In the first years of the 21st century we have faced three types of coronavirus, H1N1, Ebola.. and of course, seasonal flu. Since 1940, it has been the case that hundreds of pathogenic microbes have either appeared or have become active again after years without being reported in some regions. About 60% of them come from animals, more than two thirds of them from wild animals, while the rest come from either domestic animals or livestock.
The vast majority of its microbes live with wild animals without causing them any problems. The massive urbanization of some regions, industrialization and deforestation could explain, in part, the facilities that since the beginning of the 21st century present this microscopic life to reach the human body and adapt.
It is precisely the loss of natural habitats that makes us look for ways to replace them. One of them is precisely markets (wet markets) where live animals that came from different habitats are sold and are now caged together, piling up and producing an exchange of bacterial life of great intensity, further enhanced by the terrible hygienic conditions, where excrement and urine are mixed.
So, the question arises about...
What are coronaviruses?
They are a type of pathogen that infects mammals and birds and is transmitted between animals of the same species, but can occasionally be transmitted from animals to humans, as in the case of the coronavirus that caused the SARS pandemic in 2002-2003 (civet-borne) and the virus that caused the MERS in 2012 (camel-borne). The genes of the coronaviruses carry the necessary instructions for the production of viral proteins, most notably those called Spike (S), Membrane (M), Envelope (E), and Nucleocapsid (N).
It is precisely Spike's protein that forms the outer "crown". The function of this crown formed by the Spike protein is to "anchor" itself to the cell. In some cases, the Spike protein may encourage the cell it has infected to fuse with surrounding cells, thus spreading the infection. The M protein is attached to the inner part of the virus membrane, and makes this membrane curve, determining the spherical shape of the virions. The E-protein is necessary for the spread of the virus.
Coronaviruses capable of infecting humans cause respiratory diseases ranging from the common cold to more serious pathologies such as MERS. They usually cause simple colds, but three strains have attracted the attention of the media and health authorities:
1/ Severe Acute Respiratory Syndrome (SARS-CoV) During 2002-2003. A member of the genus Betacoronavirus (group 2) and the subgenus Sarbecoronavirus (subgroup B), which caused, according to the NGDC (National Genomics Data Center of China), 774 deaths and caused 8,098 possible cases, with a higher incidence in China [1]. It appeared in Guangdong (Canton) in November 2002, and from there it spread to Hong Kong, Vietnam and South East Asia, to other parts of the globe, causing deaths in 17 countries of which it reached and with a mortality rate of 9.6%. The World Health Organization established a slightly lower number of possible cases [2]. Wet markets played an important role in SARS.
2/ The Middle East Respiratory Syndrome (MERS-CoV), first identified in Saudi Arabia 2012. Member of the genus Betacoronavirus and the subgenus Merbecovirus. The infection causes severe acute respiratory disease resulting in fever, cough, pneumonia, respiratory distress and kidney involvement. It has a mortality rate, close to 30% [3]. A small percentage of those affected have mild respiratory disease. Almost all patients with virus infection have been infected in or near the countries of the Arabian Peninsula. The guests of MERS-CoV are camels, certain bats and Homo sapiens. As of July 2015, cases were reported in more than 21 countries, including Jordan, Qatar, Egypt, Kuwait, Saudi Arabia, Turkey, Oman, Algeria, Bangladesh, Indonesia (although none were confirmed), Austria, United Kingdom, South Korea, United States, mainland China, Thailand and the Philippines.
3/ The Covid-19. This is a new strain that appears at the end of 2019 in Wuhan (Hubei, People's Republic of China). It belongs to the genus Betacoronavirus and to the subgenus Sarbecoronavirus. The outbreak is caused by SARS-CoV-2, and began in December 2019 [4]. This type of coronavirus is characterized by having an RNA genome with 6 or more single-stranded positive genes with a size of 30 kb, and being surrounded by a pericapsid (a sort of lipid structure in which virus proteins are also found). As of 26 February 2020, 81,330 potential cases have been confirmed, covering all provinces of China and over forty countries [5]. In total and up to 26 February 2020, 8,867 cases were serious. There have been a total of 2,771 deaths that can be attributed to Covid-19, including 56 deaths outside mainland China, exceeding that of the 2003 SARS outbreak. However, more than 30,000 people have recovered since then. It has been plausibly hypothesized that the host chain of the virus from the bat to the human has had the pangolin as an intermediate point. Covid-19 is 80% similar to the 2003 SARS virus, with the greatest similarity of 88% to related genome sequences collected from a domestic bat in February 2017, according to data provided by the National Genomic Data Center (NGDC), which has launched the new 2019 coronavirus database (2019-nCoV), according to the Beijing Institute of Genomics of the Chinese Academy of Sciences. Genetic analysis has shown that in the region of the genome that is responsible for coding the protein that enables the virus to bind to receptors in the host organism, the sequence of the virus is highly similar in both pangolin and humans; in the case of SARS it was the civet that played the same role. The virus is mainly transmitted between people through small droplets expelled during breathing or coughing [6], and through contact with surfaces contaminated by secretions from the mouth and nose. Although the faecal-oral route must also be considered, cases of environments with hygiene deficits [7]. A period of time ranging from two to fourteen days usually elapses between exposure and the onset of symptoms. Symptoms may include fever, cough, muscle aches and difficulty breathing. Complications may include pneumonia and acute respiratory distress syndrome. At the moment, there is no vaccine or specific antiviral treatment, but there is research that is heading in that direction; what is being done is to control the symptoms and work on supportive therapy. Wash your hands often with soap and water for about a minute (or use alcohol-based hand sanitizers), keep your distance from people who are coughing, and avoid touching your face and mucous membranes (eyes, nose, and mouth) to prevent illness, and use tissues. In this sense, the CCDC researchers point out that the fecal-oral route of infection could explain the rapid spread of the virus, since contaminated hands in contact with food and drink would cause more infections than could be expected. This is the factor that would be critical in the spread of the virus on cruise ships, through drainage systems, and in under-resourced and overcrowded hospitals, among other places.
Another very prominent aspect comes from the use of the masks and how this could be very counterproductive, according to Eli Perevencevih, professor of medicine, a medical diagnostician and epidemiologist at the University of Iowa's College of Medicine.
