Hyderabad: The dreaded coronavirus, which originated in Wuhan (China) has already consumed close to 150,000 lives in 210 countries and territories. Yet the end is nowhere in sight, nor is a vaccine or a treatment protocol. Practically every nation is groping for solutions, with little clarity on the way forward. Some states like Israel, Korea, Germany, India, Singapore and Japan have been proactively tackling the contagion with encouraging results. Mysteriously, the affluent G7 countries, have been the worst hit. The death toll in the US alone on some days has neared or crossed 2000.
This is not the first time that deadly viruses have originated in China. Nor is it unusual for China to cover-up things. What is new however is the Chinese audacity to deny any responsibility and 'persuade' WHO (World Health Organisation) to give it a good conduct certificate. Thus, while Beijing hid the ticking Covid-19 time-bomb, the unsuspecting world went about its business, only to realise, one fine morning that the pandemic had permeated their cities and towns.
Caught off guard, the hapless world is reduced to numbly watching the havoc it is wreaking. Suddenly the Himalayan folly of locating manufacturing facilities in China, including for critical pharmaceutical products, has dawned on Western capitals and so has the realisation that their dependence on imports (a bulk from China) extends up to 95% of their requirements. Consequently, they are not only short of face-masks, gloves and ventilators but even something as basic as Paracetamol.
Cornered, the pandemic hit countries placed orders worth hundreds of millions of dollars, but were aghast to find that many unscrupulous Chinese companies, had no qualms about dumping substandard or defective testing kits, gloves and related material on them.
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"Most of the masks of the United States are produced in China. If China retaliates against the US…. by imposing a travel ban, as also a strategic control and ban on export of medical products …. then the US will fall into the hell of a new pneumonia epidemic... the US owes China an apology, and the world owes China a gratitude," ominously hinted Xinhua, Chinese official news agency, 4 March.
So, what is the situation on ground today? In addition to the unconscionable human toll, nations across continents are slipping into a deep economic recession. The global supply chain has been disrupted, factories are shutting down, unemployment is surging (22 million people in the US have lost their jobs since mid-March) and shortages of even essential commodities are becoming common place. The chief economist of OECD (Organisation for Economic Co-operation and Development) notes that production levels have dropped between “25 to 30 percent across all OECD countries."
Crude oil prices have slumped 70% (India is not complaining!). It is estimated that the educational progression of 1.57 billion students and scholars has been hampered. The hospitality, tourism, aviation and construction sectors have taken a big hit. Their recovery would be neither quick nor painless.
The IMF (International Monetary Fund) estimates that the global economy will contract 3% this year, which is the worst since the Great Depression of the 1930s. It could slice $9 trillion off global GDP ($87 trillion) over the next two years. The Chinese economy may expand just 1.2% (the slowest since 1976) and the Indian around 1.5%.
Read: Cases' doubling reduced after lockdown, growth factor down 40%: Govt
The longer the pandemic lasts, greater the damage it would inflict. It is difficult to visualise the 'new normal' at least till the end of crisis is in sight. Even then the contagion, like a forest fire, will keep smouldering and erupting, for quite some time. All the same it would change lifestyles, businesses, relationships and power dynamics significantly. At a micro level, the work-from-home and hand-hygiene culture will gain salience and so would usage of face masks, interactive digital sites, as well as, e-commerce platforms. The demand for data will grow exponentially.
At the macro level, changes could be even more far-reaching. Countries will become inward looking, manufacturing especially of strategic and essential products would be on-shored, protectionist walls would go higher, international trade and investment would decelerate and the governments would become more assertive.
As per the Institute for International Finance (IIF), about $100 billion in investments have already fled emerging markets, which is three times the capital exodus seen in the 2008 global financial crisis. Japan has already earmarked US$2.2 billion to help its manufacturers shift production out of China either to Japan or third countries,
Inter state relations and power equations would come under a serious review. The US led security architecture in various regions would inspire less confidence, but apprehension of China would increase. In fact, China could turn out to be the biggest loser. Chinese students, scientists and businesses will come under greater scrutiny. For want of alternatives, at least in the short to medium term, an arms race could ensue, enhancing tensions and instability.
Read: Socio-economic impact of the coronavirus pandemic
Global institutions of governance, including the UN, UN Security Council and WHO have been found wanting, ineffective and partisan. EAM Dr. S Jaishankar, speaking at the Munich Security Conference earlier this year, observed – “ the United Nations is far less credible today than it has been through its history.” There are two major reasons. One, these bodies do not have the wherewithal to enforce their decisions and depend on the five permanent UNSC members, who are hopelessly divided.
Two, China’s hold over them has grown disproportionate to its assessed monetary contribution, which pales in comparison with that of the US. (Chinese and the US total contributions to WHO in 2018-19, were $86 & $893 million respectively). Beijing concentrates instead on getting friendly candidates elected to key positions and then 'cultivates' them systematically. The current WHO chief is also a Chinese nominee. As such, these institutions could get further marginalised, since there is little appetite to reform.
And finally, the big question is how would India fare? Indications so far are positive. Hopefully we have managed to avert a community spread. As we grapple with the contagion, the government is considering measures to jump-start the economy. There cannot be a more opportune time, as there is a widespread sense of anticipation. 'Make in India 2.0' initiative could include credit lines on easy terms, lowering of GST rates, land and Labour reforms, time bound online approvals and easing of transport bottlenecks.
Covid-19 is an unprecedented challenge but also an opportunity. Hopefully we will be fleet-footed enough to succeed on both counts.
(Ambassador Vishnu Prakash - former Envoy to South Korea & Canada and Official Spokesperson of the Ministry of External Affairs – is a foreign affairs analyst and author)
