Saturday 1 February 2020

Xi Jinping bets China’s future on slaying the Devil Virus (Sunday Guardian)

By M D Nalapat

Before Xi Jinping took personal charge of measures to battle the novel coronavirus, official response to the crisis took nearly five weeks to evolve from initial puzzlement to the hypersonic action initiated during January.

Bangkok: The onset of the 2019 n-CoV coronavirus is proving to be the most rigorous test of the leadership capabilities of Chinese Communist Party (CCP) General Secretary Xi Jinping and the team he has assembled and empowered since 2013. Since the days of Chairman Mao, China has never had a leader as powerful and decisive as Xi, but such vast power concentrated in a single individual may sometimes be a mixed blessing, as was the case with Mao. This is because there is likely to be much less of even verbal resistance to any move favoured by the leader, even if several individuals have doubts about its practicality and value. Over the past three years especially, as a consequence of his immensely popular drive against corruption in the CCP, whatever Xi decides that the immense party-government machinery should do gets attempted and usually completed without question. Second thoughts are non-existent unless they come from Xi himself. While the unprecedented response of the authorities to the Wuhan coronavirus outbreak from the second half of January 2020 would not have been possible without the domination of the governance mechanism in China by President Xi, it is also true that the five weeks lost since early December 2019 in putting in place comprehensive and nationwide measures against the novel coronavirus 2019-n-CoV epidemic were because the matter was yet to be personally handled by President Xi. Of course, once he took personal charge of the novel coronavirus counter-measures, swift and unprecedented action followed that was designed to create firebreaks against a greater spread of the novel coronavirus. Barring Mao Zedong, none of his predecessors would have been able to implement measures as drastic and dramatic as the quarantining of Wuhan, a city of 11 million people, followed by a similar lockdown in other cities. Just as only Prime Minister Narendra Modi could have goaded the bureaucracy in India to drain away 86% of India’s currency stock with almost no notice on 8 November 2016, only President Xi could have enforced such severe restrictions on what is now a total of nearly 90 million individuals. The rollout of such unprecedented measures in an effort to limit the spread of the novel coronavirus 2019 n-CoV may turn out to be as consequential for economic growth in China as was India’s 2016 demonetization. Just as the population of India accepted the pain and dislocation caused by the drastic demonetization of their currency because of their faith in Prime Minister Modi’s promise that such immediate sacrifice would generate huge gains in future, overall public confidence in President Xi has resulted in the Chinese people enduring without significant protest the conversion of entire cities into ghost towns devoid of almost all commercial and industrial activity. Of course, just as questions began to be asked by the close of 2017 about whether the 8 November 2016 “currency famine” was worth its touted benefits, voices are likely to be raised in China in the future about whether President Xi’s policy of scorched earth that was adopted by the Chinese authorities—albeit after nearly six weeks of the confirmed appearance of the novel coronavirus—was the best course to follow. A few economists warn that the sequence of measures and responses taken by the Chinese government following the November onset of the earliest traces in Wuhan 2019 novel coronavirus may shave off as much as 2.1% annually of growth of China for 2020-2023. Defenders of the basket of measures adopted by the authorities claim that the alternative would have been mass deaths in China and a global pandemic by mid-February, whereas now they expect the virus to begin declining in spread by the close of March even within China, and be well within controllable limits in the rest of the world because of the Xi restrictions.
Before taking personal charge of measures to battle what Xi has repeatedly termed the “Devil Virus”, official response to the crisis took nearly five weeks to evolve from initial puzzlement to the hypersonic action initiated during January. In fact, doctors who warned in mid-December about the virus and its toxicity were referred to the police as “rumour mongers”. Even after confirmation of test results and spread were communicated to the WHO by China on 31 December 2019, the 1.3 billion people in the country were at first not told. It was only after Xi Jinping’s direct involvement that transparency began to be witnessed in the country. By then, the novel coronavirus had already spread within the country and outside, whereas prompt action by early December could have contained the situation. The delay in reporting to the highest levels and thereby ensuring a proper reaction to 2019 n-CoV was caused by the usual tardiness within the official machinery to disseminate bad news to higher levels. In contrast, good news gets relayed rapidly up the chain of command. The preference of lower level officials being to give “positive” rather than “negative” news to higher-ups, the consequence is that the higher echelons are often slow to know when a crisis occurs. Rather than serving as an independent source of “situation input”, the Communist Party machinery has during the Xi period become inextricably interlinked with the formal government machinery. The result has been that the feedback received by the higher leadership is usually the joint consensus of Party and Government rather than presented separately.