What kind of tests are done to find out if we're dealing with a Covid-19 case?
Basically, two guys: The first is to place a simple nasopharyngeal sample. This is done by placing a long cotton swab in the nose of the individual in order to collect a sample and then analyzing it using a technique called polymerase chain reaction which should allow us to see clues that will help us discover the genetic sequence of the virus. The test is reliable, but it needs to be done at the right time: if we rush the virus, it will not yet have risen from the lungs to the nose, and then it will be negative. If it's too late, the patient will have healed spontaneously and we'll have another negative.
The next test, which has greater certainty, consists of a blood test, since if the patient has begun to develop antibodies to the virus we will have irrefutable evidence that the patient was infected. Such analysis can only be done in advanced virology laboratories, so it is not done routinely.
Aspects of the Chinese reaction
The first reaction of the Chinese authorities was denial for weeks, moreover the events took place in the midst of the great displacements of the country in the context of the Lunar New Year. Then came the sudden mobilization of China's power apparatus. But earlier, the death of 34-year-old eye doctor Li Wenliang, who had alerted the authorities, one of a group of eight doctors, about Covid-19, led the official press to treat it at a distance, causing some irritation among the country's population. Li Wenliang was forced by the police on January 3, 2020 to sign a statement, the contents of which were an admission by Dr. Li Wenliang of having spread rumors or false information in a WeChat group on December 30, 2019 about seven confirmed cases of SARS, all coming from the southern Chinese wholesale seafood market in Wuhan. This is an area of around 50,000 square meters, with an investment of almost 50 million yuan and 1,000 operational positions. This "wet market", as the open-air food market is known in some parts of Asia, whose floors are constantly scrubbed with water to the point of virtual flooding, is located near Hankou train station at the intersection of Development Avenue and Xinhua Square in the urban district of Jianghan, and is the largest wholesale market for seafood and exotic cooking animals in Hubei Province and the Special Region of South Central China. Until now, it was believed that this place could be the first focus from which Covid-19 departed, but an official study by the Xishuangbanna Tropical Botanical Garden, which is in the southern province of Yunnan and belongs to the Chinese Academy of Sciences and the Chinese Institute of Brain Research, denies this point. The team of researchers led by Dr. Yu Wenbin believes so after analyzing 93 samples of SARS-CoV-2 coronavirus sent from 12 countries. The study suggests that the coronavirus came from outside the market, where it certainly did spread extremely quickly due to the crowding of numerous animals in cages where their feces and urine were mixed. For the same reason, the market was closed on 1 January and completely disinfected. Also, a study by Chinese researchers published last month in the medical journal "The Lancet" already noted that the first coronavirus patient became ill on Dec. 1 and had no connection to that market. Moreover, of the first 41 cases, 13 had no link to Huanan.
Dr Li Wenliang promised in the declaration he signed with the police on 3rd January not to spread "false information" again as this would expose him to the penalties foreseen by the law. Ophthalmologist Wenliang continued his work until he came into contact with an 82-year-old patient suffering from glaucoma, and it was this patient, infected with Covid-19, who transmitted the disease to Dr. Li. On January 10, he began to show symptoms of contagion and on January 12, Dr. Li Wenliang was hospitalized. On January 28, 2020, the Supreme People's Court, China's highest court, issued a statement specifying that although Covid-19 is not strictly speaking the SARS of 2003, it is nevertheless true that it has many aspects in common. The Supreme People's Court continues in its statement that the information transmitted by Dr. Li Wenliang may have been interpreted as false information, but as such it cannot be said to be false, however, it does point out that Dr. Li should have informed the hospital and his superiors, and these and only these should decide what measures are appropriate to take. What we do not know is whether Dr Li Wenliang and the seven doctors who made that decision did so precisely because of the lack of action on the part of the relevant institutions and individuals. The Supreme People's Court concludes that, although the information disseminated by Dr. Li Wenliang in WeChat could have led to a situation of fear and popular hysteria, it is true that it was sufficiently well founded for the authorities to have taken appropriate measures, which could undoubtedly have prevented and controlled the virus much better.
The People's Daily, the official newspaper of the Communist Party of China published worldwide with a circulation of between 3 and 4 million copies, did not devote a single line in its WeChat account to a Tencent application similar to WhatsApp, when Dr. Li passed away. The central channel, CCTV, only devoted a brief review to him on its evening news when the doctor died. In early January 2020, CCTV accused Dr. Li Wenliang and the seven other complainants of spreading false rumors ("the eight gossips"). However, the reaction of the community of Chinese students abroad was to protest in New York and Paris... and there was a reaction within China as well. In social networks, Internet users promised a national funeral to Dr. Wenliang and spontaneous tributes followed.
On January 28, 2020, China's President Xi Jinping said, "This virus is a demon. We cannot allow the devil to hide. Within the context of the World Health Organization director's visit to Beijing, the Chinese president made these statements to emphasize the value and effectiveness of the measures taken by his government to contain this coronavirus. Although such words were, rather, directed at the Chinese people, as it is a well-established Chinese tradition to compare any kind of natural disaster, including epidemics, with demons, spirits or gods. In the minds of the Chinese is the closest reference lived in the 21st century, of course, but the expression used by Xi Jinping connects them to the plague epidemic that struck Manchuria between 1910 and 1911, and which cost around 60,000 deaths before the god of plague passed away, paraphrasing Mao. The context that Xi Jinping wants to fix in the mind of the Chinese is that of the Qing dynasty making every effort to avoid one more weakness in China that could be taken advantage of by foreign powers to interfere even more in China's local affairs, or even take away more territory from them, as Japan and Russia could have done at that time in the 20th century. Furthermore, the Qing dynasty was overthrown in the revolution undertaken in 1911, called the Xinhai Revolution (October 10, 1911 to February 12, 1912) with the abdication of Emperor Xuantong or Puyi, although it was later imposed by the Japanese as the Emperor of Manchukuo (1934-1945). With the Xinhai Revolution it gave way to the Republic of China and the emergence of the Kuomintang or Chinese Nationalist Party and, in 1921, the Chinese Communist Party. The Republic of China lasted until 1949, when it remained on the island of Formosa or Taiwan, while mainland China became the People's Republic of China, under the control of the Communist Party of China.
