A research report recently released by Tsinghua University PBC School of Finance shows that China's small and medium sized enterprises (SMEs) have recovered well from the COVID-19 pandemic.

The report tracked the financial data of millions of SMEs in China. It found that business activities were hardest hit in February, when revenue was slashed by about two thirds compared to the same time last year. Activities recovered slightly in March, rising about 140 percent compared to February, but was still significantly lower compared to last year.

Performances varied among different sectors. The report showed that the education sector was the hardest hit, and its recovery index rose only 11.8 percent in March. The top performing sector was real estate, reaching nearly 60 percent in March. That was partly due to pent-up demand in January and February.

The report also found that micro businesses proved to be more resilient during the pandemic with better performances than small business in the first quarter. According to the report, micro businesses saw a recovery rate of 60 percent in March, compared to less than 40 percent for small enterprises.

Zhao Xin, Co-founder of Daokou Fintech and a co-author of this report, spoke of measures to further support the recovery of SMEs. He believes that financial technology can help develop more accurate policies or business loan products to meet demand of companies from different sectors. According to Zhao, the Chinese government has developed policies to encourage financial institutions to provide more financial support. But for small and medium sized business, especially for small business, it's still very hard to get a loan.

"So I think targeted measures should be used to increase the coverage of the loan funding and make it more inclusive by using financial technology. I think we could analyze the characters of different industries and sectors and to do the risk assessment by using AI and big data technology so that we could possibly reduce the cost of providing small business loans," said Zhao.