Dealing with a Liquidity Crisis: Economic and Financial Policies in China during the Coronavirus Outbreak

The coronavirus outbreak that began last December sharply curtailed economic activities across China. In response to this sudden, nationwide, and potentially devastating liquidity shock, many coordinated economic and financial policies were initiated by the Chinese authorities to help the economy battle against the epidemic. In particular, policy tools have been designed to support not only industries and regions but also small- and medium-sized firms that were disproportionally hit hard by the outbreak. We then discuss the effectiveness of the policy intervention based on a series of recent surveys which cover a representative sample of public and private firms. Some international comparisons are conducted, followed by discussion of the economic outlook going forward.