The current context in China places President Xi Jinping's reference in the key of the border policy of proximity, with Taiwan and Hong Kong. What Xi Jinping tells the Chinese people is that China has the power and capacity to defeat the coronavirus without needing anyone else. Hence his ability to establish quarantines covering absolutely impressive numbers (entire large cities, such as the quarantine of a population like that of Hubei Province, 56 million inhabitants), to build a hospital in Wuhan in ten days, to refuse the help of the World Health Organization... the message is clear and resounding... but does this mean that Xi Jinping is renouncing multilateralism? On the contrary, the President recalled that what has been learned from the great epidemics of history is that pathogens do not know borders.
On 6 February 2020, the mortality rate of those infected with Covid-19 was around 2.1% in China and 5.15% in Wuhan. Notwithstanding the efforts made by the Chinese authorities, the facilities for dealing with those infected or possible cases of contagion in Wuhan give rise to angry criticism regarding the reception conditions of the various containment centres that have been set up. Complaints from relatives of the sick are collected on the social network Weibo, the Chinese equivalent of Twitter, where it is stated that conditions are bad, far from the image projected from the media, and are focused on poor hygiene in toilets, overcrowding, lack of oxygen equipment, as well as common rooms without toilets.
A study published on February 18, 2020 by the Chinese Center for Disease Control and Prevention (CCDC), presents a detailed analysis of the general trends of the more than 70,000 cases of Covid-19, as reported by the BBC.
The overall mortality rate of the virus is 2.3 per cent, while in Hubei Province, the mortality rate is 2.9 per cent, compared to only 0.4 per cent in the rest of the country. Just as the mortality rate is still 1% globally today, there have not yet been any major changes in its genome that would allow us to speak of a sufficient mutation, as would be expected when the virus is introduced into the human population. It has not become either more transmissible or more dangerous so far. Of course, these figures are far from the numbers of deaths caused by other diseases, such as measles (140,000 deaths), influenza (650,000 deaths), tuberculosis (1.5 million deaths) and infectious gastroenteritis (1.8 million deaths).
The CCDC investigation looked at Covid-19 cases diagnosed in China up to February 11, including confirmed, suspected and asymptomatic patients.
- Approximately 80.9% of infections are classified as mild, 13.8% as severe and 4.7% as critical. These figures make Covid-19 less deadly than SARS and MERS, as confirmed by the World Health Organization.
- The highest mortality rate is for people aged 80 or over, at 14.8%.
- For children up to the age of 9, there have been no deaths and up to the age of 39, the mortality rate remains low at 0.2 per cent. One hypothesis is that the group has a better immune system than the older groups, so children would be infected by the Covid-19 virus, but would develop symptoms clearly much lighter, going unnoticed in most cases, so it would not be officially diagnosed, or in very rare cases could develop serious complications, or even die from the infection.
- For those in their 40s it is 0.4%; for those in their 50s it is 1.3%; for those in their 60s it is 3.6% and for those in their 70s it is 8%. 80% of the people who died from the virus in China were over 60.
- In terms of the gender ratio, men are more likely to die (2.8 per cent) than women (1.7 per cent).
In identifying which pre-existing diseases put patients at risk, the study found that it is cardiovascular disease, diabetes, chronic respiratory disease and hypertension, in that strict order.
Research also points to the high risk for medical personnel. A total of 3,019 health workers have been infected, 1,716 of whom were confirmed cases and five had died before 11 February, which was the last day of data included in the investigation.
The Chinese government's communication strategy has been changing and clearly evolving since the beginning of the epidemic. The turning point was determined by the appearance of President Xi Jinping in mid-February. After several weeks away, and the circulation of rumours about the legitimacy of the "helmsman" at the head of the People's Republic of China's ship, especially outside the Asian giant's borders. And that's when we saw Xi Jinping in the media center of the story, and he did it doing something unusual: in the streets of Beijing meeting with citizens, trying to convey an image of control of the situation, effectiveness and efficiency, replicating in the real world the harsh criticism that was poured on him in Chinese social networks. He took the decision to dismiss important political officials, such as Jing Chaoliang, the highest authority of the Communist Party in Hubei Province, and Ma Guoqiang, his counterpart for the city of Wuhan, who were ultimately blamed for the mistakes that led to the delay in taking action in the face of events, thus reinforcing the meritocratic line of the regime in the eyes of the people, and in the process strengthening the whole system. Also to be noted is the appointment of prominent replacements, such as former Shanghai Mayor Ying Yong. The key was the death in Wuhan of Doctor Li Wenliang.
By putting the focus and changing the communication strategy, from the denial of the month of January, to the maximum media concentration: the Covid-19 has been declared the most important health emergency in China since 1949 (ahead of the great famines that followed the Great Leap Forward, a clear exaggeration, and demonstration of the suitability of the system and its leaders, which purges the deficient, and controls the greatest risks). And this coincides when the measures taken begin to give results and gradually better results are being achieved: a very intelligent communication strategy towards the interior and, partly, also towards the exterior where President Donald Trump has applauded China's performance in the crisis. But also the World Health Organization has congratulated China and has given it as an example through Bruce Aylward, head of the mission of experts of the WHO and China that has had the opportunity to see in situ the work of the Asian giant. On the other hand, the focus of media tension in Italy, Japan and South Korea has led to a loss of centrality in the news. In addition, China has made a major propaganda move when it has revealed what the dark side of the moon is made of, thanks to the images provided by the small Yutu-2 rover, which has obtained the most accurate radar images of the interior of our satellite so far, "another achievement of the Chinese technology and system, also in space". That's the message.
This also underlines the capacity of the sector of the Chinese Communist Party that is grouped around Xi Jinping. Let us not forget the clearly ambiguous relationship between China's president and the number two, Li Keqiang, deliberately exposed as a strategy of potential siege and demolition of Li towards Xi Jinping when Prime Minister Li Keqiang visited Wuhan at the end of January 2020. Being at the epicenter of the epidemic and appearing before the hospital erected in 10 days Li firmly demonstrated his candidacy, while the president of China was in Beijing.
This crisis has shown, before the control of Chinese social networks by the power apparatus, that the population is increasingly demanding on local authorities, and this is fundamental to legitimacy. In China, legitimacy is the key to stability. There isn't one without the other. And it has to happen throughout the power structure and the collective mentality. So questioning, with possible arguments, the legitimacy of local power implies questioning the whole system.
