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The Effects of COVID-19 on Manhattan’s Chinatown

By Christopher Poon

At the end of 2019, a mysterious new disease appeared in Wuhan, China. At first, much of the world did not pay much attention to this outbreak in faraway central China. Nonetheless, the virus soon spread out of Asia through Europe and into the United States. Since then it has been hard to go a day without reading about the macro effects of the pandemic: nationwide unemployment, falling corporate earnings, monetary easing, and huge fiscal stimulus measures. However, it is also very eye-opening to look at the effects of the coronavirus pandemic on a smaller scale: individual neighborhoods, stores, restaurants, and—above all—people.

New York City’s historic Chinatown is currently facing its largest crisis since 9/11 decimated Lower Manhattan. The trouble started for Chinatown even before COVID-19 flared up in the U.S. According to CNN Business, Manhattan Chinatown businesses were seeing revenues fall between 30 and 80 percent by mid-February of 2020 before any cases of coronavirus were reported in the city, raising concerns that xenophobia towards Chinese and Asian communities was rising due to the pandemic overseas. As a local business owner named Helen Ng described, “instantly you will see nobody show up, nobody's around, not even people on the street walking.” Turnout at Lunar New Year celebrations, one of the busiest and most profitable times for Chinatown businesses, was much lower than usual. This was exacerbated by the fact that international tourism had already been brought to a standstill. Many Chinatown staples had relied on mainland Chinese and European tourists—two areas hit early by the pandemic.

COVID-19 finally hit New York in mid-March, and New York City implemented lockdowns soon after. By the time restaurants were forced to limit service to take-out only, many Chinese food establishments had already shut down due to falling profits. Chinese restaurants generally operate on very low margins, so even a small decrease in sales could potentially decimate earnings. One restaurant owner noted losses totalling to at least one million dollars during the pandemic (an extreme example of the financial harm businesses have been facing).

Closures of Chinatown businesses left staff unemployed. Pew Research Center found that Asian unemployment may have reached 20.3 percent in May. In February, that number was just 2.5 percent. This was the largest increase among all racial groups. In late May, the Chinese Planning Council announced that unemployment claims by Asian Americans increased by 6900 percent. This contrasts with the experience of Asian Americans during the Great Recession, when their unemployment did not rise as much as other groups. This could be evidence that Asian Americans are bearing the brunt of COVID-19’s economic fallout harder than others due to xenophobia.

In June, Chinatown businesses found it hard to get back on track, even as the rest of the city reopened. According to Bloomberg Businessweek, in early June, only 46 percent of Chinatown restaurants had reopened compared to 63 percent city-wide. Bloomberg cites lack of tourists and white-collar professionals in Downtown Manhattan for the general hardship faced by businesses in the borough. However, it is not explained why Chinatown has been hurt particularly bad. We could once again point to lingering perceptions that Asians are more likely to have the virus, deterring people from the area. However, it is not helpful to automatically pinpoint racism as the sole cause of the problem. We must also consider other factors, such as the fact that tourists still have not returned to the U.S.

The difficulty of reopening in Chinatown has been made clear by a record number of home loan deferral requests at local banks. If residents are not earning money, they will likely want to hold off on making large payments. However, Thomas Sung, chairman of Abacus Federal Savings Bank, sees some hope since Asian Americans have extremely high savings rates. Asian Americans typically save between 30 and 50 percent of their income compared to 10 percent for the general population. This could place the group in a good position to weather the economic downturn and racism caused by the coronavirus pandemic. It is important to note there are large disparities in income and wealth between different Asian American groups, and that some individuals and families will undoubtedly face immense hardship getting through this unprecedented time.

However, if Chinatown residents are likely to have a high marginal propensity to save, it means they are likely not to spend a large amount of whatever income they have. That means less money will flow to local businesses, which will have to pay their employees less. These employees could have then spent the extra money at other businesses which could have paid their employees and so on. One dollar spent actually benefits more than just the store that received the dollar. It will benefit everyone who receives part of that dollar as it circulates through the economy. This outsize effect of spending is called the multiplier effect, and if marginal propensity to save is high, the positive benefits of the phenomenon are muted.

Consumer spending is the largest contributor to GDP in the U.S., constituting 68 percent of our national product. It would be safe to assume that Chinatown’s individual GDP is also largely based on consumer spending given its reliance on retail and restaurants. Therefore, if it is difficult to get consumer spending up because of high savings rates, the overall health of the economy as measured by GDP will not recover.

The challenges Chinatown has faced in the past months has put the spotlight on businesses that are embracing new technology to target new clientele, such as Nom Wah Tea Parlor, which advertises on Instagram, has a page on the upscale delivery app Caviar, and sold frozen dumplings online during the pandemic. The goal is to spur growth by wooing younger customers who are more willing to spend than the ageing local population. They are also likely to come from wealthier neighborhoods in Manhattan, which increases their spending power further.

On the other hand, Hop Kee, another Chinatown favorite, has decided not to go on this route, opting instead to preserve “authenticity.” As it has throughout the world, coronavirus has forced New York’s Chinatown community to do a lot of thinking: is it time to move on or is it worth it to history and heritage? Can both be done at the same time? At a time when Chinatown is facing unprecedented challenges from multiple angles, including struggling businesses, unemployment, and xenophobia, I believe that solutions can come from within the community. There are plenty of young Chinese and Asian American professionals currently disconnected with their heritage that businesses can aim to attract in order to drive new business while decreasing concerns about complete gentrification. Of course, businesses should continue to promote themselves to NYC residents from other neighborhoods and tourists, because part of the point of a cultural neighborhood is to share history and customs. As we move forward, Chinatown’s historical resilience will need to show itself once again.



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