While the Coronavirus outbreak continues to cause concern across the globe, there are growing anxieties about its long-term effect on the economy of China which has already started showing cracks.

China has been hit by viral epidemics before and felt its sting on its economy. The 2003 SARS outbreak was estimated to have cost the country some $40 billion. However, China’s economy has grown far larger since 2003, and the impact of the Coronavirus outbreak could be significantly worse.

Chinese firms are nearing collapse if they do not receive some sort of assistance or bailout from the banks. [Bloomberg] This has put massive amounts of pressure on the banks and leaves many asking how much longer the economy can hold out.

China-Based Companies Running out of Time

According to the Bloomberg report, a survey of small to medium-sized Chinese companies conducted in February shows that over 30 percent of them admit to only having enough cash reserves to keep running for a month. while another third of the businesses claim they can only hold out for two months.

[jnews_block_28 second_title=”Featured Stories” header_type=”heading_5″ number_post=”4″ boxed=”true” show_border=”true”] More concerning is that only a third of firms have been able to resume operations amid the spread of the virus due to complicated local government approval procedures as well as a lack of employees and financing. In order to try and help some of the companies, the government has cut interest rates, ordered banks to boost lending, and loosened the rules that determine if a company can resume normal operations. Even still, many of the country’s companies are saying they will not be able to meet deadlines for debt and salary.

“If China fails to contain the virus in the first quarter, I expect a vast number of small businesses would go under,” said Lv Changshun, an analyst at Beijing Zhonghe Yingtai Management Consultant Co.

Bitcoin: The Missing Safe Haven

What is even more concerning for the Chinese citizens looking to stay afloat, is their access to an ever increasingly popular digital safe haven has mostly been cut off. Bitcoin is emerging as a potential hedge in times of economic uncertainty, and with the Coronavirus fears, its designation as a safe haven is being accelerated.

China has, since 2017, tried to shut the door on Bitcoin for its citizens, as is evident from this report in the Asia Times remarking on how successful the clampdown had been. In July of 2018, the Chinese yuan made up less than one percent of transactions for Bitcoin, down from a high point of over 90 percent of global trades.

Citizens of China have seen their avenues to a potential safe-haven asset taken away during this economic catastrophe because of their government’s distrust of the decentralized cryptocurrency.

Fears of a recession have seen Bitcoin become a talked about potential safe haven in the mainstream media, but had the coin been prevalent in China amid this Coronavirus-induced downturn, it would have been interesting to see how successful the digital asset could have been.