What will be the reaction of the Chinese people when this crisis is over and the results in the economy are evident? For the whole of society, Beijing has all the legitimacy. He acted seriously when he was in the know, he was effective and efficient. He purged the parts that failed in the gear. And that will be the main idea. For those sectors demanding reform in a democratic sense, the indignation and upward line of responsibility will be sought to target Beijing and the Communist Party for "lack of legitimacy". It is interesting to observe how, deep down, what happened could not be another turn of the screw to the policy initiated by Xi Jinping in 2010 to fight corruption, as a tool to keep civil society mobilized against the intermediary bodies between Beijing and the people, precisely where Xi Jinping could be questioned.
Moreover, it is no longer a Chinese issue, it is a global issue. In addition to Japan and South Korea, Singapore, Iran, Italy, France... and also the United States, as well as cases in Egypt or Nigeria (the case of Africa is interesting, since the main mega-cities have laboratories trained to make diagnoses; but in rural and remote areas it would be very difficult to identify). In other words, we enter the so-called "community transmission".
We have also had the opportunity to contemplate the control of information and social networks from the power of Beijing. One of the things that the People's Republic of China is very clear about is that it must learn from the collapse and fall of the Soviet Union on issues such as gasnost, the functioning of the economy in all aspects, or how the institutions were able to contribute to the collapse of the Soviet giant in the 20th century. It is precisely in this sense of what has been developed in this section that we must understand the disappearance of Professor Xu Zhangrun, professor of Jurisprudence and Constitutional Law at Tsinghua University, and research member of the Unirule Institute of Economics, a think tank based in Beijing that was closed in August 2019 under pressure from the Chinese government. Professor Xu's research focuses on jurisprudence, Western legal philosophy, constitutional theory and the relationship between Confucianism and law. In July 2018, Professor Xu published an essay, "Imminent Fears, Immediate Hopes," in which he analyzes and criticizes the policy changes introduced by Communist Party General Secretary Xi Jinping at the time, such as the abolition of term limits and what Professor Xu sees as a kind of restoration of the cult of personality. This work by Professor Xu Zhangrun was translated into English by Geremie Barmé, and as a result he was suspended and placed under investigation.
In February 2020, Xu published a text that can be translated as "Viral Alarm: When Fury Overcomes Fear", in which he denounces what Professor Zhangrun calls the "culture of lies" of the Communist Party of China, and takes the opportunity to point out what he considers to be a deficient response by the Beijing government to what happened. Xu exposes and denounces in nine points how the government prohibited the disclosure of objective information during the outbreak and connects this problem with a bigger problem of freedom of expression in China and raises some reflections that he wants to raise to the whole Chinese citizenship. The Chinese Communist Party apparatus has reacted as expected: his WeChat account has been suspended, his Weibo profile has been deleted and the text has simply disappeared. My view is that the People's Republic of China wants to avoid any leakage that could be analogous to what happened in Chernobyl during the final part of the Soviet Union, not only because of the disaster, but also because of the policy of concealment of the socialist country until the evidence made it clear what had happened. According to his friends, Professor Zhangrun cannot be reached, and is believed to be under house arrest.
The economic impact
According to Morgan Stanley's predictions, he expects China's economy to grow from 5.6% (in the worst case) to 5.9% by 2020. Manufacturing activities in China were stopped because authorities established city quarantines as part of measures to contain the spread of Covid-19, a new coronavirus. While factories began to come online, Morgan Stanley analysts' checks found that production had only reached 30% to 50% of normal levels the week of February 10. China's economic growth in the first quarter could fall by as much as 3.5% if the spread of the virus outbreak is not contained quickly enough for factory production to resume at normal levels. Tourism in China has been greatly affected by travel restrictions and fears of contagion, including the banning of domestic and international tour groups. The automotive sector, for example, has also been affected in China, with new vehicle sales falling by 92% in the first two weeks of February 2020 [8].
Hong Kong is officially in recession, and the rating agency Moody's ha bajado la calificación crediticia de la ciudad. Along with China, the territory of Hong Kong can expect the worst economic effects of the outbreak, along with Australia, as Mark Humphery-Jenner notes.
What happened in Japan and South Korea also reinforces China's agenda and its projection of power and model. We are talking about two countries that are the representatives of the liberal model in the economic and social fields in the United States. China's "socialist" model is being vindicated before these societies and the world in view of the failures of Tokyo and Seoul, with the cases of the Diamond Princess, and above all the numbers presented by South Korea, which is on the way to being comparable to China, but with hundreds of millions of less people, and which is already facing a reduction in its growth forecasts from 2.1% to 1.9%.
The impact on the Japanese economy of the Covid-19 has also been noted. Especially in the retail, aviation and tourism sectors, where declining sales are reported. The case of tourism is worrying, since 40% of tourism in Japan comes from China. It is expected that around 400,000 Chinese visitors will cancel their trip to Japan by the end of March 2020, and the government is even considering measures to support the sector. In addition, some Japanese manufacturers have indicated that there has been an interruption or disruption of Chinese factories, logistics and supply chains [9].
However, S&P Global explained that the greatest impact was felt by companies covering the travel, cosmetics and luxury retail sectors that are most exposed to Chinese tourism. Even the video game company Nintendo announced that the shipment to Japan of the Nintendo Switch, which is manufactured in China, would have to be delayed [11].
Perhaps the greatest concern, however, would be linked to the 2020 Summer Olympics, which are scheduled to take place in Tokyo from the end of July, and where the government led by Prime Minister Shinzō Abe is trying to avoid its failure in terms of visitors and even potential participants by taking all kinds of precautions [12].
In India the immediate impact is on the supply chains of fertilizers, automobiles, pharmaceuticals and electronics. Not to mention the severe impact on the logistics of world trade due to the disruption of logistics in mainland China, to which would be added regional geopolitical tensions, wider trade wars and, of course, the Brexit [13].
Reports by Maybank economists ranked Thailand as one of the places with the highest economic risk, which has already affected the very important tourism sector, causing the Thai baht to fall to a minimum of seven months [14].
In Malaysia, Covid-19 would affect the country's GDP, trade and investment flows, commodity prices and tourist arrivals [15].
