COVID-19 has adversely impacted the start of the year. The epidemic overtook the 2002-03 SARS crisis in just seven weeks, with 75,000 infected in China alone at the time of writing.

Statistically, one in seven patients dies, making the disease both more contagious but less deadly than previous coronavirus outbreaks.

Apart from its direct impact on health and human life, Covid-19 has put a serious damper on business, highlighting the world’s widespread and deep reliance on the Chinese for trade. Malaysia is not exempted from this trend.

From Taobao to Huawei, Geely to WeChat, China has come a long way to establish itself as a global economic powerhouse. In Malaysia, China used to be known primarily as a producer of stationery and low-quality garments. Today, it is the world’s largest producer of consumer goods, from high-end products to mundane ones, and the Chinese are the fastest-growing consumers of all things luxury – cars, liquor, even “exotic” fruits like durian.

If it was once said that “when America sneezes, the world catches a cold”, this adage is now doubly true for China.

We have grown increasingly dependent on the country over the years, on both macro and micro economic levels. China is one of our biggest trading partners, with US$124 billion in trade recorded last year. Also in 2019, its nationals made up the largest proportion of tourist arrivals, after Singapore and Indonesia, at three million – making the Chinese our largest tourism client outside Asean.

The impact of Covid-19 is so bad that industry experts are predicting a RM1 billion loss in budget airline sales alone for flights between China and Malaysia.

Governments have announced stimulus packages even before the full extent of the damage is known, with ours among the first to do so. Putrajaya is expected to release the details next week.

We’ve learnt, and continue to learn, many lessons from this episode – how to manage an outbreak, the importance of effective communication to allay fears – and in many ways, we are handling this well, even better than some of our richer, more developed neighbours.

However, this situation has underscored our dependence, to the point of over-reliance, on China.

Hotels are lowering their prices by as much as 60% due to the declining number of visitors from the mainland, and many pharmacies have very limited stocks of masks and hand sanitiser because they source almost exclusively from China. Durian farms are desperate for an alternative market as a majority of their top-grade fruits are exported to Singapore and China.

Small and medium enterprises, too, are affected, with many shipments to and from China delayed. Besides finished products, we import a lot of raw materials from there, from compound chemicals to small electronics.

Even private merchants and freelancers have been impacted, including those who trade on platforms like Lazada, provide services like coding or translation for the Chinese market, or offer ride-shares or homestays for Chinese tourists, who contribute an estimated RM9 billion to the Malaysian economy.

Perhaps, it’s a good time for the relevant agencies, ministries and trade groups to look at alternative markets, namely emerging countries, like Argentina, Brazil, Mexico and South Africa, which are often overlooked in tourism promotion. This would be a logical choice as they have a climate similar to ours.

India, another long-time trading partner, is fast becoming a manufacturing hub as China moves towards high-yielding productions, like precision-engineering and upper-segment products, while old partners Japan and Taiwan can be revisited, with trade and tourism links revitalised. Cultural ties, sometimes panned as a hindrance, can be used to our advantage. For example, Malaysia caters to many dietary requirements – halal, Sattvic, and the various types of vegetarianism, such as Jain, Buddhist and Sikh.

Looking at local sources, meanwhile, will promote the domestic economy for a number of reasons. It keeps the circulation of the ringgit in Malaysian hands, grows the SME segment and improves the quality of our people’s lives. Sure, the profit margins may not be as high or the order value as big, but the risk profile drops considerably as there are fewer moving parts when it comes to logistics. It is also a great opportunity for us to look beyond physical products to less-explored types of businesses, such as entertainment content generation, start-ups and long-distance education.

Diversifying the economy, as well as investment sources, served us well before. It is worth a relook. – February 20, 2020.

* Emmanuel Joseph firmly believes that Klang is the best place on Earth, and that motivated people can do far more good than any leader with motive.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.