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Assesment of COVID19 Impact

May 6, 2020
Assessment of COVID-19’s Impact on
Small and Medium-Sized Enterprises
Implications from China
Jennifer Bouey
Testimony presented before the House Small Business Committee on March 10, 2020.
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ChapterTitle 1
Assessment of COVID-19’s Impact on Small and Medium-Sized Enterprises: Implications
from China
Testimony of Jennifer Bouey
The RAND Corporation
Before the Committee on Small Business
United States House of Representatives
March 10, 2020
hairwoman Velázquez, Ranking Member Chabot, and members of the committee, thank
you for inviting me to testify on the impact of the coronavirus outbreak on the economy
in China and small and medium-sized enterprises (SMEs) there. As the first country hit
by the new coronavirus, China’s epidemic patterns and actions and the combined impact on
China’s SMEs may provide some useful insights for the U.S. government and businesses. I will
first briefly introduce the characteristics of the coronavirus disease 2019 (COVID-19) and the
epidemic it is causing. Next, I will describe the epidemic patterns in China, China’s actions, and
the combined impact on China’s economy in three stages. Last, I will summarize the epidemic’s
impact on the global supply chain and a few recommendations on the control of the epidemic and
assistance for U.S. SMEs facing the epidemic.
COVID-19 Epidemic: Virus, Host, Environment, and Transmission
SARS-CoV-2 (the virus that causes COVID-19) is the latest member of the coronavirus
family affecting humans. This type of virus is commonly found in humans and other mammals.
In humans, coronavirus has four strains that cause mild clinical symptoms, usually referred as the
common cold. Two other strains are more lethal: SARS-CoV and MERS-CoV. These two strains
cause case-fatality rates (CFRs) of 9.6 percent and 34.4 percent, respectively.
The new zoonotic
The opinions and conclusions expressed in this testimony are the author’s alone and should not be interpreted as
representing those of the RAND Corporation or any of its research sponsors.
The RAND Corporation is a research organization that develops solutions to public policy challenges to help make
communities throughout the world safer and more secure, healthier, and more prosperous. RAND is nonprofit,
nonpartisan, and committed to the public interest.
World Health Organization, “Middle East Respiratory Syndrome Coronavirus (MERS-CoV): WHO MERS Global
Summary and Assessment of Risk,” July 2019
virus (i.e., can spread between humans and other animal species) shares a high degree of
genomic similarity to coronavirus in bats and to SARS-CoV in humans.
Because this is a new
viral challenge to humans, there is no preexisting immunity in humans and everyone is assumed
to be a susceptible host to COVID-19.
The most recent data show that COVID-19 is likely to be more contagious but less likely to
cause severe clinical symptoms and deaths than SARS and MERS. A Chinese clinical study
recorded 72,314 COVID-19 cases diagnosed by February 11, showing an overall CFR of 2.3
percent, with 81 percent of cases being mild. The CFR jumped to 8 percent among patients 70–
79 years old and to 14.8 percent among patients 80 years old and older.
Most COVID-19
patients have mild symptoms, similar to a flu. People with mild symptoms might not go to the
hospital or even necessarily know that they have the disease but could still carry the infection;
accordingly, person-to-person transmission is not limited to hospital settings, which is what
happened in the SARS and MERS cases. COVID-19 is transmitted via droplets and fomites
(contact with contaminated surfaces). Data synthesis from several preliminary reports on
COVID-19 indicates a coronavirus patient, on average, can transmit the disease to three people
without intervention (compared with one for the common influenza, two for Ebola, and 18 for
the measles).
The World Health Organization (WHO) reported that such transmission in China
occurred most often at the household level, as 78 percent to 85 percent of disease clusters were
family clusters.
The moderately high infectivity, mild clinical symptoms, uncertain incubation
period, no human immunity, and possibility of asymptomatic healthy carriers may mean that the
novel virus is likely to cause worldwide transmissions. At the time of this testimony, there have
been COVID-19 case reports on every continent except Antarctica, while China still has the
majority of the reported cases and deaths. Sustainable community transmissions—multiple
chains of person-to-person transmissions in a community without direct link to travel—have
emerged in many countries, including the United States.