In Europe, the UK-based excavator manufacturer JCB has announced that it will reduce working hours and cut production on the grounds of shortages in its supply chains [16].
In Germany, with a worsening economic situation, the economic consequences of the Covid-19 could lead the country directly into recession, according to a Deutsche Bank study published on February 12, 2020 [17]. In Italy, 11 cities are isolated and the first patients in Europe have died. The case of Italy, a highly export-oriented country, could experience, on another scale, economic situations closely linked to that of China, should the outbreak continue to progress.
In Brazil, soybean, oil, and iron ore prices have fallen, representing 30%, 24%, and 21% of the exports of the southern cone giant to China, respectively [18] [19], and in turn, the logical impact on Argentina's economy due to its ties to Brazil and China [20].
Australia is, as has already been said, along with China and Hong Kong, one of the three main victims. The first impact is estimated to be a contraction of GDP of between 0.2% and 0.5% [21]. An initial loss of more than 20,000 jobs is also estimated [22]. In addition, it is possible to lose the budget surplus [23]. The Australian dollar fell to its lowest value since the Great Recession [24].
The impact on the tourism sector from 11 February 2020 would be A$4.5 billion.
However, the main victims could be the mining companies because sales to China account for 93% of Fortescue Metals' sales, 55% of BHP's sales and 45% of Rio Tinto's sales. The iron ore shipping indicator fell by 99.9% [25], and mining companies have already experienced more complicated shipping and logistics operations [26].
Agriculture is also experiencing the effects of Covid-19 in Australia, including the dairy and fishing industries, wine producers, and has also affected meat producers. On February 13, 2020, Rabobank warned that the Australian agricultural sector had eight weeks to contain the coronavirus before facing major losses [27]. All this helps us to be more precise about the real involvement that could be expected from Australia in a hypothetical global war and the real will to fight a war between great powers, as I had the opportunity to analyze briefly in Quixote Globe.
With regard to the United States and its trade activity, it should be noted that it depends largely on China. To cite one case, Apple. The company depends so heavily on the manufacture of its components and subsequent assembly that United Airlines brings about 50 of its executives to China from California every day. After the exceptionally long Chinese New Year's holiday, the production lines of the Foxconn group, which is based in Taiwan but manufactures most of the iPhones in mainland China, have been unable to work at full capacity due to a lack of workers. It is estimated by several analysts that the virus could mean that Apple will distribute between 5% and 10% less iPhones during this quarter and could jeopardize the plan it is contemplating to increase the production of its AirPods. In fact, on February 17th, Apple acknowledged that it would not be able to reach its sales targets for the first quarter.
The obvious conclusion is that, for the time being, companies are not abandoning China en masse as a result of the trade war. But business leaders are upset and make changes.
A recent survey by Bain & Co. of more than 200 senior executives of U.S. multinationals with operations in China reveals some significant data:
- Sixty percent of respondents said they expect their business to outperform due to U.S. tariffs on Chinese products.
- Despite the fact that executives largely support tariffs on China (60%), few of them think that China's retaliatory tariffs are "fair" and most do not like the tariffs 'results.
- Over 65% of electronics and industrial product manufacturers believe they will see negative impacts.
- Only 40% of respondents believed that tariffs would eventually lead to more jobs in the United States.
- In the next 12 months, more than 40% of executives said their companies planned to take steps such as finding new sourcing partners and new regions to source raw materials.
- 39% said they will seek to renegotiate vendor contracts.
- 33% said they planned to pass on the costs to the clients.
The same can be said of the impact on the world's stock markets, where this week they have experienced their worst results since the terrible data of 2008 [28]. This shows the panic investors experience when faced with a situation whose ultimate consequences are difficult to gauge and understand. The outstanding vulnerability of the electronics and textile sectors, and of course the automotive industry, should be noted and can lead to a domino effect, which is further underlined and made more vulnerable by the fact that China accounts for 30% of all manufacturing in the world. This is quite different from 2003, when China was just over 1.2%. Moreover, in 2003 China was 4% of the world's GDP, while it now accounts for 17%. Let us remember that China alone accounted for 70% of global economic growth last year.
However, it should be borne in mind that a large part of the stock was overvalued, according to Dion Rabouin of Axios. In fact, the same portal reflects on the real impact of the coronavirus on the stock market and on the economy.
It should be borne in mind that, according to a certain model, there is a 70% chance of recession in the next six months, according to a new recession indicator.
One recommendation, the reading of the following report, "Coronavirus and Global Delivery: The Domino Effect".
Another logical aspect in its economic impact has to do with the price of energy, as the fall in demand is evident in several aspects, including air quality, in China. Thus, the Brent barrel, the reference in Europe, has gone from 68.71 dollars on January 3, 2020 to 50.28 dollars at the close of the market on March 2, 2020.
Russia has so far not spoken out about deeper cuts in so-called OPEC+, but believes that the Covid-19 outbreak could mean further downward revisions in terms of the growth prospects for global oil demand by 2020. Analysts predict that the coronavirus would reduce oil demand by 150,000 bpd-200,000 bpd by 2020.
For Asia as a whole, according to Platts, Analytics the outlook for oil product demand growth in 2020 will be weaker since the 2009 financial crisis.
Can global supply chains, other than the technology-commercial war and the Covid-19, be changed?
On 13 August 2019, TradeLink International Ltd. noted a trend in the global supply chains of multinationals [28], in the context of the technological-commercial war between the United States and China. Well, it is interesting the opportunity that the Covid-19 is giving to the fact of getting those supply chains out of China. In this regard, Rei Nakafuji and Ken Moriyasu, reflect and provide interesting data in this direction in the Nikkei Asian Review dated February 15, 2020.
Construction equipment manufacturer Komatsu is moving production of metal parts used in vehicle bodies and cable harnesses to Japan and Vietnam. The Tokyo-based company aims to prevent delays in Chinese shipments from spreading to the rest of the world.
Daikin Industries in Japan is considering moving the assembly of its commercial air conditioners to Malaysia or elsewhere from Wuhan. Key components, such as compressors, could be produced in Japan or Thailand, the executive said.
Sportswear manufacturer Asics is looking to move production to Vietnam and Indonesia that had been outsourced to facilities in Wuhan.
