On February 29, Professor Luo Zhi, director of The China New Private Economy Research Center at Wuhan University, and her team jointly released theAnalysis Report on the Operation of Hubei Enterprises under the Epidemic Situation together with Wuhan Federation of Industry and Commerce. The report has drawn wide attention from the domestic media. Luo Zhi has been interviewed by China News Weekly, China Business Daily, China Business News and other well-known media and platforms in China. The report has also been quoted and reprinted many times by Southern Metropolis Daily, Sina Finance and Economics, Sohu.com, Toutiao, NetEase News, China.com and many domestic media platforms.

Analysis and Policy Suggestions of Enterprises in Hubei Province under the Impact of the Epidemic,Three Cases of Wuhan Enterprises in the Epidemic: Most worried about customer loss, all hope to resume work as soon as possible, andOperating Accounts of a Small and medium-sized Entrepreneur in Wuhan, written by Luo Zhi, have been successively published on the Paper News. The team also submitted two consulting reports to the relevant government departments under the theme of"Two hands for Epidemic Prevention and Development, two hands for Hard”: Policy Suggestions based on the analysis report of Hubei enterprises' operation during the epidemic andHubei Province, especially Wuhan, urgently needs to apply for medium and long-term policies from the central government to help post-epidemic reconstruction. The following is the main content of this series of studies.

1. More than 50% of Private enterprises in Hubei have difficulties in operation

From February 24 to 26,China New Private Economy Research Center of Wuhan University, in cooperation with Wuhan Federation of Industry and Commerce, conducted a 3-day questionnaire survey of 573 enterprises (mainly enterprises in Wuhan, including 13 state-owned enterprises, 558 private enterprises and 2 foreign-funded enterprises) in Hubei Province. The research results show that:

(1) The survival state of enterprises is worrying. At present, 97.21% of enterprises have completely or partially ceased production, and 95.64% of them believe that the epidemic has a great or very great impact on their operations. In the absence of resumption of work or production capacity, 57.59 percent of private enterprises could not survive for more than three months.

(2) The multiple difficulties faced by businesses. More than 70 percent of the enterprises suffer from capital shortage and rising operating costs; more than 50 percent suffer from lack of epidemic prevention materials, excessive rent pressure and employee turnover; and 40 percent of the enterprises report that the market has been seized.

(3) Government support policies are not fully implemented. Although the country has introduced a lot of financial policies and tax preferential policies to support the steady and healthy development of enterprises, the implementation effect of these policies is not obvious. Only 11.87 percent of enterprises obtain financial support from Banks, and 9.08 percent apply for bank credit support but are not approved. Only 23.21 percent of companies receiving bank loans have seen their lending rates cut.

2. The orderly resumption of work in Hubei as soon as possible is conducive to enhancing enterprise confidence

According to the analysis of the report, with the continuous extension of the time of closure of cities and prefectures in the province, the survival of enterprises and the plight of the people's employment are highlighted. At present, the main idea of the national epidemic prevention and control work is to control the epidemic in a local area, namely Hubei province. However, decentralized control does not mean that the province must remain motionless. An extra day's delay in the resumption of work will reduce the probability of survival of enterprises, especially small and medium-sized private enterprises, and increase the probability of occurrence of various risks.

The report suggests that under the premise of focusing on epidemic prevention work, Hubei should allocate and transfer manpower to organize work in different regions, in batches and in an orderly manner. The government should gradually make arrangements and arrangements for resuming work, clarify the criteria for starting work and reduce the approval procedures for starting work, so that enterprises have rules to follow and entrepreneurs can see hope and regain confidence. At the same time, we will coordinate with each other in Hubei province to restore logistics and allow employees in Hubei province to work (the labor force will not leave the province). Through scientific epidemic prevention and strict monitoring, we will realize "two hands for epidemic prevention and development, two hands for hard work" and avoid various risks such as economic downturn after immunization.

In principle, areas with a low risk of the epidemic will be given priority to resume work, high-tech industries, industries with a high degree of automation, capital-intensive industries and industries involved in foreign trade, enterprises with staff dormitories and cafeterias and prefectures and cities where the epidemic has been brought under control will be given priority to resume work. In the later stage, as long as the epidemic prevention standards are met, enterprises should also be able to resume work. For qualified enterprises, online work is encouraged.

3. Small and medium-sized enterprise support policies need to be more specific

The report points out that it is very difficult for various support policies to be implemented in private enterprises, especially micro, small and medium enterprises. In addition, some of the tax breaks and social security benefits introduced by the state cannot solve the current plight of enterprises' lack of cash flow, which is also an afterthought for many enterprises. However, it remains to be seen whether companies will survive the winter.

In order to accurately assist private enterprises, especially small and medium-sized private enterprises, the research group suggests that the government fully support and help small and medium-sized private enterprises to meet the epidemic prevention standards, and promote the resumption of work and production of small and medium-sized private enterprises. According to the tax amount of private enterprises in 2019, the portion retained by local governments shall be returned in a certain proportion in a directional or regressive manner. For large and high-quality private enterprises facing difficulties, local governments and local commercial Banks provide one-to-one assistance. We will introduce more targeted financial policies for small and medium-sized enterprises, and vigorously issue targeted loans and discount interest loans to small and medium-sized private enterprises in Hubei province. For the need of small and medium-sized private enterprises to provide legal, regulatory consulting services.

4. The economy of Hubei province, especially Wuhan, has a great downside risk in the medium and long term

Luo Zhi in a separate study“the central especially in Wuhan city, Hubei province need to apply for medium and long-term policy to help rebuild after the plague”pointed out that because of the effects of the outbreak, a long period of work stopover will lead to business difficulties and bankruptcies in Hubei Province, especially Wuhan, in the short term. In the next 1-3 years, these negative impacts will continue to spread and expand through the industrial chain, consumption chain and investment chain, causing medium and long-term economic downturn.

The main reasons are as follows: First, with the continuous delay in the resumption of work, the bankruptcy probability of small and medium-sized enterprises in Hubei will increase significantly, and the number of smes in the short term is difficult to recover. Second, for enterprises, especially manufacturing enterprises, even if they can continue to survive, their market share will decline significantly and they cannot recover the market for at least one year. Third, the business crisis and bankruptcy crisis in Hubei province has a strong infectivity. Fourth, the delay in resuming work may also lead to the withdrawal of funds and difficulties in attracting them. Fifth, the COVID-19 will reduce the income of residents in Hubei province, especially Wuhan, by at least 20%, which will be amplified by the consumption multiplier. Sixth, government fiscal expenditure has declined. Through the magnification of fiscal multiplier, the economic downturn of Hubei Province, especially Wuhan, is further aggravated.

The report suggests that the country needs to provide Hubei province, especially Wuhan, with some medium and long-term preferential support policies, just as it did for the post-Wenchuan Earthquake reconstruction, to help Hubei province, especially Wuhan, return to its pre-epidemic development track at an early date.

Specific measures: First, in 2020 and 2021, the government can reduce the burden of enterprises in Hubei province, especially Wuhan, through preferential tax policies. Second, in 2020, the individual income tax burden of employees in Hubei province, especially Wuhan city, will be reduced or adjusted to help the local consumer market. Third, promote employment through preferential policies for enterprises. Fifth, promote enterprise investment and financing through financial support policies. Sixth, industrial support policies should be adopted to help Hubei Province, especially Wuhan, return to the normal development track. Seventh, the government of Hubei Province, Wuhan City in particular, should be given financial subsidies for the recovery period in 1-3 years, and tax retention should be increased in proportion to help local governments recover financial resources.(Rewritten by Lai Xiaowei,Edited by Luo Yu ）