Covid-19 continues, and while infection rates are dropping, government is stepping up intervention measures. Work resumption, new quarantine rules and municipal business subsidies are top stories here in China. This week, I want to update you on members in two sectors critical to the long-term success of the Canada-China economic relationship: financial services and education. Organizations in both industries are reporting cautious optimism – and despite severe short-term interruptions to operations, the confidence they have in their responses to these unique challenges is inspiring.

It is difficult to overstate the impact of Covid-19 on the students, teachers and administrative staff of China, and there is virtually no end in sight. As an indicator of the level of seriousness that some organizations have elevated the issue to, the well-respected Schwarzman College at Tsinghua University has now relocated the cohort to their NYU Abu Dhabi campus for the remainder of the program. A Canadian international school operator responsible for over 30 locations in China (and thousands of students) has been closed since January 23rd and has no idea when classes will resume. This in turn affects the ability to return to work for parents, causing more stress on an already reduced workforce. Therefore, we are seeing the largest remote study phenomenon in history, with a massive deployment of online learning portals and web-based community learning. Teachers, many of whom are back in Canada with their families, are working on China-time. On the upside, remote-study international tutoring businesses are seeing significant spikes in business, and Canadian university registration rates remain stable.

From the perspective of several large-scale financial services firms, while the consensus is that the market will be tested over the course of the first half of 2020, the long-term confidence in this market remains very strong. Fixed income, equity and currency markets will likely be hurt in the early days, which many China market experts are seeing as a 黄金坑, or a golden opportunity, to take advantage of underpriced positions. Pressure will be heavily applied on business continuity plans this year, and Q1 P&L forecasts are certainly being scrapped in boardrooms from Shanghai to Chengdu, but major players are optimistic for 2020 on the whole. In the near term, the healthcare and online marketplace (O2O) sectors will thrive, and watch for “revenge spending” in the second half as consumers regain their appetites. Unfortunately, however, the tone of the story changes quickly when referring to small to medium sized enterprises . The findings in a report co-authored by Tsinghua and Peking Universities (the top ranked institutions in China) this month were alarming: if current market conditions persist for 3 months, only 18% of SMEs in China could maintain operations. If that time horizon is pushed out to 6 months, the number drops to under 10% based on current cash reserves. This reality is grinding up against the security measures that have made it so onerous for these SMEs to get back to business – watch for an easing of back-to-work scrutiny and continued government support measures to be announced.

There have been numerous updates, yet regulatory and policy information is still conflicting. Canadian businesses operating in China should be inquiring with their landlords, accountants and corporate services companies to find out if they are going to be able to be offered any rental waivers or tax incentives. These benefits are being unequally awarded – one report relayed that if the office building that is occupied by the company is state-owned, there would be a two-month forgiveness on rent, yet if ownership is private, the waivers are discretionary. I encourage companies to reach out to these parties to find out their rights. Business leaders should also be aware of the new self-quarantine regulations that have been put into effect: as of several days ago, relevant authorities have been instructing anyone arriving in Beijing, from both domestic or international destinations and regardless of duration of trip, to self-quarantine in isolation for 14 days. This policy (and many others) are being unevenly applied. Different departments, organizations and communities are providing different interpretations of the rules. Please get in touch with me, your local offices and Canadian consular staff in China before travelling. While top-level edicts may be clear, local cadres are understandably concerned about an infection occurring under their purview, so rigidity on implementation will continue to be fractured, often from one checkpoint to the next.

My final thought this week is a positive note on resilience. There are few countries in the world, if any, that could have coordinated a national response to this outbreak in a more galvanized, coordinated and enthusiastic manner. This is not only the government. The team-effort mentality demonstrated by the great majority of the local population has been awe-inspiring, in even the smallest of day-to-day issues. While reactions to policy decisions will always come under scrutiny, the overarching strength of the mobilization against Covid-19 on the ground here is impressive to say the least – with dividends being demonstrated in the positive recovery rates of the last several days. On the topic of recovery: now that the virus seems to be flickering, one way or another, the economy must get back on track soon, and I believe the Chinese entrepreneurial spirit will rise to the challenge. I highly encourage the Canadian business world to do the same.

As always, the CCBC offices across China (and Canada) are open and at your service. Note that we will be circulating a special CCBC Business Survey this week (open to both members and non-members) and we hope that you will take the time to share your experience and ideas. In the meantime, please contact me (noah[at]ccbc.com.cn) or my colleague Edward Dai (edward[at]ccbc.com.cn) if you wish to discuss your China strategy for both the short and long term.