Edward Alden, a member of the Council on Foreign Relations who specializes in trade, says this is a turning point. According to Mr. Alden, there was already great pressure on several multinationals to diversify away from China just by way of the Asian giant experiencing an increase in both wages and production costs. Alden further specifies that, since the "phase one" trade agreement between the United States and China has failed to eliminate most tariffs, companies have had to conclude that China's supply costs for products destined for the United States now appear to be permanent, not just temporarily higher.
Dan Alpert, managing partner of the investment bank Westwood Capital believes that one of the measures the Chinese government will take to avoid this scenario becoming definitive as much as possible, could be to make its currency cheaper in the second quarter to help its exporters, and thus make the multinationals that have temporarily displaced their production from China return, because, according to Mr. Alpert, the only thing that matters to the multinationals is the internal cost of importing", which comes down to shipping costs, currencies and entry costs... However, as Alden of the Council on Foreign Relations rightly points out, this measure would create a massive problem with the Trump administration and would be a blatant violation of the Phase One agreement. And then it is more than likely that discussions will increase in the U.S. Administration and Congress about whether to re-label China as a currency manipulator.
Aspects of the geopolitics of health and other geopolitical aspects of Covid-19: some reflections
Health is environmental, cultural... but it's also geopolitical. In other words, factors such as air, water, soil and its quality, as well as noise, food, habits, family relations of individuals, social issues and inequality (access to universal and quality public health, social stability, access to decent housing, healthiness of living conditions of people in a place ...), and lately it enters, increasingly, the rivalry between the great powers in the technological field applied to health, not only as an economic-technological field and for capturing intelligence, but also in the management of data of all kinds in order to be able to trace research and treatment in the field of health, not to mention the ability to detect vulnerabilities, potential focuses and the taking of effective actions to control the disease, such as quarantines.
As for the geopolitics of health, there has always been a direct application, which would allow us to establish three types of blocks in human history and in the geopolitics of health:
1/ Pandemics: the evolution of viruses and their spread are a determining factor in travel and trade. The war in the antiquity with invasions made or suffered, the commercial circuits and their intensity and extension, or the discoveries with the traffic of all the biological and viral, have taken cases of pestilences (like the one of Athens during the Peloponnesian War, the plague in time of the Antoninos in Rome, the smallpox, the black plague, the cholera, influenza, etc.).
2/ The 19th-20th century and the development of nursing, improvements in health care, the application at a global level of solutions organized through States, bodies and institutions, such as the League of Red Cross Societies, founded on the initiative of Henry P. Davison in 1919, or the Rockefeller Foundation which was particularly active in internationalizing public health care, as well as medical conferences which took on a global character. When in 1918 Spain warned of the virulence of the flu virus while other nations chose to remain silent (which is why it is known as the "Spanish flu"), as the virus spread around the world, it led the world powers to the need for a joint response. The League of Nations, formed in 1919, understood the need to seek coordinated responses in health, so the League of Nations Hygiene Organization and the Hygiene Committee were created in 1920. The "Committee on Hygiene", the very forefather of WHO, and under the leadership of Elvald Tománek, was charged with setting the guidelines and directives in health policies to be followed at the global level, as for example was the case with trachoma and its spread, duration and fatal consequences as a result of the conditions of World War I and the misery and poverty during the inter-war period.
3/ The artificial intelligence, the Big Data, the 5G (and the step towards the 6G) that allows to manage the information and the data of a very high quality and value as never before in terms of volume and speed to be managed by the AI.
The digital revolution and AI are one of the battle horses in the relationship and war between China and the United States, which is not really commercial or economic, but is, above all, a technological and digital war. The United States, which was looking for expansion at all levels of China's public/private enterprises but under the direction and control of the state, like Huawei, launched the artificial intelligence plan in October 2016, to which China replied with an international development plan for AI in July 2017, setting out the plan and means for China to become the undisputed world leader by 2025.
Xi Jinping is also determined to make China a world leader in science, technology and innovation by the middle of the 21st century. It has boosted R&D spending, prepared the rise of new technology companies and called for a "robot revolution". For Xi Jinping, China's concentration of power in government gives it an inherent advantage over its competitors in the West because "it can pool resources into one important mission. In fact, China is competing strongly for talent, even from the United States, as approximately 2,629 experts went to China as part of its 1,000-talent plan, as collected by the U.S. intelligence services in 2018.
One of the things we have been able to see is how China has been able to experience a critical model in managing an extreme crisis. Moreover, it has introduced different operational models induced by the crisis and which leads us to consider what a model of society governed by Artificial Intelligence and Big Data could look like. We have had occasion to see the possibility of massive homework, police drones [29] or renditions by drones among other aspects [30]. In all this, 5G and 6G will play a major role on a large scale, and again Huawei sale a la palestra. In all this, the United States also pursues the same end, and we can venture that President Trump's promised industrialization must necessarily be technological in order to be competitive, and therefore cannot have a real mass impact on the American labor market.
Sri Lanka and Singapore have impacts on Chinese tourism, logistics and transport. In addition, the Singapore Air Show, which left around 250 million dollars in the 2018 edition, already presents a list of casualties of 70 companies in the sector, some of them as relevant as the American Lockheed Martin. It is interesting to see how the same scheme has been repeated as with the Mobile World Congress. And, in my opinion, this is no coincidence, since the Indo-Pacific region has been a region totally dominated by the United States. However, China, in its White Paper published in 2017, speaks of the same region as Asia-Pacific, an aspect that is repeated in China's defence strategy document of July 2019. However, the concept was indeed used, for example, by the Prime Minister of Japan in 2007 in the context of the Quadrilateral Security Dialogue, a partnership between Japan, Australia, India and the United States, as an arc of containment of China's regional and global ambitions. But for the People's Republic of China this region, which it already called Indo-Pacific Haushofer in the 1920s, has been a "natural" part of China's influence since ancient times, being more and more visible in the waters and territories of the Indian Ocean, whose increasingly intense presence is, above all and still, economic and not yet military, due to the lack of capacity to project this power (aircraft carriers, supply planes, bases in the area). China's eastern coastal area is still the nerve centre of its economy, but development means taking up a kind of imitation of Japanese expansion policies during the first half of the 20th century: it needs new markets for product exports and raw material imports (there are areas, for example, around the Spratley and Paracels Islands that have an abundance of raw materials, especially fish and gas). But the fact is that China wants to consolidate a defence zone in military terms and in terms of projection that starts in the Yellow Sea and encompasses the Taiwan Strait until it reaches the South China Sea, where it is already beginning to achieve success, like the policy of Philippine President Duterte. China is adapting its ships to strengthen its military muscle in its area of influence, in addition to launching more ships of all kinds and very designed for their space in a strategy of hegemony and support of the sea on land, and vice versa. In addition, it builds positions on islets (or extends them, or creates them) to reinforce its conquest of space in all the dimensions of war, winning micro-battles in the so-called grey zone and thus imposing itself on its space by investing its resources wisely and effectively and expelling or nuancing the American presence in its "Sino-Confucian" space, as I call it. A turn of the screw to the millenary Chinese historical hegemony in the region and a demonstration of an ascending power against the American hegemonic one. China's goal for 2049 is to launch from this first line, a second line covering the Ogasawara Islands, Guam and Saipan, and from there a third line of defence reaching Hawaii.
