COVID-19 & China: A View from Asia

Since then, the tables have turned dramatically. China has succeeded in bringing down the number of new cases to less than a hundred a day, the majority of them imported. The country remains dead scared of an epidemic rebound and has put in place comprehensive safeguards. Instead of the world locking in China, China is now locking out the world. Particular care is taken to protect Beijing. International flights to Beijing must first land in one of twelve provincial cities so that every incoming passenger is carefully checked and quarantined if necessary. At the same time, the Central Government has progressively relaxed controls on normal economic activities. All indicators (highway traffic, consumption of luxury goods, housing sales, coal consumption, air pollution etc.) show the economy quickly reviving. China’s GDP is likely to register positive growth this year. The export sector remains badly affected of course but China’s dependence on it is not as large as before because of the size of its internal market. China is the most vertically integrated economy in the world. Last July, McKinsey published a report that while the world’s economic exposure to China is growing, China’s exposure to the rest of the world is reducing.

In the meantime, COVID-19 has spread with a vengeance to the rest of the world on a scale much bigger than that which affected China. The economies of US and the EU are almost in free fall as priority is rightly placed on measures to control what has become a pandemic. Unemployment rates have shot up and national governments are spending trillions of dollars to help struggling businesses and individuals stay afloat. Masks, protective clothing and respirators are in woefully short supply. In some cities in Lombardy and Spain, a system of heart-wrenching triage was in place to decide who were more deserving of lifesaving treatment. China, which once had to appeal for supplies from the rest of the world to supplement its own inadequate production, is now the principal supplier of such lifesaving material to the world. China’s factories operating 24/7 now make 200 million masks a day, much of which for export.

We do not know how long it will take for Europe and the US to get out of the current situation. COVID-19 is such a contagious virus, no country is safe until all countries are safe. Even after Europe and the US have contained the virus, its spread to other parts of the world (Middle East, Africa, South Asia, Southeast Asia, Latin America) will make it a recurrent threat to everyone until good vaccines are found to inoculate entire populations. What China has done, no other country can do. China’s uniquely centralized system has deep roots in Chinese history and is not peculiar to the People’s Republic. For over two thousand years, the ideal in the minds of ordinary people is of a well-functioning centralized system with good and wise leaders at the top. Great walls are repeatedly built to protect the country from baleful external influence. This is China’s great strength but also its great weakness.f

The immediate impact of COVID-19 is to public health. The longer-term impact of COVID-19 is on the global economy and geopolitics. More than ten years after the Global Financial Crisis, another downturn is perhaps due. Some fear that this time it will be much worse. Governmental attempts to inject liquidity and suspend contractual obligations can only provide temporary relief. Eventually, the problem of excessive debt, caused in no small part to unprecedented infusion of liquidity into the global system since the Global Financial Crisis, will have to be resolved one way or another. As companies collapse with cascading knock-on effects on other companies and creditors, sorting out the financial mess may take years. With so much human suffering, affecting disproportionately those who are poorer off, existing political systems and structures will inevitably be called into question. In some countries, there will be social upheaval. What is weak will collapse and become history. What is strong will become stronger and built upon. In global politics and economics, the league table of leading countries and companies will change again.

In the US, the mixed response to COVID-19 is becoming a key issue for the coming elections. New leaders are being thrown up. In the EU, COVID-19 is testing European solidarity to its elastic limit. If COVID-19 becomes much worse in India, its rambunctious democracy will come under severe stress. In China, what began as a threat to the Communist Party has become vindication of its leadership, at least for the time being. Chinese history goes through long cycles. Every schoolboy in China is familiar with the opening lines of the Romance of the Three Kingdoms: In the great affairs of men, long disunity leads to unity and long unity leads to disunity.

Provided it can prevent a second round of the epidemic, China is now in pole position to lead the world out of global recession. It is now the only tunnel with bright light at the end of it. China’s leaders will naturally want to turn this to political advantage. Already we see how China doles out masks and other material (either by outright donation or through export licenses) to foreign countries based on political considerations. As its economy recovers, we can expect China to offer preferential access to its domestic market to friendly countries along the Belt and Road. For the US and Europe, China will try to make use of its current advantage to blunt anti-China sentiments and build long-term relations.

Anti-China sentiments in the west have gone from bad to worse in recent years caused partly by fear of a rising China and party by a clash of civilizational values. Even among those who admire China’s success in overcoming COVID-19 there is antipathy towards China’s authoritarian ways. When the Central Government shut down Wuhan, the people of Wuhan had no say in the decision. When President Trump considered shutting down New York City, Government Cuomo objected furiously. In China, national interest comes before human rights. In the liberal west, there is continuous tension between the two which is the source of western creativity from the time of Greece and Rome. It is interesting to compare the national reaction to two whistleblowers - China’s Dr Li Wenliang who first sounded the alarm in Wuhan and Captain Brett Crozier who publicized the deteriorating situation onboard USS Theodore Roosevelt. Both men came down with the virus. In Dr Li’s case, he has been officially vindicated after his death and the dossier is closed by central edict. In Captain Crozier’s case, the debate will never cease whatever the White House might say. China and the US are built on different foundations, each having the weakness of its strength. Global cooperation requires each to accept the other for what it is.

Provided China does not overplay its hand this round, it may emerge a big winner out of the COVID-19 pandemic. It must curb the tendency of its officials to be overly truculent in their defense of China’s position or condescending in their treatment of lesser powers. It will do well to heed Winston Churchill’s wise words: In defeat, defiance; in victory, magnanimity; in peace, goodwill. At the recent Extraordinary G-20 Leaders Summit conducted through videoconference, President Xi Jinping called for greater international cooperation to fight the pandemic and to revive the global economy through coordination of macro-economic policy and facilitation of trade.

China is likely to convene the twin meetings of the National People’s Congress and the National People’s Political Consultative Committee soon. They had been postponed because of COVID-19. How China adjusts its domestic and foreign policy - economic and political - will be of interest not only to China but also to the world. COVID-19 is a global tragedy but it is also a historic opportunity for China and the world to reset course, rebuild trust, work together more and bring about a safer world. The alternative is a tragedy much worse than the pandemic.