China’s small businesses are lagging behind larger firms as they strive to return to normal operations, raising concerns about their survival in the current post-pandemic period, a survey on the health of domestic businesses revealed.

According to the survey conducted by China Merchants Bank, the country’s small businesses — defined as those employing fewer than 50 people — had resumed only 40% of their operations by late April. Meanwhile, larger companies — those with more than 100 employees — said they were operating at at least 70% of their output capacity.

The data collected from 23,524 companies — over 90% of which had fewer than 100 employees — found that tight cash flow and financing pressures remain common headaches for Chinese businesses struggling to reach previous productivity levels. Firms in first-tier cities including Beijing and Shanghai were especially pessimistic about their financial outlooks, with the hospitality, restaurant, education, and entertainment sectors reporting the most economic pressure.

Over 90% of the surveyed businesses said they had slashed staff or salaries, with only 10% of respondents saying they planned to increase investment in the first half of the year. Earlier this month, China’s Cabinet pledged to allocate 1 trillion yuan ($140 billion) in government bonds to support small businesses struggling to stay afloat during the COVID-19 pandemic.(Image: People Visual)