Thur 05 March 2020
By Jayne He
With the unexpected outbreak of COVID-19 at the beginning of 2020 in China, the Government of Australia implemented a travel ban on any non-Australian citizens or permanent residents who has been in the Mainland of China within the previous 14 days against entering the border of Australia from 1 February 2020 as an effort to prevent the spread of COVID-19 in the country.
The travel ban soon sparks off huge debates as it prohibits the majority of international students from returning to school and will inevitably bring a huge loss to the entire education sector. To tackle with this emergency, many Australian universities announced various solutions to minimise its impact to both the students and the universities themselves – some offer online courses to allow students study remotely, while some offer a travel allowance to help students enter Australia via a third country.
Unlike the gloomy situation of the education sector, the real estate sector looks blooming at the beginning of this year with an around 80 per cent clearance rate in Sydney and Melbourne home auctions. Is it a good sign that indicates the impact of COVID-19 will not be severe in sectors other than education in Australia? Professor Heng Wang, the Co-director of the Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre recently interviewed with the SBS Mandarin on the impact of COVID-19 and the travel ban to Australia.
According to Professor Wang, the urgent situation COVID-19 brought may drive the Australian universities to further diversify the constitution of their international students. However, Professor Wang also pointed out that considering the market size and the economic development of China, it looks hard to solve this problem in a short time.
“This problem may not be solved in a short period of time. Given the population distribution and the level of economic development, China is a huge market and it has a large number of students. It will be hard to find an alternative market in Asia that could completely substitute China in a short time. … Going forward, Australian universities may amplify their preparation for responding to such potential risks.” Professor Wang told SBS Mandarin.
Although the Real Estate Sector has shown an optimistic sign with a high auction clearance rate earlier this year, Professor Wang warned that people should be cautious about being over-positive on the economic outlook.
“Generally speaking, most industries normally should have some reserved resources to address such sudden short-term fluctuations. However, such reserved resources only have a limited capacity to confront such emergencies.” Professor Wang noted, “The travel ban mainly affects the home renting market so its effects on home auction may not be significant at this stage.
“However, with the depression of the entire economy that may happen later, the global economy will be impacted, and the global value chain may face challenges. If this happens, all industries and sectors will be affected, and this will have a negative effect on purchasing power and may lead to a decrease in the clarence rate in the future.”
Nonetheless, Professor Wang also said the Reserve Bank may intervene in the market by using monetary tools later, but it all depends on how the COVID-19 situation will become in the future.
“Education may not be the only sector who is suffering from the travel ban. Tourism may have had a severer impact already. It is an unprecedented challenge to the entire economy, indeed,” Professor Wang said, “Moreover, given the current size of China’s economy compared with 17 years ago during the SARS outbreak, it now has a far huge impact on the world economy. Hence we cannot evaluate the current situation only with a historical measure.”
More of Professor Wang’s research may be found at ResearchGate, SSRN, Twitter @HengWANG_law, and LinkedIn.