To contain the coronavirus epidemic, China has implemented strict measures during this Spring Festival, including travel restrictions and quarantine requirements, and even locked down the whole province at the epicenter. But after the public holiday, China’s economy still couldn’t resume immediately as usual. Banks and restaurants have been temporarily closed. Office workers are required to or have chosen to work from home. Factories are struggling to get back to production.
The impacts to China’s economy are immediate and obvious. As an important indicator of 1st quarter, the total number of passenger trips during this holiday decreased by over 50% year-over-year. What worries the Chinese state government most is small and medium-sized enterprises(SMEs). SMEs create about 80% of the national jobs and generate about 70% of all sales revenues of all enterprises. By the end of the past February, only 30% of small and medium-sized enterprises resumed business, according to the Ministry of Industry and Information Technology of China.
To mitigate the economic impacts, the Chinese government has rolled out a series of conventional stimulus initiatives. As the financial condition is a major concern for them, Chinese authorities have announced plans for tax and interest rate cuts as well as liquidity injections. Many banks and financial institutions have lowered lending rates or allowed their business borrowers to postpone monthly interest payments.
China experienced a similar virus outbreak in 2003. Compared with these conventional measures, China’s effort in leveraging technologies to address the challenges is remarkable this time.
Since 2003, information technology has brought great changes to China. China has built a world-class Internet infrastructure in e-commerce, finance and small business services. By applying the latest technological advances such as big data and artificial intelligence, Chinese technology developers have been trying to help traditional businesses and services improve scalability, speed up decision-making efficiency and reduce operating costs.
As people movement restrictions have put China’s economy into halt recently, products and services powered by technologies mentioned above can provide long-distance services and automated services, and avoid large-scale human interactions in an effective manner.
On Feb 9, the Ministry of Industry and Information Technology of China issued a guidance on how to help SMEs to resume operation. There’s a whole section on how to help small businesses leverage technologies to digitalize their operations or intelligentized factories so as to gradually resume business as well as upgrade their technological capability. The Ministry singles out artificial intelligence with a separate note and asks businesses and organizations to help develop products and services that can reduce impacts to businesses, factories and schools.
Both the state owned and private companies have responded quickly, rolling out customized or enhanced versions of their existing technological services and tools or developed new ones to address the emerging challenges.
Since February, the adoption and usage of communication products or collaborations services have significantly increased. Dingtalk, a business collaboration app developed by tech giant Alibaba, quickly launched a customized update and announced to offer the video conferencing function for free. The app saw its ranking on App Store surpassed WeChat to become No. 1 a few days after the New Year holidays ended. Feishu, a similar service developed by another Chinese internet giant ByteDance, announced to offer all of their functions and features for free.
Chinese Fintech developers, which are leading in the application of cutting-edge technologies such as big data and machine learning, have demonstrated their advantages. They have the ability to serve remote customers with highly automated systems in credit assessment and underwriting, loan monitoring, and risk management in general. Some consumer finance companies have seen their online operations gaining volume as purchases like educational services have largely taken place online since the outbreak. As field staff are not able to get back to work, loan delinquencies have increased. Some fintech developers have updated their loan servicing and risk management services accordingly.
To enable local governments or other organizations navigate the economy, some companies have come up with new indicators to track economic activities. For instance, some branches of the State Grid Corporation of China now track the electricity usage to analyse resumed production and other economic activities.
It is widely believed by China’s tech industry that the last outbreak in 2003 was a major booster for China’s e-commerce industry, as the convenience of online shopping easily won the hearts of consumers stuck at home then. It appears that both government and companies see the latest outbreak even an opportunity to promote tech products and services. Productivity and efficiency is largely increased through digitalization and automation, and factories and businesses are relatively backward upgraded. The whole country has been trying to move up the value chain.
The adoption rate of productivity enhancing services or enterprise-facing software in general is still relatively low in China, especially among small businesses. The increases in the adoption of these products or services will also accelerate the generation of digital data. This can help cutting-edge tech tools like machine learning algorithms to improve business analysis capabilities or decision-making.
Tracey Xiang is a tech writer, specializing in ChinaTech, Digital Economy, FinTech and AI.