China’s cash-strapped local hospitals are shunning a government-subsidised loan scheme for equipment upgrades, despite the need to quickly prepare for a spike in cases as Beijing eases its draconian zero-Covid policy.

China’s cabinet, the State Council, announced in September that it would offer local hospitals a total of more than Rmb200bn ($29bn) in loans with interest rates of only 0.7 per cent or lower to buy devices ranging from CT scanners to surgical robots.

But most hospitals have yet to apply for the scheme despite a deadline of the end of this year, according to government advisers and medical equipment makers. Hospitals said China’s zero-Covid regime, which has severely restricted movement in the country and depressed consumption, had undermined their financial health and willingness to take on new loans.