China declares “people’s war” against coronavirus; global economic impact spreads

SINGAPORE—China has declared a “people’s war” against the rapidly spreading coronavirus that has infected more than 24,000 so far and killed nearly 500—including two outside mainland China. At a meeting of the ruling Communist Party’s Politburo Standing Committee on Monday, leaders described the epidemic as a “major test of China’s system and capacity for governance” and said there have been “shortcomings and difficulties exposed in the response.”

At their meeting in Beijing, party leaders announced a number of new measures against the coronavirus as well as some targeted reforms to address significant shortcomings in the government’s response that became apparent in recent days.

President Xi Jinping, who chaired the session, said the response effort is not only a health issue but also one that concerns the functioning of the Chinese government at all levels. According to an account given by People’s Daily, Xi “demanded resolute opposition against bureaucratism and the practice of formalities for formalities’ sake.”

While the party laid out the next steps to be taken, economists began calculating the impact for China and the rest of the world. With travel on lockdown and many workplaces in China idled, the financial effects of the crisis are beginning to trickle out to other countries.

Reversing “shortcomings and weaknesses”

Xi’s remarks to the Politburo came amid reports, now confirmed, that authorities in Wuhan had initially acted to quash any public mention of a new illness back in December. At the time, police detained and issued warnings to eight local health professionals who had discussed among themselves the possibility of a new SARS-like outbreak they were observing among patients in messages on WeChat (a Chinese messenger app). Police summoned the doctors and accused them of spreading “rumors.” It was only after the doctors’ messages leaked that Wuhan health officials announced that indeed there were people suffering from pneumonia, cause unknown.

One of those involved in the WeChat discussions and summoned by police was Dr. Li Wenliang, who himself became infected with the coronavirus after treating a patient. He is now being described as a whistleblower. China’s Supreme Court vindicated Li and reprimanded police in a statement issued last week.

Judge Tang Xinghua wrote: “If the public had believed these ‘rumors’ at the time, and carried out measures like wearing masks, strictly disinfecting and avoiding wildlife markets… it might have been a good thing.” Tang said the instinct of public officials to keep information secret and cover up embarrassing news is “textbook material for weakening public trust in the government.”

The Communist Party’s Monday meeting in Beijing appeared aimed at shoring up public faith in the government’s ability to combat the epidemic, emphasizing a commitment to transparency—something lacking during the SARS epidemic of 2002-03. Party leaders stressed the need to improve China’s “emergency management system” and ordered a “systematic review” of local officials’ failure to maintain reserves of emergency supplies—evident in shortages of masks and other materials in several regions.

The party leadership also mandated a total overhaul of sanitation at food centers and said any weaknesses in public health must be eliminated. In a direct attack on the root cause of the current health crisis, a directive was issued to “crack down on illegal wildlife markets and trade.” The coronavirus now sweeping across Hubei province is believed to have jumped from animals to humans at a wet market in Wuhan, where meat was sold alongside live wildlife in unsanitary conditions.

In Wuhan, the first infected patients were transported on Monday to a new hospital specially built to deal with the coronavirus. The 1,000-bed facility was constructed in just ten days, and a second 1,500-bed center is due to open soon. Despite the problems noted by the Communist Party at its meeting and by the Supreme Court, the pace of the state’s organized response effort, including its mass quarantine measures, continued to earn praise from officials at the World Health Organization (WHO). Director-General Tedros Adhanom Ghebreyesus told Xinhua News Agency, “If it weren’t for China’s efforts, the number of cases outside China would have been very much higher.”

In addition to the quick hospital construction and dispatch of medical workers to Wuhan, other major public resources are also being marshaled. The state-owned Assets Supervision and Administration Commission (SASAC), the top body overseeing China’s publicly-owned companies, put all its firms on notice to re-orient themselves toward epidemic control. Logistics giants like China Post and State Grid Corporation are providing free air cargo transportation of medical supplies and other goods. Food distributors are re-routing supplies to Hubei province, while manufacturers of masks, gloves, and disinfection equipment are all raising production volume.

Global economic impact

As the immediate medical and political response to the epidemic proceeds, the coronavirus is threatening to become a major burden on the global economy. Inside China, tens of millions of people remain under quarantine and unable to return to work after the extended Lunar New Year holiday. National oil consumption is reportedly down 20%, indicating not just a decline in travel but also in industrial production.

While the vast majority of factories, shops, and other workplaces are still operating, a number of international brands have closed their doors for now—among them Apple, Ikea, General Motors, Toyota, Nike, Starbucks, and McDonald’s. And some cities are seeing extended holiday periods by order of the government.

Some domestic companies are also under pressure, especially if they’re located in the quarantine zones or rely on workers from affected cities. A representative from a metal works factory in Zhongshan, in southern Guangdong province just west of Hong Kong, told People’s World via email that they were ramping up production at their second plant in Bangladesh to fulfill international orders.

But it’s not just a lack of workers hampering work; it’s also an inability to ship out completed products.

