Author : Manoj Joshi

Expert Speak Raisina Debates
Published on Feb 06, 2020
China’s long march to fight the Coronavirus There are no indications that the novel coronavirus (nCoV) outbreak has peaked. As of now nearly 600 people have died and 30,000 infected. In addition there are over 150 confirmed cases abroad in 26 countries. Experts say that the coronavirus is less virulent than SARS, the virus that hit China in 2002-2004. But, they say that it could take another 6-12 months before a vaccine can be readied. However there are claims that the rate of infection is declining. Alarms had been sounded about the virus in December 2019 and that it was allowed to spread without intervention. An ophthalmologist in Wuhan had raised the alarm over the virus after treating a patient in December and had been punished by the Wuhan police for spreading rumours. He and seven other people so punished were vindicated by the Chinese Supreme People’s Court. So far, the mortality rate for the known cases of the virus is significantly higher in Wuhan, the epicenter of the outbreak. The mortality rate (total deaths as proportion of confirmed cases) is around 2.1 per cent in China, down from the 2.3 at the outbreak according to the National Health Commission on February 4. In Hubei, however it remains at 3.1 per cent. One problem was that given the focus on Wuhan city, the needs of the smaller cities in the Hubei province were being neglected. It was noticed, for example that Ezhou City has a higher death rate than Wuhan and lacks medical infrastructure and supplies. Hubei is suffering from a severe shortage of Intensive Care specialists and hospital beds. Wang Chen, the head of the Chinese Academy of Medical Science has said that while there was no evidence yet that the epidemic had reached its peak and that the biggest source of transmission of the virus were people with mild symptoms who are not being attended to because there were not enough hospital beds. Since the outbreak, the province has been racing to build adequate infrastructure and provide the required supplies both for those ill, as well as for the residents of the city.

Political response

On 25 January the Communist Party of China’s Politburo Standing Committee (PBSC) held a meeting to discuss the issue. Strikingly, CCTV showed a video from inside the meeting with XI doing most of the talking but the other six members also making points and comments. Clearly the goal was to show that the collective leadership was very much in place. On Feb 3 the PBSC again met to discuss the virus. Xinhua’s report of the meeting emphasized the collective nature of the Chinese leadership and emphasized that the outbreak was a major test of China’s governance system and its capacity. There was therefore a need to “address the shortcomings in the response to the outbreak, improve national emergency management system.” Even so Xi’s primacy was underscored by a front page editorial in the People’s Daily on February 4 describing the coronavirus as a “people’s war”  and noting that as long as the great Chinese people “more closely rally around the CCP with comrade Xi Jinping as the core”, they will be able to win this war. Even though in practical terms Li Keqiang has been shown as visiting Wuhan and inspecting the situation, and Vice Premier Sun Chunlan taking charge of the operations on the ground, the Chinese media is emphasizing Xi’s role. Xinhua summarized Xi’s orders on controlling the outbreak as saying that Xi had been “personally directing, and personally planning everything on this matter.” Not surprisingly, the CPC is concerned about the political consequences of the nCov outbreak. One manifestation of this has been the call by the PBSC in its February 3 meeting calling on officials to maintain a tight grip on the online media and direct public opinion to “winning the war over the virus.” The next day, the State Councilor and Minister of Public Security (Police), Zhao Kezhi addressed public security personnel across the country through teleconference and called on them to maintain a secure and stable environment to fight the virus. He said the police needed to crack down on “hostile forces” that may try and disrupt the battle against the coronavirus.