Briefings and information from authorities on the ground indicate that it was sometime in November 2019 that hospitals began to suspect that a new strain of the coronavirus family had manifested itself in Wuhan. Rather than raise the alarm with sufficient velocity, nearly three weeks were spent on further tests and investigations, during the course of which the new coronavirus spread uninterruptedly. Only by the middle of December was there acknowledgment among provincial authorities that a new and potentially deadly coronavirus strain was afflicting Wuhan. A check on the Baidu search engine reveals the very low level of activity concerning searches within China on the novel coronavirus, while the announced figures for patients (including fatalities) were at a level below that which would have been normal for such a virulently infectious strain. Several cases apparently went undetected. After Singapore reported its first suspected case of the Wuhan coronavirus on 5 January 2020, searches on Google rose exponentially, while those on Baidu remained at very low levels, indicating that the public in China was still unaware of the magnitude of the crisis that was confronting them. Figures that were released by concerned officials about victims of the new virus strain in China suddenly tripled on 20 January, indicating that orders from the top had come to ensure a greater level of transparency on the 2019 n-CoV situation. The wake-up call for the global community came when the Chinese leadership ordered the lockdown of Wuhan, which was later extended to several other cities. This unprecedented measure brought home to the world the dangers faced should the novel coronavirus spread. However, the roughly 12,000 reported cases of 2019 n-CoV as on date sits uneasily with the fact that nearly 20 countries in multiple continents have reported novel coronavirus cases, most concerning Chinese visitors. If the figures for such infections outside China are juxtaposed with official figures for those infected with the virus in Hubei province, it would seem that the virus has a particular affinity for frequent flyers. The alternative hypothesis is that the number of those affected within China is substantially higher than the figures made available. As a consequence of the slowness in reporting and the initial downplaying of the figures for those afflicted by 2019 n-CoV (until corrected by orders from General Secretary Xi Jinping), countries receiving visitors from China (including from the focus of the epidemic, Wuhan) were unaware for about five weeks of the need for screening, as were places within China but outside Wuhan. As a consequence, the novel coronavirus spread rather than got contained. Late but perhaps not too late, the city was placed in quarantine on Xi’s orders, thereby ensuring that its spread beyond the boundaries of China remains manageable. Within China, the lost window of opportunity to fence off the virus in a limited area that was caused by the delay in giving full and factual information to the highest levels about 2019 n-CoV has resulted in cases being diagnosed in every province of China. The persisting low level of searches about the novel coronavirus in Baidu until the close of January 2020 is evidence that the initial window of virus suppression was lost. The low level of public awareness as evidenced by the infrequent Baidu searches confirms that.
The R-0 (R-naught) of 2019 n-CoV is 2.9, which indicates that more than half of those infected will need to be quarantined if the spread of the virus is to be halted and reversed. Given that the virus is infective even when there is no fever (the common manner of separating healthy from infected travellers at airports), and some cases may be wholly asymptomatic throughout the duration of the infection in an individual, human-to-human transmission carries a high risk of occurrence. By way of comparison, the R0 of SARS was 2.5. However, the mortality rate from the novel coronavirus is much below that of SARS, with fatalities reaching a peak of 2% of severe cases. Several mild cases have gone undetected, the virus running its course within the body within ten days, often with few or no overt symptoms. The low mortality rate of the novel coronavirus may be the reason why the World Health Organisation (WHO) hesitated for over a month before declaring a 2019 n-CoV global health emergency on 30 January. The WHO has continued its post-2016 practice of excluding Taiwan from its reporting mechanism, despite the island being a mere hundred miles from the Chinese mainland. Were President Xi to take a humanitarian initiative and ask the WHO to include Taiwan within its 2019 n-CoV reporting matrix, that single step would win him substantial goodwill in Taiwan. It is irresponsible on the part of the WHO to continue to exclude Taiwan from its global matrix of measures to contain the spread and toxicity of 2019 n-CoV. Both Prime Minister Shinzo Abe of Japan and Prime Minister Justin