By Hussein Askary*
If there is anything positive about the outbreak of the Novel Corona (COVID-19) epidemic / pandemic it is that we are being told that we are one human race. The level of connectivity and physical movement of humans and goods across the globe by land, sea and air has reached such density that the whole world today looks like one small town. People are also realizing that a common fate connects all peoples. Suspicion, distrust and blame games directed against China’s leadership, people and culture soon turned into a wave of sympathy and expressions of solidarity. Certain media outlets and personalities who were gleefully mocking China by words and drawings, realized soon that they were standing alone. The officials of the World Health Organization (WHO) joint delegation to China in late February had only praise and admiration for the people and government of China for swiftly and selflessly doing the impossible to contain the outbreak of the COVID-19. What is more important is that China’s coming role both in dealing with the virus itself through medical experience and through technical and tactical ways of controlling the outbreak will be of great value for the rest of the world’s nations. Besides, the production of materials and devices for prevention of infection and treatment will rely greatly on China’s return to industrial production which is slowly coming back. Chinese media is reporting that China’s daily output of medical protective products has skyrocketed. According to Wang Jiangping, vice minister of industry and information technology, the output of protective clothing has increased to 500,000 pieces per day from less than 20,000 pieces. Meanwhile, about 1.6 million N95-rated medical masks were produced to ensure medical staff at the forefront of the battle against the epidemic are well-equipped, while the daily output of regular masks reached 100 million units, according to Wang. With the efforts of work resumption, production of other supplies and medical equipment has also seen robust growth, said Wang. This is extremely important as the COVID-19 spreads to almost all parts of the world. This production capacity will play a decisive role in the fight against the virus. This kind of material is already in short supply here in Sweden and in Europe, although the outbreak has not taken effect fully.
The global supply chains
The COVID-19 outbreak put the spotlight on one key element of the extreme interdependency of nations and regions of the world on each other for supplying the products needed by every society from food to medicines, electronics, tools, machines and vehicles, or key components of these products. This is the result of about 40 years of globalization, which has brough great benefits but also complex challenges. However, much of the discussion in Western capitals regarding the effects of the coronavirus outbreak on supply chains has been too much focused on the geopolitics of the U.S. and EU confrontation against China rather than on addressing the challenges presented by globalization. Swedish media has reported that not only major Swedish companies active in China or export to China will be negatively affected, but also that major Swedish industries like the automotive industry, will face severe interruption in their production lines due to shortage of components produced by Chinese producers. The disruption of the container transport from China to Europe is another factor reason for that kind of disruption.
U.S. Military supplies too?
Across the Atlantic, in the United States, a grim picture is emerging over U.S. reliance on Chinese suppliers, even in terms of military production. Voice of America reported on March 5, that the shutdown of industries in China as a measure against the virus, showed weaknesses in the global supply chain as many inputs provided by Chinese industries to processes elsewhere became unavailable.
VOA reported that U.S. Commissioner of Food and Drugs Dr. Stephen Hahn said last week in a statement that one drug shortage already had occurred in the United States. “Hahn also said that currently, 20 drugs come only from China” VOA said in its report. Furthermore, it added that “it is estimated that more than 90% of active ingredients in antibiotics in the U.S. market are sourced in China.” It cited former FDA compliance executive Steven Lynn who told CBS News “There is a lot of reliance on China for antibiotics, and I worry about it for sure”. He added that “the worst-case scenario is China starts shutting down all its ports. That means no more air traffic, boats or trains are going out, and raw material can’t get out of the country.”
Since the U.S. military draws on the same chain for medical supplies as the civilian world does, it affects the military, too. Chairman of the Joint Chiefs of Staff Gen. Mark Milley testified in Congress last week where he said: “It is a vulnerability to have a country such as China manufacturing high percentages — I don’t know if it is 97%, 98% or 80%, whatever it is — but I do know it is high percentages of the ingredients to [the] American pharmaceutical industry across the country, both military and civilian.”
Representative Vicky Hartzler, a Missouri Republican who is a member of the House Armed Services Committee, was particularly virulent on the geopolitical question. “Most of the United States military receives their vaccines, their antibiotics, and their medicines from either China directly or through companies here in America that receive their base components of the medicine from China,” Hartzler told VOA. “If we were to go into a conflict with China,” she said, “it raises the question if this is something perhaps China could use against us — to either withhold the needed medicines, vaccines, or to potentially put inert ingredients in them or just to put something harmful in them.”
Needless to say, this kind of language does not really help build the trust necessary for the U.S. and China to tackle the coronavirus threat together. But the fact is that China is indispensable for the U.S.
