What a tiny virus can do: Ask China

The wildfire novel-Coronavirus (renamed as Covid-19) has taken a toll of nearly 3,000 so far, confirmed cases of some 80,000 in China and over 5,000 affected across the globe. It is still raging, with serious consequences to the health of millions of people, economic development and on political life in China.

China’s responses are at three levels – maintaining political stability, restarting production lines and clearing supply chain bottlenecks, and health and safety of people across the country and in Hubei province in particular.

In an unprecedented manner, the most decisive political dispensation in the country, the politburo standing committee, met three times in a month and announced a “people’s war against the epidemic.” President Xi Jinping addressed 170,000 officials at the local level. A small leading group was formed to counter the damage under Premier Li Keqiang, who visited Wuhan. Other members like Vice Premier Sun Chunlan, who also heads the National Health Organisation, visited Wuhan seven times.

A one billion Yuan (about $140 million) outlay was made for building two major hospitals at Wuhan and for other medical purposes; 4,000 medical personnel from the armed forces were despatched to Wuhan in three batches. In addition, 2,600 personnel were despatched, carried by 6 Yun-20, 3 Il-76 and 2 Yun-9 military aircraft to Wuhan.

Growing public discontent and mismanagement led to the dismissal of the local leadership in Hubei, with party secretary Jiang Chaoliang and Wuhan party secretary Ma Guoqiang replaced by Xi’s protégé Ying Yong and Wang Zhonglin.

The impact of Covid-19 on the economy has been debilitating, coming as it were after the 17-month tariff war with the US that sapped China’s economy. In 2019, China indicated its GDP grew at 6.1%. However, early 2020 began with negatives.

As with SARS before, civil airlines -- both domestic, but more international flights – have announced cancellations, affecting the industry. Some 85,000 flights were reportedly cancelled. Many major airlines have stopped flying into China given the contagion. International retailers have shut shop in China for the moment. The Apple products maker Foxconn could not open its Longhua complex. South Korean firm Hyundai suspended its car production in China. Others are following suit.

Small and medium enterprises are losing substantially. Huang Qifan, vice chairman of the NPC’s Financial and Economic Affairs Committee, stated that the retail sector, services sector, tourism and hotel industry are worst affected. Alibaba, the only company in China to dish out statistics on monthly turnovers, stated that while food deliveries have gone up, clothing and electronics sales were affected.

China’s stock exchanges fell over 8% in the initial period. China has recently become a major supply chain centre, displacing Japan this decade. The Covid-19 may affect this position in the short term. Global commodity prices may also take a cue from the current shutdown in China. Guangdong, Shanghai and Tianjin witnessed selective quarantines, with impact on labour movement, production and trade. The enactment of the recent law in Guangdong -- the hub of manufacturing in China – to seize private properties in order to contain and control the spread of the virus, could have negative effects on the economy.

China may overcome these economic problems in the medium term but the damage to the already sagging economy could linger. Other countries are also feeling the pinch with supply chains disrupted, stocks tumbling, consumer durable prices expected to rise as Covid-19 expands beyond borders.

The domestic political situation in China is also expected to take several twists and turns. The annual parliamentary and consultative meetings to be held in March were postponed and at the year-end, all eyes will be on the preparations for the 20th Communist Party Congress in 2022.

For higher political positions in the party, emphasis is placed on political firmness, capacity, image among party members and ordinary people. The spread of the virus and delay of nearly two months in addressing the problem has been costing the party’s public image. However, there is no threat, at least in the foreseeable future, to President Xi’s position.