As Coronavirus spreads with human and economic losses, China’s central bank takes action!

China's central bank said on Saturday that the country's lenders will tolerate higher levels of bad loans, part of efforts to support companies hit by the coronavirus epidemic.

"We will support qualified firms so that they can resume work and production as soon as possible, helping maintain stable operations of the economy and minimising the epidemic's impact," Fan Yifei, a vice governor at the People's Bank of China, told a news conference. And he added that the problem will be manageable as China has a relatively low bad-loan ratio.

Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, told the same briefing that lending for key investment projects will be sped up.

Separately, Xuan Changneng, vice head of the country's foreign exchange regulator, said China was expected to maintain a small current account surplus and keep a basic balance in international payments.

More than 2,600 new cases of coronavirus infections were confirmed in mainland China, health officials said on Saturday, a day after people returning to the capital from holidays were ordered to quarantine themselves for 14 days.

At least two economists at government-linked think-tanks have projected a loss of up to one percentage point from China's growth rate in the first quarter of 2020 and even for the full year, a potentially troubling development for an economy that was already slowing down.

China's economy grew by 6.1 percent over the whole of 2019, its slowest expansion since 1990. For the fourth quarter, gross domestic product (GDP) grew by 6.0 percent compared with the same period a year earlier.

Some economists say China's debt burden could limit its ability to stimulate the economy.

Research firm S&P Global said in a report in June 2019 that rural Chinese banks face a particularly large problem of bad debts, known as non-performing loans.

"China's rural commercial banks, whose asset quality is the poorest among the nation's lenders, could be sitting on even more bad loans amid a slowing economy and potentially tighter rules on debt classification," S&P said.