBIRC data showed the balance of inclusive loans provided by major banks in Shanghai had exceeded 640 billion yuan ($97 billion) by the end of the first quarter. Local commercial banks have also extended 200 billion yuan worth of loans by allowing companies to delay repayment of principal.

The Lin-gang Special Area, which has been part of the China (Shanghai) Pilot Free Trade Zone since August 2019, announced on April 28 that discount loans will be provided to companies in the area, especially the pandemic-hit small and micro-sized ones and providers of livelihood supplies. Such companies will enjoy a 50 percent discount on interest paid on new loans secured this year. A maximum 400,000 yuan of discounted interest is allowed every six months, said the local administrative committee.

In early April, Shanghai Rural Commercial Bank introduced 20 inclusive finance measures, including 20 billion yuan worth of bank loans to help companies affected by the pandemic and another 10 billion yuan toward special financing directed at companies providing basic supplies in the city.

Up to 120 small and micro-sized enterprises have received inclusive loans from Bank of China's Shanghai branch over the past few months.

Shanghai is home to 14 national financial markets covering, among others, stocks, bonds and futures. Annual trading value of all financial products exceeded 2,500 trillion yuan in 2021. Most trading venues, such as the landmark Shanghai Stock Exchange, had seen professionals working in different shifts in late March when the city started its phased lockdown.

On top of that, the China Foreign Exchange Trade System, which is headquartered in Zhangjiang of eastern Shanghai's Pudong New Area, has built remote trading rooms for nearly 200 financial institutions. The system's daily trading value reached 7.7 trillion yuan in April, which is on a par with the daily figure in the first two months of the year.

Trading, settlement and technology staff of the Shanghai Futures Exchange started to work in closed loops in early March to ensure the stable operation of the market. To minimize the negative impact of the pandemic and inject more vitality into the market, the exchange has exempted or reduced commissions for all its member companies, with the total value approaching 23.6 million yuan during the first quarter of the year.