Police had to break up a protest in one of Wuhan’s busiest shopping districts after retailers demanded rent relief and greater government support for private businesses, exposing tensions in the city hardest hit by coronavirus.
The Communist party is desperate to portray the lifting of restrictions on Wuhan, where the deadly virus first surfaced, as a success.
According to official data, 97 per cent of the city’s large factories have reopened, boosting Beijing’s claim that the economic recovery is gathering pace.
But the same data reveal that just a third of small businesses are up and running, raising anxiety in a city that was brought to a standstill for 76 days.
The discrepancy in support between large, government-backed enterprises and small private companies has also raised concerns about how quickly Wuhan’s economy can return to normal.
A lot more demonstrations will break out if business continues to worsen
“Wuhan’s recovery doesn’t just lie in a handful of state-controlled industry champions,” said a researcher at Wuhan Academy of Social Sciences who did not want to be identified. It also depends on numerous mom-and-pop shops the city government has largely ignored.
While economic activity was picking up in the central commercial hub, with some of the once empty streets growing ever more congested, most small business were either still closed or had received few orders since reopening.
Li Da, owner of a Wuhan-based enterprise software company that resumed work in March, said revenue last month was down more than two-thirds from a year ago as most clients had yet to return to work.
“There is no way we could run a normal operation when our customers couldn’t do so,” said Mr Li.
The picture is brighter for large companies. On the day Wuhan escaped its strict quarantine last week, Dongfeng Honda No 2 Plant, a joint venture between the state-owned auto group and the Japanese carmaker, produced 1,237 cars, 16 per cent more than its planned capacity.
Li Shiquan, general manager of the plant, said it had been running at full capacity since the end of March and had maintained that momentum.
“We want to make up for the lost time,” said Mr Li.
What drives Dongfeng Honda’s rapid recovery is strong state support that is denied to small companies. Many small companies have been slow to reopen in part because their workers must first test for the virus at their own expense but Dongfeng is exempted from the requirement.
Mr Li shrugged off the need to have his workers tested as nothing “unusual” has happened since the factory resumed production almost a month ago.
“I am not worried about [the disease] because we have adopted very strict protective measures,” he said.
Wuhan is known for its state-dominated economy and Beijing has been keen to support it. Apart from the testing exemption, the government has unveiled several other supportive measures that range from low interest loans to tax breaks and even rescue plans for the struggling private sector.
But the policy initiatives often come with strict requirements that few business owners could meet.
A week after the state-owned Hankou Bank released a collateral-free small business loan product charging 3 per cent per year — a low rate by industry standards — only 11 of the 404 companies that had applied had won approval.
An official at Hankou Bank said the loan was reserved for applicants with “strong” tax payment records or business ties to large companies.
“There is no way for us to issue credit loans without imposing additional conditions,” said the official.
Private companies also face a skills shortage. In a recent survey of small businesses by Wuhan’s Hongshan District Science, Technology and Economic Information Bureaus, some 44 per cent of respondents said their non-resident workers had difficulty returning to the city even though the travel ban had been rescinded.
With little hope of a quick turnround, some desperate Wuhan business owners were voicing their anger in public — and taking to the streets.
“A lot more demonstrations will break out if business continues to worsen,” said Mike Chen, a protester and the owner of a snack store.