Coronavirus: Can China Deal with it?

Last year, amidst the US-China trade war, Chinese leader the Xi Jinping held a meeting with top Communist Party officials to warn about the surprise emergence of "black swan events" that could destabilise their 70-year rule. Perhaps the outbreak of Coronavirus epidemic is that event.¹

The World Health Organisation (WHO), Director-General Tedros Adhnom Ghebreyesus, visited China and announced an outbreak of a new Coronavirus in the Wuhan city of Hubei Province of China. According to WHO, Coronaviruses are a large family of viruses causing illnesses ranging from the common cold to more severe diseases such as the Middle East respiratory syndrome (MERS) and severe acute respiratory syndrome (SARS). It has an incubation period of two weeks. It has a reproductive rate of as high as 2.5, which implies, each infected individual, on an average, can infect as many as 2.5 more people. In comparison to the SARS outbreak of 2003, where 774 people died the intensity of Coronavirus is much more. According to China Daily, as of 18 February 2020, a total number of affected cases have been 72,436 with confirmed cases of 1886 deaths.² The virus is likely to infect two-thirds of the globe as the numbers are still rising every day.

The epicentre of the disease was traced to Wuhan city, the capital of the Hubei Province in China. The starting of the epidemic is traced back to the Hunan Seafood Market in Wuhan. It is a “wet market”, a labyrinth of stalls selling live fish, meat and wild animals. It is believed that the new virus mutated from a coronavirus which is common in animals and jumped over to humans in Wuhan bazaar. Alternatively, it has also been reported that in 2017, scientists warned that a SARS-like virus could have escaped from the lab of Wuhan in China that studies dangerous pathogens in the world. The Wuhan National Biosafety Laboratory is situated near the “wet market”. There is also a possibility that the outbreak's epicentre is coincidental. There is a perception among the scientific community that the virus mutated and jumped to people through animal-human contact at the market.³

As a matter of precaution, China has put Wuhan and the adjoining areas under quarantine to control the spread of the virus. On 23 January 2020, Wuhan was closed off by stopping outbound planes, trains and buses. All the public transports were also banned in the city. Other citifies adjoining Wuhan also followed the quarantine method.⁴ Further, justifying the quarantine method, the People’s Daily published an editorial in which it stated that “the case of Quarantine is a traditional and yet the most effective measure to contain a deadly epidemic.”

China has also deployed hundreds of military officers to control the flow of medical and essential supplies. A team of 260 officers of the PLA logistics team along with 130 military truck started the distribution process and they have delivered over 200 tonnes of supplies. However, some incidents of corruption were also found in the process. Reportedly, it was found that almost all the donation points in Hubei and Wuhan had discrepancies and the people were trying to make money in the process. It was also noticed that the donation of 350 tonnes of cabbage by the Shandong province to the Hubei province were being sold in the local supermarkets. The Red Cross Society of the in Wuhan was also under scanner when it was found that the crucial medical supplies failed to reach the hospitals.⁵

Domestic and International Effects of Coronavirus

In an endeavour, to fight the epidemic China built a 1000-bed hospital at a war-footing speed of less than ten days. Thus demonstrating its infrastructure capabilities.⁶ But the outbreak of the epidemic has exposed the failure of the Chinese government to handle such kind of events. At an initial stage, the Chinese government had overlooked the intensity of the disease. Although the first case was reported on 8 December 2020, the Wuhan municipal health commission did not issue any official notice rather they have been downplaying it.⁷ The outbreak of the epidemic has exposed the lack of action and fear of action by the local government in China. Xi Jinping did not declare the Coronavirus as epidemic himself and rather used the presence of the Director-General of WHO to declare it as an “Epidemic”.

The outbreak of the epidemic coincided with the Chinese Lunar New Year. During this period the Chinese citizen across the world travel to meet there family. The virus started spreading since early December and the fact there was no indication or any kind of public advice from the Chinese leadership elucidates the fact that the Chinese government is unprepared to deal with such kind of incidents. Reportedly, the Quishi journal, states that Xi Jinping already met the CCP Central Committee of the Standing Committee on 7 January 2020. This is 13 days before the public announcement of the outbreak.