The timing and the global environment in which this novel coronavirus emerged also helped
it spread globally. Just before the outbreak, there were 739 international air travel routes
originating from China, and, on average, 51 million people traveled between China and another
Peng Zhou, Xing-Lou Yang, Xian-Guang Wang, Ben Hu, Lei Zhang, Wei Zhang, Hao-Rui Si, Yan Zhu, Bei Li,
Chao-Lin Huang, Hui-Dong Chen, Jing Chen, Yun Luo, Hua Guo, Ren-Di Jiang, Mei-Qin Liu, Ying Chen, Zu-Rui
Shen, Xi Wang, Xiao-Shuang Zheng, Kai Zhao, Quan-Jiao Chen, Fei Deng, Lin-Lin Liu, Bing Yan, Fa-Xian Zhan,
Yan-Yi Wang, Gengfu Xiao, and Zheng-Li Shi, “Discovery of a Novel Coronavirus Associated with the Recent
Pneumonia Outbreak in Humans and Its Potential Bat Origin,” bioRxiv, January 23, 2020.
WHO-China Joint Mission on Coronavirus Disease 2019, Report of the WHO-China Joint Mission on Coronavirus
Disease 2019 (COVID-19), February 1624, 2020 (https://www.who.int/docs/default-source/coronaviruse/who-
Z. Wu and J. M. McGoogan, “Characteristics of and Important Lessons from the Coronavirus Disease 2019
(COVID-19) Outbreak in China: Summary of a Report of 72 314 Cases from the Chinese Center for Disease Control
and Prevention,” JAMA, February 24, 2020.
Ying Liu, Albert A Gayle, Annelies Wilder-Smith, and Joacim Rocklöv, “The Reproductive Number of COVID-
19 Is Higher Compared to SARS Coronavirus,” Journal of Travel Medicine, February 13, 2020.
WHO-China Joint Mission on Coronavirus Disease 2019, Report of the WHO-China Joint Mission on Coronavirus
Disease 2019 (COVID-19), February 1624, 2020 (https://www.who.int/docs/default-source/coronaviruse/who-
country per year. The epicenter of the outbreak, Wuhan, is a major transportation hub in central
China, sometimes known as the “Chicago of China.” On an average day, 30,000 people fly out of
the city, and many more use the bullet trains from three railway stations in the city. The outbreak
intensified right before the peak travel time for the Chinese Lunar New Year (January 25,
2020)—two weeks before to two weeks after the New Year day, a time during which more than
3 billion trips typically occur in a normal year.
Three Stages of the COVID-19 Epidemic in China and the Impact
In this section, I describe China’s COVID-19 epidemic, the Chinese government’s responses,
and the combined impact on the economy, in three chronological stages.
Stage One: Awakening to the Epidemic (December 2019 to January 20, 2020)
The Epidemic and Chinese Government’s Actions
A cluster of pneumonia of unknown etiology appeared in Wuhan in December 2019, where
several cases were associated with exposure to a seafood market. Wuhan health officials closed
the market and announced the 27 cases on December 30, 2019, after a few doctors in Wuhan sent
social media messages warning their acquaintances about a “SARS-like” pneumonia. Three
Chinese Center for Disease Control and Prevention (Chinese CDC) expert teams were dispatched
to Wuhan for investigation. The first two went to Wuhan on January 1 and January 8,
respectively. They concluded that there was no person-to-person transmission, the epidemic was
under control, and no new cases were reported. Meanwhile, the virus’s genomic data were shared
with GenBank of the U.S. National Institutes of Health (NIH) and Global Initiative on Sharing
All Influenza Data (GISAID) by the Chinese CDC and Fudan University on January 11. Soon
after, these original genetic data helped Japan and Thailand link their new COVID cases to
Wuhan. A third expert team from the central government went to Wuhan on January 19 and
confirmed the person-to-person transmission. On January 20, the Chinese government hosted a
high-level political meeting on COVID-19 management, triggered the national public health
emergency, and added COVID-19 to the national Infectious Disease Information System (IDIS)
that would guarantee mandatory case reporting according to the China’s Health Emergency
For more discussion about the epidemic and Chinese government’s actions at this
stage, see my previous testimony.
Impact on the Economy

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