The impact of COVID-19 on SMEs in China: Textual analysis and empirical evidence

This paper investigates the impact of COVID-19 on small and medium-sized firms (SMEs) in China with textual and empirical analyses. We find that most SMEs suffered financially. The main causes of SMEs’ financial problems are postponed work resumption, declining market demand, and restrictions on logistics and crowd flow. We uncover key factors that reduce the negative effects and in some cases benefitted SMEs during the pandemic. Our empirical results also demonstrate that the negative impacts of the pandemic are reduced for value-type firms, state-owned firms, and those situated in cities with high-level digitization.