Administrative response

The fight against nCoV is being headed by Premier Li Keqiang. On Monday 27 January, he visited Wuhan and inspected the efforts to control the virus and visited a hospital having the largest group of patients and infected persons. The Chinese authorities announced that they had extended the Lunar New Year holiday, originally supposed to end on January 30 to 2nd February 2020. This was done on the authority of a Leading Group of the CPC Central Committee on the prevention and control of the coronavirus outbreak, which is headed by Premier Li Keqiang and whose deputy is Wang Huning. The leading group has said that measures will be taken to ensure the supply of medical resources and daily necessities. But, on the ground the task is being carried out by Vice Premier Sun Chunlan who is the head of a “central guiding group” which has taken charge and which has given instructions to pursue a policy of “resolutely rounding up everyone” so as to prevent the further transmission of the virus. Wuhan has already built two hospitals—the Huoshenshan and the Leishenshan—which are being run by the PLA. The city authorities plan to convert another eight existing venues including gyms, exhibition centres and sports facilities into hospitals. So far, it has already converted 11 venues into makeshift hospitals with 10,000 beds. As of now the hospitals are turning away all but the most severely affected. But the authorities are aware that the tighter their quarantine, the earlier they will be able to control its spread. According to Caijing magazine, the Wuhan government had been ordered to hospitalize all confirmed patients by the mid-night of February 5 under direct orders from President Xi. All those failing to do so could get sacked.

 Economic Impact

Beyond the issue of the epidemic and its consequences in terms of those infected and those who die from it, is the issue of the impact on China and the world’s economy. The spread of nCoV has sparked concerns among Chinese investors and sent China's A-share market tumbling on Monday (Feb 3), the first trading day after the extended Lunar New Year holiday. Xu Gao, chief economist at BOC International (China), said economic fallout from the outbreak should be short-lived as stringent control measures may help curb the epidemic's nationwide spread as early as by the end of this month. According to Lian Weiliang, the deputy head of the National Development and Reform Commission (NDRC) "In comparison with the 2002-2003 SARS epidemic, China's economic strength, material and goods accumulation and ability to cope with emergencies are significantly stronger than that period." But China’s economy in 2020 is much more complex than it was back in the time of SARS. There is much more local government, corporate, consumer and mortgage debt. And the extension of measures to other parts of Hubei and quarantining of entire cities will disrupt supply chain and logistics in an unprecedented manner. Besides, the proportion of consumer consumption in GDP is much higher than 2003 ensuring a greater impact on the economy. The most vulnerable are medium, small and micro enterprises which are a major force in the job market, but more susceptible to the economic consequences of the nCoV outbreak. But, at the same time, the impact of the outbreak on the economy of China, whatever it is, will affect the global economy as well. In 2003, China generated 4 per cent of the global GDP, in 2019, it was 16 per cent. The immediate and obvious impact are in the tourist and aviation markets. Domestic and international aviation has been shut down and outbound tourists have cancelled their programs. China is the world’s biggest outbound tourist market. China’s Banking and Insurance Regulatory Commission announced that companies would receive support “through measures such as encouraging appropriate lowering of loan interest rates, improving arrangements for loan renewal policies and increasing medium-term and credit loans. “ Meanwhile, according to reports, many cities rolled out policies to support small and medium sized enterprises (MSMEs) to reduce their burden of loans, rent and social security payments. The People’s Bank of China (PBOC) has also said that credit support for the manufacturing sector and the MSMEs would be boosted. The China’s Cabinet, the State Council, has announced tax exemption and loan policies to contain the consequences of the nCoV outbreak and better meet the demand for medical supplies and everyday necessities. Even so, according to Caixin, the Chinese MSME’s may be the “non-human” victims of nCoV. As it is many have suffered because of the extension of the Lunar New Year holiday by an additional week to 9 February. This is despite the announcements by many local governments cutting rents and taxes. Such measures will help in alleviating short-term cash flow issues, but can’t address the larger problems that have afflicted this sector. Many were limping along before the nCoV outbreak and may well sink. The financial system of the country will come under great pressure in the coming weeks and along with mobilizing the PLA, the Party and the police, the CPC is also taking steps to stabilize the economy. 28 January, the People’s Bank of China announced that it would use monetary policy tools, including open market operations to inject funds to keep banking system liquidity at a reasonable rate. On 4 Feb, the PBOC pumped $ 57 billion into the banking system with reverse repurchase agreements, making it the largest single-day addition since January 2019. It also set the yuan’s reference rate stronger than the currency’s official close on 3 Feb.  As a result on the next day the currency strengthened and Shanghai stocks rebounded.
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Manoj Joshi

Manoj Joshi

Manoj Joshi is a Distinguished Fellow at the ORF. He has been a journalist specialising on national and international politics and is a commentator and ...

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