For China, on the other hand, the control of the Indian Ocean, is fundamental to control Asia and the seven seas. In this respect, I fully agree with the Chinese assessment. Furthermore, I believe that in order to dominate the world, it is necessary to establish a sort of control key that covers the following positions, which we could call "The Great Sea Serpent": Canary Islands-Azores-Strait of Gibraltar-Balearics-Malta-Cape Bon-Crete-Cyprus-Suez Canal/Red Sea-Yemen/Oman-Socotra-Persian Gulf-Seychelles-Maldives-Diego Garcia-Coconus Islands-Christmas Island-Sri Lanka-Guyarat (India)-Gwadar (Pakistan).
The aspect that unites the blockade action of the Singapore Air Show would come from China's interest in ASEAN within the actions within the One Belt One Road program, since it is just where the ASEAN countries are where the hinge phenomenon that unites the two oceans - Indian and Pacific - would occur. China has invested heavily in these countries to ensure their economic growth and thus initiate in an unarmed, rather purely economic way, the same process that I mentioned earlier that Japan undertook: finding markets where China can export and import raw materials that will launch the Asian giant to dominate the region and position itself as the economic hub of the world. However, we cannot forget the words of President Xi Jinping in 2013, as they are a roadmap for economic policy in the region: the creation of a political body, which he called the China-ASEAN Common Destination Community, which can strengthen the ties between the countries of the region. And finally, the third leg of this three-pronged Chinese strategy is evident: bilateral cooperation with some ASEAN countries, which as early as 2018 was the first maritime military exercise between all ASEAN countries and China. Something like a sort of Chinese Bushido, with the clear message of "Asia, for the Asians... and with the millenary China leading again".
And in all this, the heart zone is marked by the Strait of Malacca and Singapore. It is precisely a blockade, of different categories and calibre, one in Singapore and another in Malacca, that could make China feel very vulnerable. In the case of Malacca, it is clear: if the United States blocks the Strait of Malacca, the gas and oil transiting to China through there would be held back, not to mention the Chinese exports that pass through that strategic point. In the economic aspect and in the projection of power and influence, Singapore plays a key role in the whole region, where the strong and influential Chinese community plays a clear role. If China wanted to reduce the exposure of its "flanks" it would have to increase its presence in the area, and even protect its ships, obviously with an escort. How would ASEAN and South Korea react then? Would the Chinese be perceived as a threat by them as well as by the Americans? This is why some ASEAN members welcome investment in the region - but are wary of China's presence in the area on the military side. In large part, I believe this is due to the mentality of the region: they do not yet perceive China as a total power, economically, politically, culturally and militarily. Perhaps, they still don't see the certainty of perceiving a clear Chinese hegemony in the area, which includes the military, and they perceive American power as key in the war facet of that arithmetic, so they move between both sides: the economic strength in the region is China, and they support it; the military strength is still America, and they must balance both spheres for their prosperity and security.
In short, are we facing yet another scenario of competition between the "champion" and the "challenger" within the context of the Thucydidian Trap applied to China and the United States?
There has also been a struggle in Spain between the United States and China with the framework of the European Union in the background and its projections to become a geopolitical power and to strengthen its strategic autonomy with respect to the United States, where the European Union has to deal with the misgivings and opportunities that China could offer it to achieve its objectives. And this has been manifested in the fact that the Mobile World Congress has been cancelled in a possible pulse of the technological war between the United States and China, after the casualties of Facebook, Amazon, Vodafone or BT among others. Indeed, within Spain, for example, voices have emerged that, after analyzing the shifts in US policy, question relevant aspects [32]. Or President Donald Trump's threat to Spain over the issue of Huawei's 5G to leave it without the access and cooperation that exists with the United States intelligence services [33]. The words of the President of the French Republic, Emmanuel Macron, about NATO are along the same lines. In the same way, the US Attorney General, William Barr, called for "taking control" of the European Nokia/Ericsson, for their 5G and 6G programs, with the excuse of arresting Huawei. The path followed by these events should be followed with interest in the near future, in particular in view of a second term of office for Donald Trump, although for the former deputy national security advisor to the White House, Ben Rhodes, the scenario of a definitive move away from Europe and the United States is not unreasonable. In this regard, once again the President of the French Republic, Emmanuel Macron, in the interesting speech on defence strategy and deterrence of the École militaire, the President left a series of very interesting reflections on the subject: "The last decade has witnessed strategic, political, economic, technological, energy and military balances, to a great extent challenged, and today we see the dawn again which could undermine the peace acquired after so many tragedies on our continent". He also noted the existence of a "new hierarchy of powers [that] is taking shape, at the expense of uninhibited global strategic competition, which carries with it the risks of incidents and uncontrolled military escalation in the future.
Macron declared himself ready to work towards "greater capacity for autonomous action by Europeans", even if, according to him, France "is convinced that the long-term security of Europe requires a strong alliance with the United States. "At this point, the French president was severe with the policies applied in Europe since the end of the Cold War. Policies which, by not anticipating future movements, have led to a loss of autonomy in the fields of industry, technologies [those related to the digital, in particular] and defence.