In fact on 18 January 2020, there was a banquet of 40,000 families with government approval.⁸ On 20 January 2020, he issued a directive urging the government at all level to curb the spread of the epidemic. ⁹ A special “CPC Central Committee Novel Coronavirus Pneumonia Outbreak Response Taskforce” was constituted under Li Keqiang in January and on 3 February 2020; Xi Jinping held a meeting of the standing committee of the Political Bureau of the Communist Party of China to hear the reports on the groups of the coronavirus and the ways to prevent it.¹⁰ Further, the party secretary of Wuhan, Jiang Chaoliang was replaced by Ying Yong (mayor of Shanghai and a close confidant of Xi Jinping).

The Chinese government has exercised excessive censorship to suppress any information about the spread of the virus. According to Caixin, Dr. Li Wenliang one of the early victims of the epidemic disease tried to tell his classmates about the danger of the disease.¹¹ But his voice was silenced and he passed away under unknown circumstances. On 1 January 2020, the Wuhan Public Security Bureau published a message in their official Weibo account, declaring that the eight people who were spreading the news about the Wuhan epidemic have been dealt with according to the Chinese Law. There is increasing censorship of social media also to control any information about the epidemic. Chinese citizens started venting out their frustration on Weibo. They started writing posts “where is that person?” (It was directed towards Xi Jinping), it was deleted quickly. Some of them knew that Xi Jinping was a sensitive word to use so they replaced it with “Trump” soon posts like “scolding Trump” started trending on Weibo. A few people started posting the missing person notices for Xi Jinping.¹²

As the Coronavirus is spreading six times faster than the SARS, the effect is also bound to be greater than it. Specifically, the epidemic will affect the service sector, manufacturing sector and the trade sector.¹³ The National Development Reforms Commission has claimed that the outbreak will have “temporary and limited economic effects and will not leave a permanent mark on the Chinese economy.¹⁴ It has also affected consumer price inflation, which rose by 5.4 per cent in January. It is the highest since October 2011. The price of pork has risen to 116 per cent and the vegetables are 17 per cent more expensive. Health care products saw a rise of 2.3 per cent and the clothing’s prices rose to 0.6 per cent in China.¹⁵ However, it is alarming that the price of copper, which is one of the essential commodities has increased by 12 per cent since mid-January. Overall, supply chains have been disrupted due to travel restrictions as many cities have a lockdown. As China’s crude oil consumption has fallen by 20 per cent, it has led to a fall of 20 per cent in global oil prices. Prices for metals and other construction materials have dropped. The epidemic may also affect China’s capacity to purchase the additional USD 200 billion of the US goods over two years that was agreed in the “Phase 1” of the US-China trade deal.¹⁶

Implications for India

India-China trade is poised to reach the 100 billion mark this year. The epidemic is bound to affect the India-China trade as well. Overall, the epidemic is going to affect the smartphone and consumer electronics companies. Indian companies are expecting cuts and possible delays in the launch of new products due to the coronavirus outbreak in China that has disrupted component supplies. Chinese retailers have raised the price of the component by 2-3 per cent due to the shutdown of the factories. This may further lead to the rise of the commodities in India.¹⁷ Around 67.56 per cent of the bulk drugs and drugs, intermediaries come from China. The pharmaceutical sector is closely following the situation in China. Although India is dependent on the fermentation-based Active Pharmaceutical Ingredients (APIs) and vitamins, Indian companies maintain 2-3 months inventory of these APIs and intermediates.¹⁸ It is premature to predict the effect on the pharmaceutical sector. Thus at the moment, it seems the epidemic will have limited effect on India.

Despite China, at the behest of Pakistan, raising the issue of abrogation of Article 370 related to Jammu and Kashmir in the United Nation Security Council closed-door meeting India has acted prudently in the episode. Indian PM Narendra Modi has offered help and other cooperation to fight the epidemic. The spokesperson of the Chinese Ministry of Foreign Affair, said: “We thank and appreciate India’s support for China’s fight against the NCP. India’s acts of goodwill fully demonstrate its people’s friendship with the Chinese people. We stand ready to work with India and other members of the international community to jointly fight the epidemic and safeguard regional and global public health security.”¹⁹

Conclusion

As a safeguard, the People’s Bank of China (PBC) has injected a total of 1.7 trillion yuan into the financial system sending a signal of strengthening counter-cyclical adjustments to stabilize market expectations. Besides, cities across the country are mobilizing and organizing key enterprises to resume production.²⁰ During his inspection tour, Xi Jinping has said: “the fundamentals of China’s long-term economic development remain unchanged and the epidemic’s impact on the economy is short-lived”. Overall, it is going to be a litmus test for Xi Jinping on health, society, economy and international challenges, at least for the near future.

References

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