PBOC urges loans to logistics firms to ease supply chain pain

China’s central bank pledged financial support for logistics firms and truck drivers to ensure the country can maintain supply chain stability amid the worst Covid outbreak in two years.

The People’s Bank of China will ask lenders to “reasonably” extend and renew loans for the industry, it said in a statement on Friday, following a central bank meeting on coordinating Covid controls and economic development.

Financial institutions will be encouraged to step up support for the transportation sector with favorable policies, such as relending and rediscounting tools. Credit to air cargo businesses will also be increased, the PBOC said.

Supply chain disruptions have increased in China as places like Shanghai—home to the world’s largest container port—went into lockdown to curb Covid infections. Port congestion and road checks have extended delivery times for goods, stalling production and cutting consumption even further. That’s making the government’s annual growth target of around 5.5% challenging to achieve.

One high-profile complaint of supply chain problems came from  He Xiaopeng, the chief executive officer of electric-vehicle firm Xpeng Inc. In a social media posting on Thursday evening, He warned that automakers across China may have to halt production in May if shutdowns persist in the Shanghai area. 

Richard Yu, CEO of Huawei Technologies Co.’s smart car solutions unit, raised similar concerns, saying production in entire technology and industrial sectors which have supply chains reliant on Shanghai will grind to a stop if operations in the city cannot resume next month, the National Business Daily reports Friday.