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Hundreds of Chinese companies seek billions in loans to fight coronavirus

Hundreds of Chinese companies seek billions in loans to fight coronavirusHundreds of Chinese companies seek billions in loans to fight coronavirus

More than 300 Chinese companies, including Meituan Dianping, China’s largest food delivery company, and smartphone maker Xiaomi, are seeking bank loans totaling at least 57.4 billion yuan ($ 8.2 billion) to mitigate negative business impact caused by the outbreak of the coronavirus epidemic.

Sources told Reuters on Monday that many companies, including China’s largest transportation provider, Didi Chuxing Technology Co, Megvii Technology Inc and Qihoo 360 Technology Co, were either involved in the fight against the epidemic or were hit hardest by it..

China fights to contain the epidemic that claimed lives more than 900 people and infected more than 40,000.

The authorities have cordoned off cities, suspended transport links and closed crowded facilities, which has a negative effect on economic growth, which, according to some experts, could slow down to 5% or less in the first quarter of this year..

Massive plant closures will slow down production and affect global supply chains.

Companies seeking loans in the Chinese capital are likely to receive expedited permits and preferential rates, sources said, who obtained copies of company name lists sent to banks located in Beijing by the city government’s finance bureau..

There is no official data yet showing the total amount of loans Chinese companies are seeking across the country to weather the outbreak..

The two lists also indicated the amount of loans requested by companies, including pharmaceutical firms and restaurants. The bureau previously reported that companies seeking financial support can ask for help..

«Banks will be critical in lending decisions», – said one of the sources. «Interest rates are likely to be at the level of those offered to the largest clients of banks».

According to the lists, Xiaomi, the fourth largest smartphone manufacturer in the world, is seeking 5 billion yuan ($ 716.24 million) in loans to manufacture and sell medical equipment, including masks and thermometers..

Meituan Dianping seeks 4 billion yuan ($ 572.99 million), in part to fund free food and deliver it to medical staff in Wuhan, the epicenter of the outbreak in central Hubei province.

Private company Didi Chuxing, «severely affected by the coronavirus outbreak», seeking 50 million yuan ($ 7.16 million).

According to the exchange, Xiaomi’s revenue for the quarter ended in September slowed, but gross profit for the quarter rose 25.2% to 8.2 billion yuan on an annualized basis. Meituan Dianping has been profitable for the past two quarters since being listed in Hong Kong in Summer 2018.

Beijing-based Internet security company Qihoo 360 seeks 1 billion yuan ($ 143.25 million) to buy medical products and fund development of applications to track and contain the virus.

Facial recognition startup Megvii has applied for 100 million yuan ($ 14.32 million) to develop new technology, including means to improve the accuracy of identification in crowds of masked people.

Beijing-based Megvii tried to raise funds through an initial public offering in Hong Kong but faced obstacles due to being blacklisted by the US trade for its alleged involvement in Beijing’s crackdown on Uyghurs in China’s Xinjiang region … At the time, the company stated that «strongly objects» against moving the USA.

To help combat the impact of the virus, China’s central bank has orchestrated cash flows into the banking system to bolster market confidence. Banking and insurance supervision also urged lenders to cut interest rates.

Local bureaus of the National Development and Reform Commission (NDRC) in charge of economic planning and the Ministry of Industry and Information Technology (MIIT) also list and offer support to affected companies.