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China takes major steps to prop up coronavirus-hit economy

FILE PHOTO: A woman wearing a mask walks past a quarantine notice about the outbreak of coronavirus in Wuhan, China at an arrival hall of Haneda airport in Tokyo

(Reuters) - Chinese policymakers have implemented a raft of measures to support an economy jolted by a coronavirus outbreak that is expected to have a devastating impact on first-quarter growth.

The People's Bank of China (PBOC) is attempting to restore investor confidence and as global markets shudder at the potentially damaging impact of the virus on world growth.

Below are some fiscal and monetary policies put in place by the government and the central bank since the outbreak:


- On Feb. 3 and Feb. 4, the People's Bank of China (PBOC) pumped in 1.7 trillion yuan ($242.74 billion) through open market operations.


- China's central bank unexpectedly cuts some key short-term money market interest rates, and analysts predict more are likely. A central bank adviser says the possibility of a cut in the country's benchmark loan prime rate (LPR) on Feb. 20 has significantly increased.


- The central bank said on Feb. 6 that it will use tools such as targeted reserve requirement cuts, re-lending and rediscount, to support key sectors.

The cost of special re-lending, at 300 billion yuan, from the PBOC to commercial banks is relatively low, it said.

The PBOC has told banks to cap rates on loans for selected firms at 3.15%, 1 percentage point lower than the latest LPR.


- China's finance ministry said on Feb. 9 that all levels of government had allocated a total of 71.85 billion yuan ($10.26 billion) as of Saturday afternoon to fight the virus.


- China's finance ministry said on Feb. 1 materials directly used for epidemic control will be exempt from import tariffs from Jan. 1 to March 31.

Imports of donations including ambulances and disinfectant products will also be exempt from tariffs, value-added tax and consumption tax, the finance ministry said.


- China's bond market regulator said on Feb. 5 it will actively support debt financing and debt issuance by companies heavily affected by a fast-spreading coronavirus outbreak.

The National Association of Financial Market Institutional Investors (NAFMII) also said it would support companies that have participated in containing the spread of the virus.

The association also said it would allow virus-hit firms to issue bonds and raise funds via other instruments including asset-backed notes.



(Compiled by Saumyadeb Chakrabarty and Bernard Orr)