Trudeau of Canada have asked the WHO why such a Taiwan exclusion was made that would affect the efficacy of the global campaign to stamp out the virus, but have not received a reply from the Director-General of an international organisation that has done creditable work despite having a budget that is lower than that of Massachusetts General Hospital in Boston. It may be added that the heads of the two biggest democracies in the world, President Donald Trump of the US and Prime Minister Narendra Modi of India, have yet to comment on the matter. Given the ability of the virus to spread, it would be reasonable to assume that the number of those infected in China alone would rise to around 240,000 by the close of March 2020, although reported figures may be lower in view of the fact that several cases may remain undetected because of the mildness of symptoms. The measures now put in place should be sufficient to ensure that the novel coronavirus outbreak remains largely contained within China, which is good news for the global economy.
The effects of the outbreak on the Chinese economy are expected to begin tapering by March, but weaknesses to commerce and industry caused by the epidemic will linger. Among the more problematic could be the fact that China as an investment destination will be much less attractive to outside capital, given the perception of elevated health risks, views that may linger for at least three years. Another factor is the disruption caused to global supply chains by the closure of manufacturing units in China as a consequence of both quarantine as well as silent panic manifesting itself in most of the citizenry staying indoors. Such a situation is likely to be temporary, and should be over by the close of April 2020. However, added to the disruption already caused by the Trump Trade War on China, investment into the manufacturing sector in China is likely to remain subdued, to the advantage of countries such as Vietnam and possibly India. Given the leadership style of Xi Jinping, which is inspirational in nature as was that of Mao Zedong, it is certain that intense efforts will be launched to revive the economy once the “Devil Virus” is finally sent first to the ICU and then the grave. Organised efforts by the Chinese Communist Party-PRC Government at reviving the “animal spirits” of hundreds of thousands of Chinese entrepreneurs are likely to be accompanied by increased leeway shown to private enterprise, which has long been shackled by the CCP’s preferential treatment to the many dinosaurs owned by the state. The Chinese Central bank may need to forget about pleasing Trump by trying to keep the price of the RMB stable against the US dollar. Small units in particular already face a crisis of working capital, and only the Central bank’s printing press can rescue them from closure. China is likely to follow the example of the US during the Presidency of Donald J. Trump. The Federal Reserve Board has printed money on a scale never even dreamed of before, and has stopped the presses (perhaps temporarily) less than a month ago, after two straight years of trillion dollar expansion of money supply. This has kept US stocks high, so much so that their total value amounts to 150% of the US economy. Should the Chinese economy remain depressed, Europe continue on a reduced growth trajectory and the Middle East remain wracked by US-Iran tensions, the US economy may begin to slide two to three months before the 2020 US Presidential elections, thereby making it possible for a genuine “Contra Trump” candidate (rather than a faux Contra Trump candidate such as Joe Biden) of the calibre and competence of Elizabeth Warren to defeat the 45th President of the US. This would have an immediate impact on US foreign policy. Given that every Democratic Party candidate except Joe Biden favours the shutting down of gas and oil fracking in the continental US, that single step would take away almost half of US output. This would make short-term global oil prices unacceptably volatile in a fragile economic environment unless Venezuela and Iran were allowed to resume normal oil production. This would contrast with the systematic manner in which President George W. Bush and his Republican successor Donald J. Trump have brought oil production in both Iran as well as Venezuela close to zero through overt sanctions and covert sabotage. Despite the Trump-induced near-total loss of output in Venezuela and Iran, the effects of 2019 n-CoV are likely to drag oil prices down to around $50 a barrel. Even this value can only go lower as alternative energy feedstocks gain in cost advantages.
By blockading Wuhan and other cities, the Chinese leadership is likely to be able to contain the effects and spread of the novel coronavirus, and ensure its rollback by April 2020. As US Commerce Secretary Wilbur Ross truthfully, if somewhat insensitively, said, the pain that China is now experiencing could be converted into gain for much of the rest of the world, provided that the transmission of 2019 n-CoV from China to elsewhere gets reduced within ten days and the spread of the novel coronavirus is slowed down and stopped in China within the next four to five weeks. The month of February 2020 will show if the 2019 n-CoV novel coronavirus outbreak is a painful but temporary distraction to the global economy or a catastrophe.

No comments:

Post a Comment