The impact of COVID-19 on small and medium-sized enterprises (SMEs): Evidence from two-wave phone surveys in China

This paper examines the short-term and mid-term impact of COVID-19 restrictions on SMEs, based on two waves of phone interviews with a previously surveyed large SME sample in China. The outbreak of COVID-19 and the resultant lockdowns took a heavy toll on SMEs. Afflicted by problems of logistics blocks, labor shortages, and drops in demand, 80% of SMEs were temporarily closed at the time of the first wave of interviews in February 2020. After reining in COVID-19, authorities largely eased lockdown restrictions in April. Consequently, most SMEs had reopened by the time of the second round of surveys in May. However, many firms, particularly export firms, were running at partial capacity, primarily due to inadequate demand. Moreover, around 19% of incorporated enterprises and 25% of self-employed businesses had permanently closed between the two waves of surveys. •We conducted two waves of large-scale phone surveys with SMEs in China.•COVID-19 landed a heavy toll on SMEs.•The challenges facing SMEs have changed from the supply side to the demand side.•More inclusive policies were more effective in helping SMEs than other targeted policies.