Italy: double hit
Italy, one of the G-Seven countries and a major economic power in Europe will be hard hit economically by this crisis. Former government official, economist Michele Geraci has made an assessment of the impact of the slowdown of the Chinese economy and of the coronavirus epidemics in Italy, combining direct and third-country effects, reaching the conclusion that, in 2020, Italian GDP will lose EU37 billion, or 2.1%. On one side, there are the effects of the global value-chain which Italy is locked into. As for Italian exports to China, the official data of EU13 billion is an underestimation, because it does not consider exports through third countries and intermediate (semi-finished) goods exported to countries such as Germany, which are used to produce final goods to export to China. If all this is taken into account, the overall export at risk is EU26 billion. As Chinese imports are projected to fall by 20%, this means EU5.2 billion for Italy.
Additionally, the economic loss due to the failure of supplies of intermediate goods from China will cost EU4 billion. And the loss of exports to other EU countries and the U.S.A. due to the fall in their domestic demand because of a reduced demand from China, will be EU5 billion. Last but not least, the impact on tourism, fashion, and “image damage” produced by the coronavirus epidemics could reach EU11 billion for tourism and EU7 billion for the fashion sector.
Despite the seriousness of the crisis, Geraci says the economy could recover if several measures are adopted, including “the creation of a task force of experts in international relations to hold relations with China in a more appropriate way than what we have seen so far.” Furthermore, an extraordinary commissioner for foreign trade — currently, six months after the birth of the Conte-2 government, the foreign trade portfolio has not yet been assigned!
“We must exploit the crisis to implement a serious development plan, from R&D to infrastructure and transport, but it must be drafted in a few weeks, otherwise we will miss the train. Countries such as China do it in a few months, and they will rise stronger than before.”
A community of a shared future for mankind!
The negative challenges provoked by the COVID-19 are many and there is enough information about them. However, the positive ones are not as proliferative. What this virus is forcing people across the globe to realize is that their fate is tied to that of everyone else on this planet. If the Chinese people manage to contain and defeat the virus, then they are doing everyone else a great service. The same goes for every other nation. The fact that scientists and researchers from every part of the world are putting together their best efforts to understand the virus and learn how to defeat it, is making all those scientists wherever they are on the globe as one team. A breakthrough in one part of the world, would immediately be a breakthrough for every other part of the world. Very few moments in history offer us this sense of a joint mission or common goal for all mankind. The rest of the time we are focused on the shortcoming and misdeeds of the others. When Russian cosmonaut Yuri Gagarin reached into outer space in 1961, it was a happy shock for all people. When the American astronauts Neil Armstrong and Buzz Aldrin stepped on the surface of the moon in 1969, the whole world was watching with happy amazement. Armstrong, upon stepping on the surface of the moon, said famously that this was “one giant leap for mankind” not for the U.S.!
If, and when mankind comes out victorious from this fight with the COVID-19, it would have only done so united. That would be the greatest lesson and positive outcome of this pandemic. Before the outbreak of the COVID-19, there was a great opportunity to unite the nations of the world around the goals of eliminating poverty, hunger, lack of healthcare and education, and many other goals set by the “United Nations”. China has proven, through its own fight against poverty and creation of a relatively prosperous society, that this is completely possible. In this year, 2020, China was about to take out the last few millions of its citizens out of poverty, to join the other 800 million Chinese who already achieved that in the past three decades. Besides, since 2013, China has worked fervently to build the Belt and Road (BRI) or the New Silk Road jointly with other nations. More than 130 nations joined, and infrastructure projects were being planned, constructed and completed on at least three continents. It was a great opportunity for the U.S. and the EU to join this new paradigm in international relations base on peaceful economic cooperation and add their capabilities to these of China and its partners. However, obsolete geopolitical thinking, which belongs to the dark ages of colonialism, prevented that. Today, there is a new opportunity to reconsider that failed approach. The Chinese people and their leadership are sincere and serious about the appeal President Xi Jinping made in his speech at the Unite Nations General Assembly in Geneva in 2017 in which he said: “Pass on the torch of peace from generation to generation, sustain development and make civilization flourish: this is what people of all countries long for; it is also the responsibility statesmen of our generation ought to shoulder. And China’s proposition is: build a community of shared future for mankind and achieve shared and win-win development.”
* Hussein Askary is founding member of the Belt and Road Institute in Sweden, and Southwest Asia Coordinator for the International Schiller Institute. [email protected]
Carl Osgood and Claudio Celani contributed to this article.