"European freedom of action, defence and security of Europe cannot be based on a purely military approach. To build the Europe of tomorrow, our standards cannot be under American control, our infrastructures, our ports and airports under the Chinese capital and our digital networks under Russian pressure. At European level, we need to master our maritime, energy and digital infrastructures. There too, we were very wrong. We ended up thinking, in the 1990s and 2000, that Europe had become a large and comfortable market, a theatre of influences and all sorts of depredations , talking about a 'fatal mistake'.
And in this context, he said, Europeans "must collectively realise that, in the absence of a legal framework, they could be rapidly exposed to the resumption of a conventional, even nuclear, arms race on their territory. They cannot limit themselves to a role of spectators.
The impact of the Covid-19 on the Middle East
The issue in Iran, which is spreading the coronavirus to a large number of neighbouring countries, which are also in a very poor position to deal with it, needs to be highlighted.
Iran is trying to fight the spread of the coronavirus, and is already clearly positioning itself as the second focal point after China for the spread of the disease, and the true dimensions of the impact of Covid-19 on Iran may not yet be known, given the opacity. However, cases in Iraq, Afghanistan, Bahrain, Kuwait, Oman, Lebanon, United Arab Emirates, including one in Canada, have been traced to Iran.
In several fundamental aspects, the Middle East is a place that can generate a pandemic, due to the circulation of different groups: workers, businessmen, religious pilgrims, clergy and soldiers circulate permanently across Iran's borders, since in some relevant aspects, Iran is something like the center of a board. These countries have weak border controls, weak and ineffective governments and fragile health systems. In addition, the Iranian economy has been strangled by sanctions, the people have lost, with their foreign policy in the Middle East and Central Asia, some of the confidence in their government and their leaders are isolated from much of the world.
On top of that, actions in Iraq and Afghanistan add to scenes of civil war or years of unrest that have destroyed health systems in several countries in the region such as Syria, Iraq, Afghanistan and Yemen. Much of the Middle East is under authoritarian governments with a poor record of providing public services in transparency, accountability and health. The news leak that has brought us closer to the reach of Covid-19 in Iran and the evidence that, once again, the regime has mishandled information and communication strategy, as happened less than two months ago with the information that the regime really knew about the accidental shooting down of the Ukrainian passenger plane by the air defence systems, and which caused angry reactions among the Iranian people that threw away the moral "capital" that Tehran had accumulated with the death of Major General Soleimani.
Millions of pilgrims travel each year from all over the region to visit Shiite holy places in Iran and Iraq. For example, as early as last January, at least 30,000 people returned to Afghanistan from Iran, and hundreds of others continued their pilgrimage to Qom. Iran's Ministry of Health sent a letter to the governor of Qom on Thursday and asked Shiite religious leaders to limit the number of pilgrims in the shrine to Fatima Masumeh and other religious sites in the city, but action has been taken too late and too slowly.
The other important centre for the Muslim world is Saudi Arabia, which was already the epicentre of MERS. But the truth is that after seven years, Saudi Arabia, one of the richest countries in the world, has presented problems in adapting the most modern hygiene procedures and thus limiting the spread of the virus within hospitals. For example, spring 2019 saw a new outbreak of MERS that infected at least 61 people, killing eight of them. Saudi Arabia took the decision last Thursday to suspend entry to all pilgrims visiting the Prophet Mohammed's Mosque and the holy places of Islam in Mecca and Medina, as well as any tourists from countries affected by Covid-19 [37].
How the Covid-19 approaches the United States
It is appropriate to consider this point, since we should remember that this year Donald Trump could be re-elected for a second term in the elections of 3 November 2020. For now, within the Democratic Party, which is holding a presidential primary, Bernie Sanders leads former Vice President Joe Biden by eight delegates. If Sanders ends up winning the primary and the Democratic Party's nomination, we would have a politician with a profile similar to what we in Europe call a "social democrat".
Well, so far, the Trump administration is very focused on controlling the discourse around Covid-19 and health, clearly being a political tool. It focuses on a clearly neoliberal idea: talking about individuals, and not about the whole population, so as not to deepen specific economic and active policies, where budget cuts are made that mask the whole population by following the stratagem of talking about the individual.
To reinforce this policy line, President Trump has repeatedly called Covid-19 a "simple flu" [38]. And he has pointed to fifteen patients as the total number of affected in the United States, when during the weekend of March 1 the figure was close to eighty. To strengthen this idea in the American people, he has appointed Vice President Mike Pence responsible for monitoring the coronavirus. The message is that Covid-19 does not deserve President Trump's attention, and if it turns out that it did, Mike Pence will be blamed. For Trump, it will all be over soon, and it's only a matter of time before a vaccine is developed (so, if it's not so relevant, why wait for a vaccine?). In fact, today, 2 March, President Trump is meeting with pharmaceutical groups to discuss the issue.
On February 28, 2020 in South Carolina, President Donald Trump pointed to the coronavirus as a new deception by the Democrats, in addition to presenting their border policy as a value. What President Trump also intends, above all, is to avoid the downward reactions of the stock market, as well as a slowdown or, worse, but also possible, a recession, at the time of the presidential elections in 8 months. The other idea that emerges from the analysis of President Trump's words is that he intends to accuse the Democrats and the major media of creating panic against him by using, the expression that has been so successful, spread by him during his previous presidential campaign and his own presidency: Fake News.
Objective data on the administration's actual ability to deal with the coronavirus if it became more unpredictable and took a path similar to that of China, South Korea, or Italy would be a test for Trump's re-election. Let us not forget that the health structure of the United States is based, as a whole, on the type of private insurance, and the impact and scope that it could have. On the other hand, President Trump ceased immediately after the National Security Council's pandemic chief took office, in addition to reducing funding for national health agencies, in particular that of the Center for Infectious Disease Control (CDC), and also global health programs, expressing his desire to reduce to 50% the funds allocated precisely to the World Health Organization. In fact, for that reason, the White House has asked to release a $2.5 billion package to handle the situation, which Democrats claim is clearly insufficient unless the figure is raised to at least $8 billion.
Moreover, the Centers for Disease Control has had to cut 80% of its overall disease outbreak program as a result of CDC funding cuts [40]. Another interesting fact is that although a plan to screen people for coronavirus was announced by the CDC, it was later found that only 3% of public health laboratories were prepared, even after delays, due to the agency's funding cuts [41].
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