Isolationism not the Remedy

Quarantine Combats Contagion; Isolationism Does Not

By Gary Burrows

Chinese President Xi Jinping’s envisioned “Chinese Century” has struggled in recent months.

Despite its aggressive international reach through the Belt and Road Initiative, and redoubled efforts to emphasize its domestic market, the world’s second-largest economy by nominal GDP was already facing its slowest growth in nearly three decades, a brutal trade war with the No. 1 economy, the U.S., and flagging consumer and business confidence.

Now comes the novel coronavirus, or Covid-19, as it has been labeled by the World Health Organization, or WHO. While it has been said that when China sneezes, the world catches a cold, the virus’ global impact became more apparent as the country raced to bring it in check and avoid it turning into a global pandemic.
At the time of writing, tens of thousands had been diagnosed with Covid-19 and more than 1,000 deaths had been reported, predominantly in Hubei and the city of Wuhan, China’s key oil and gas hub and a major manufacturing base.

(Due to restrictions in travel, Breakbulk Asia’s organizers decided to postpone the event, originally schedule for March 18-19, to Aug. 3-4, 2020.)

Officials and media have been using the severe acute respiratory syndrome, or SARS, outbreak of 2003 in China as a measuring stick by which to compare Covid-19. By all measures, the latest virus has surpassed SARS’s destructive force – both in human and economic measures.

Until more is known about the impact of China’s unprecedented transportation blockade and quarantine around Hubei province, a region of about 60 million people, and experts are able to better understand the disease and how to combat it, estimating Covid-19’s full impact is a fool’s errand.

Already economists are revising downward expectations for Chinese growth by as much as a percentage point, to an average of about 4.9 percent, compared with original forecasts of 6.1 percent for the year. The world’s biggest oil importer, China’s sagging demand has led to a double-digit dip in crude oil prices, forcing the Organization of Petroleum Exporting Countries to call an emergency meeting.

The SARS epidemic caused US$40 billion in lost productivity in 2003, according to WHO. The 2009 H1N1 swine flu pandemic’s impact was measured at US$55 billion, both of which involved China. An Ebola outbreak in West Africa from 2014 to 2016 had an economic and social impact of US$53 billion.

Much has changed in the 17 years since SARS. For starters, China’s economy was the sixth-largest vs. the second today, and its impact on global GDP was less than half the value it is today, according to the International Monetary Fund.

International disasters like floods in Thailand and the earthquake and nuclear disaster in Fukushima, Japan, both in 2011, had significant impacts on the supply chain which were slow to recover.

Given the global impact of the Covid-19 virus, while China is the epicenter, it’s obvious that this is a global issue. Many countries are already dealing with the impact of another epidemic, one of protectionism.

World leaders have credited China for its dramatic approach to fighting the disease. While a veil of mistrust remains, it behooves China to invite and coordinate on a global basis to get the virus under control. It also is incumbent upon other global leaders and trade adversaries to provide open channels and needed assistance.
While quarantine is a tried-and-true means to combat contagion, isolationism is not.