All over the world, there is anger and frustration about how China handled the pandemic . I fully share that view – we could have all handled this disaster much better if the Chinese government did a more responsible job. And I doubt any of us believe the stats coming out of China – and we live with it only because there is no other source of good information to rely on. There are more conspiracy theories floating around now than I can keep up with – which is perhaps normal for these times.
A lot of American politicians have already been calling for a hard break with China because of what they did with the Corona pandemic. That was my first instinct too – but as I thought through this more, I doubt this is a pragmatic solution anymore. As always, these are just my personal views.
Calling Corona Virus as China Virus is just dangerous
It is perfectly normal for nationalist feelings to surge when we feel attacked . It is also a great point that plenty of viruses were named in the past after country of origin ( including some like Spanish Flu where there are stories that it was an unfair tag ) . So when we cloak our hatred for Chinese government with an academic argument to hide our bias – we tend to forget how it affects Asian people everywhere.
I was born and raised in India. I have lived roughly half my life outside India now. No one should find it hard to guess my ethnicity if they see or hear me. And yet – when 9/11 happened, a lot of people mistakenly thought I was Arab. It is not an exaggeration to say I was afraid for my life at that time. Absurd as it might sound to people who know the difference – that is how this works. Ignorant people who also feel under attack – they react in absolutely nasty ways that you may not realize. So please resist the temptation to tag China – your words and tweets can unintentionally hurt innocent people !
Capital and Talent problems
America and other countries consciously let China become a single point of failure in their global supply chains – be it clothing, semiconductors, auto, pharma , medical equipment or any number of things we all need every day. The capital required to rebuild all of that in every country is huge. And even if governments agree to find the money to do it – in most cases, the skills are just not there in quantity and quality to make it happen in reasonable time. And it will take time and resources away from many other priorities.
Even if we just think about the world of medicine – equipment and drugs – we should be scared at how much we depend on China for our population to stay alive. Now that they have flattened the curve, and their factories are buzzing again – they have an upper hand already while rest of the world is still figuring out its response. I don’t know how much of a sustained advantage that will be – but its worth keeping it in perspective. For now, they are helping US and others ( and with it comes some complaints on poor quality) – though perhaps not just out of just humanitarian reasons.
Realistically – even if just the rich countries like USA start bringing all this in-house we are going to have to wait decades to get it done. And given we tend to value our economy over and above other interests – the cold calculations will probably stop most private sector companies to do a total shift back to homeland. Best case I see is that we will shift some significant manufacturing capacity to Vietnam, India etc in near term.
That is all good and much needed – but China probably will remain a single point of failure for a lot longer even in a well planned transition.
How about Tariffs as a way to keep China in line ?
US has played this hand with China already and we found that all that happens is that it is not the exporter that gets stuck with the bill, and its the importer – and that is passed on to the end customer. On top of that – we also had to take some tariffs off already because of our dependence on China to get through this pandemic.
If we look at this from a Chinese exporter’s point of view – they may also come to the conclusion that they should perhaps reduce US as a big market, and start building markets elsewhere. USA is big strong economy and can still hold some punitive power with China. But that is not the case for the smaller economies – their constraints will make them do things which US will be able to avoid.
Net-net – Tariff is not much of a magic wand to wield !
Corona might not be the last pandemic – it may just be a beginning
I don’t wish it in the least – but that is the pragmatic assumption for now. I have no doubts that we will learn a lot from handling COVID19 and hence will have a better playbook for the next time. But what is the role of China in that future playbook ?
Since the whole mess started in China – and since China has allegedly controlled it significantly now – it is quite possible that they may be the first to come out with a treatment plan and vaccine too. Don’t we want them to share it ? Not just now for the current crisis – but going forward as well.
I am not an expert on pandemics – but I do remember reading frequently about US and China co-operating in tackling past pandemics from George Bush’s term in office all the way to Obama’s time ( joint effort to help Africa). I would think that model is what works for the world – as in for common folk like you and me. Virus is not nationalist in its kinetics, and there is no good reason in my mind why the solution to prevent its spread should be nationalist.
When it comes to saving lives – China and US and everyone else should let science lead, and politics follow ! The other way around is stupid.
We need a better balance of Nationalism and Global Co-operation
Pendulum always swings to extremes. Now it is swinging to an extreme on nationalism. But its side effects are yet to be seen.
In India – there are states closing their boundaries physically to stop people from neighboring states to enter in times of pandemic. It is not clear how the supply chains of food and health care will get affected when states do it. Will it next happen within districts within a state ? Taken to an extreme – nationalism can be quite destructive !
US may not be much different either . What happens if richer states can offer more money and take medical pros and medicines from poorer states ? I hope we won’t see it play out that way – but when we feel under attack, its normal to close in. Toilet paper hoarding is roughly the same thing at a micro level – people with money to hoard will keep doing it and people with less money will disproportionately suffer.
Although off topic here – climate change is one of those things we can look at as an example. There is no effective solution to climate change if China does not play nice. And China has limited incentive to play nice if it gets isolated globally !
It is not a comfortable position for any of us ( Certainly not for me) to think China apparently continues to hold an unfair advantage despite their mistakes. We largely brought this on ourselves with our significant focus on the economy and lesser focus on healthcare, infra, education etc. It is not as if we did not have some huge advantages – we enjoyed a prolonged bull market as a result of sending more work to China. I hope and pray we learn from this history and have a more balanced and holistic view going forward.
(Cross-posted @ Vijay’s thoughts on all things big and small)