An international airline blockade has halted big chunks of passenger and cargo traffic in and out of China. The United States, Israel, Italy, Russia, the Philippines, Singapore, Vietnam, Australia, Japan, and several other countries have imposed various restrictions on the arrival of Chinese nationals or people who have visited China recently—despite WHO pleas calling such measures unnecessary. The international health agency is actively opposing restrictions on travel and trade to China, saying they will needlessly cause economic damage.

The Chinese government says it is perfectly reasonable that other countries have taken precautionary measures at their border entry points, but it said that some governments—especially the United States—were sparking “panic.” Hua Chunying, a spokesperson for China’s Foreign Ministry, said Monday the U.S. had “inappropriately overreacted.”

“The U.S. government hasn’t provided any substantial assistance to us, but it was the first to evacuate personnel from its consulate in Wuhan, the first to suggest partial withdrawal of its embassy staff, and the first to impose a comprehensive travel ban on Chinese travelers,” Hua said. He also cited a report from the U.S. Centers for Disease Control and Prevention (CDC) which stated 10,000 people had already died from flu in the United States during the 2019-20 season, with 19 million infected.

In Singapore, where 18 coronavirus cases have been confirmed, the government has implemented progressively escalating travel restriction measures. The most immediate impact of China’s closing has been felt in the tourism and related sectors. Around a fifth of visitors who pass through this city-state are from the Chinese mainland, but arrivals from there have now plummeted by 80%. Visitors from other countries are also deferring travel, compounding the effect.

Julie Cheong, president of the Food, Drinks, and Allied Workers Union, which represents workers in hotels and supermarkets, told the Singapore media that cancellations of events are up and occupancy is down. Workers at some restaurants that rely on tour groups are off the job as business is too slow to keep the doors open. A single hotel reported more than 1,000 nights’ worth of reservations have been canceled. And workers in the gig economy—such as ride hailing app drivers—are feeling the hit to their incomes as the number of rides to and from the airport decline sharply.

State agencies are slashing licensing fees for tour operators and offering subsidies for disinfection and cleaning costs to hotels where some of the country’s coronavirus patients had stayed. They are admonishing landlords accused of evicting people who are quarantined or on leave of absence because of infection or exposure.

U.S. not immune

The confirmation of 11 coronavirus cases in the U.S. already shows that it’s not immune to the health effects of the epidemic, but it is quickly becoming clear that neither is it shielded from the contagion of economic stress also spreading around the world.

With the Trump administration’s trade war against China, economic links between the two countries were already frayed. But if the slowdown in Chinese factory output extends much further, things could get worse. Experts predict U.S. companies and consumers will start to see a decline in available goods should the situation not stabilize by mid-March.

Clothes, toys, and other items could be in short supply at retailers for the back-to-school and holiday seasons. The automotive and electronics industries will feel the pinch fastest, however. Wuhan is a hub for the manufacture of car parts and liquid crystal television and computer monitors.

David Closs, a professor emeritus in the Supply Chain Management Department at Michigan State University, told the Associated Press that his estimates show it could be as little as one to three weeks before the auto parts shortage begins affecting big U.S. automakers. General Motors already sells more cars in China than it does in the U.S., so a significant sales decline also looks increasingly unavoidable.

Also, the U.S. economy generally relies on China for goods that are much more valuable and essential than the cheap t-shirts, shoes, and plastic household items that dominated imports at the time of the SARS crisis 17 years ago. China now accounts for a third of global economic growth; a slowdown there will unavoidably and significantly impact the U.S.

Authorities in China are taking unprecedented steps to put a floor under any drop caused by the coronavirus epidemic. The central bank announced over the weekend that it plans to inject 1.2 trillion yuan ($171.6 billion USD) of fresh financing into the economy. Some 300 billion yuan (nearly $43 billion USD) is being used to incentivize banks to extend loans to domestic companies to keep production moving.

From his private Mar-a-Lago club in Florida, however, President Donald Trump declared in a Fox News interview Saturday that the U.S. had “pretty much shut it down,” referring to the coronavirus. At the same time, media reports were detailing a lack of preparation and coordination inside the U.S. government. In 2018, the administration fired the top managers of the country’s pandemic response team, leaving it unclear what agency or persons would be in charge should the coronavirus threat expand in the U.S.

Instead of focusing on public preparedness, Trump administration officials have appeared more interested in using the health crisis as an opportunity to step up their attacks on China and trumpet the opportunities represented by the coronavirus.

Secretary of State Mike Pompeo last week sought to further sabotage the business of Chinese mobile technology company Huawei while he was in Europe and launched into a tirade against the Communist Party of China, calling it “the central threat of our times.” Commerce Secretary Wilbur Ross spoke the following day of how the coronavirus “will help accelerate the return of jobs to North America.”

The Chinese ambassador to the United States, Cui Tiankai, said on Saturday that the people of the U.S. and China must both be on guard against any “political viruses” that could threaten cooperation between the world’s two largest economies to fight the epidemic.

It may be too late, though. It appears the Trump administration is already infected.