Economists and business insiders applauded the government's decision to waive companies' social insurance payments and defer the collection of housing provident funds to help them tide over the novel coronavirus outbreak.

A State Council meeting presided over by Premier Li Keqiang on Tuesday decided that for companies in Hubei, the hardest-hit province, all should be exempted from social security contributions from February to June.

Micro-, small- and medium-sized enterprises outside Hubei should be exempted from such expenses from February to June, while big enterprises outside Hubei should be levied in half from February to April.

Authorities also decided that companies across the country can apply to postpone the payment of housing provident fund contributions before end-June.

Calling the new policies "strong and timely," Zhang Bin, an analyst with the National Academy of Economic Strategy under the Chinese Academy of Social Sciences, said they would help stabilize market expectations and employment and cushion the blows of the ongoing epidemic on the economy.

He also noted that the new policies are well-targeted and tilt toward smaller firms which play a leading role in job creation but are more fragile than big companies.

Firms in China's services sector, from restaurants and hotels to shopping malls, cinemas and travel agents, have borne the brunt of the outbreak as people were advised to stay at home and avoid crowded places. At the same time, small manufacturers with tight cash flows have also faced great pressures.

A recent survey conducted by the University of International Business and Economics showed that maintaining cash flow is one of the main challenges for companies and that the larger the company is, the longer its cash flow can last.

Only 42.67 percent of small companies with less than 50 employees said their cash flow could last for over three months, but the proportion was 80.5 percent for big companies with more than 500 employees, according to the survey.

"The new policies will slash operation costs for enterprises, especially smaller ones, buoying their confidence and warding off massive layoffs," said Dong Dengxin, head of a financial research institute under Wuhan University of Science and Technology.

Chinese authorities have called for unremitting efforts to contain the novel coronavirus epidemic while resuming business operations in an orderly fashion.

To support the economy, state-owned enterprises have stepped up efforts to resume production, while the government has taken a slew of favorable financial and tax policies, including injecting liquidity into the market, cutting loan rates for companies, and providing special funds for banks to lend to businesses.

After implementing large-scale tax and fee reductions in 2019, the country will continue to do so this year to further alleviate burdens on companies and boost their development, said Finance Minister Liu Kun.

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