Virus hits students and tourists

The scale of threat from the latest coronavirus originating in China is a rapidly unfolding story. Almost 3000 infections have been declared in mainland China and it has spread elsewhere in the Asia-Pacific, including Australia, as well as to Europe and the US. It appears those without symptoms can pass on the virus. China’s Health Minister, Ma Xiaowei, has suggested it is becoming more infectious, although it’s not yet clear how easy it is to catch or what proportion of patients may die. In any event, it’s already serious enough to reflect on medium-term implications while keeping in mind this is unlikely to be the last such virus to emerge from China’s wildlife markets.

The rise of China has been a marvel of the modern world; never before have so many people been lifted out of abject poverty so quickly. This has helped drive prosperity for many other nations, not least Australia, which was spared the hardship of the global financial crisis thanks to the China trade. As the Chinese middle class expanded, travel overseas for business and education became normalised. Australia alone has more than 35 direct inbound flights from China daily. This interchange, easily taken for granted, promotes personal ties and mutual understanding that can help mitigate future tensions between China and the rest of the world. But no benefit comes without its risks.

Already singed by bushfire, our tourist industry is bracing for a sizeable loss of revenue following China’s decision to cancel outbound group travel bookings. In a rapidly expanding market, Chinese visitors to Australia spend almost $12bn a year. Of course, the damage to China’s own economy has been highlighted by the virus outbreak, and travel restrictions have cast a pall over the Lunar New Year holiday, when millions of families reunite for celebration and feasting. This disruption is close to home for us because more than 1.2 million Australians are ethnic Chinese.

As retail spending and commercial activity weaken in China, there will be economic knock-on effects for the rest of the world, depending on how prolonged this health crisis turns out to be. Australia’s universities have a special vulnerability. They are large-scale, successful recruiters of other countries’ students, trading on our reputation as a safe, naturally beautiful destination. But images of bushfire inferno have gone around the world. On top of this, our universities are heavily reliant on tuition fees from one overseas nation: China. This was the source of more than a quarter of revenue for the University of Sydney and the University of NSW in 2018.

Just as tourism marketing has to keep developing new markets, so too our higher education sector has to make a better fist of diversifying the source countries of international students. And China’s troubles should be a general wake-up call for our political class. Red tape and other burdens on business need to be lifted so we can unleash the entrepreneurial spirits necessary to come up with new products, services and markets, thereby diversifying our sources of prosperity.