The impact of Coronavirus syndrome on masses and world economy

The speedy spreading of new coronavirus that reportedly originated from the Chinese London-sized city of Wuhan is, at its most immediate level, causing a global public health crisis. But it is also much more than that, it is feared.

As Beijing’s governments struggle to contain the epidemic, the virus is already having economic ramifications in China and around the world. That is the second level of its impact. And as the epidemic threatens to become a pandemic and the speed of the contagion exceeds the number of cases of the 2003 SARS outbreak, there is a third level of consequences that has received far less attention: This coronavirus could leave a lasting political mark far beyond China that could ultimately be its most profound legacy.

Much will depend on how long this health crisis lasts, which, in turn, depends on how fast the virus continues to spread and how effective public health measures prove to be. Although the virus remains largely confined to China two months after it was first detected in Wuhan, it is all but certain that it will send shockwaves to every corner of the world, even if there is no single new case outside of mainland China.

That is because, as the number of victims and confirmed cases in China grows — they roughly doubled in a recent four-day period — the country’s level of economic activity is steadily contracting. If that were happening in any other country, there would be fewer reverberations. But China is a unique case. Its economy is more closely integrated into global activity than ever before and vital to global supply chains. What happens in China economically does not stay in China.

Unlike Pakistan, where Sindh is already being hit by mild outbreak, in Hong Kong, the epidemic may put a damper on mass protests, but it has added one more grievance to the list of complaints against Beijing and its minions in the Hong Kong government. Protesters have blasted the authorities’ failure to more thoroughly cut off links to the mainland and prevent the virus from spreading into Hong Kong.

But there is more. Because China’s breakneck economic growth in recent decades has turned it into the world’s biggest importer of commodities like oil, iron ore and soybeans, a sharp economic slowdown in China inevitably means a sharp drop in commodity exports and prices around the world. Commodity exports are the lifeblood of government revenues for many developing countries. When those revenues drop, the state is less able to respond to public demands. The potential for political disruptions from the coronavirus is magnified by the recent wave of mass protests in many of these countries.

Many of the predictions about the impact of this epidemic are based on what occurred in 2003, during and after the SARS outbreak. But this is not the SARS virus, and China in 2020 is not China in 2003.

SARS was much deadlier, killing up to 10 percent of those who became infected. The new virus has a mortality rate of about 2 percent, but it is infecting so many more people that the number of dead in China has already surpassed the toll from SARS, which spread over nine months. Because this coronavirus is so infectious, it is harder to stop.

China, too, has changed. In 2003, it accounted for 4 percent of global gross domestic product (GDP); that share has since quadrupled. China’s economy — now worth an estimated $14 trillion, making it the world’s second-largest after America — consumes more than 50 percent of the global output of copper, aluminum, iron ore and other materials.

For the countries that provide those commodities, such as Chile, the world’s biggest exporter of copper, the timing is precarious. Chile endured huge popular protests late last year in the wake of an increase in public transportation fares. Its government responded with a promise to tackle inequality and address the economic demands of demonstrators. A sharp drop in export revenues will make those promises more expensive. Other countries that rely on commodity exports to China will feel the economic impact of the coronavirus as well, putting their governments under pressure.

For developed economies, generally less reliant on commodity exports, such as Germany, France and America, a combination of China’s economic slowdown and measures aimed at constricting traffic in and out of the country means disruptions of supply chains, loss of export sales and, ultimately, their own diminished economic growth. Slower growth in these developed economies, particularly during election years, can have a powerful effect at the ballot box.

China is the top export destination for 33 countries and the top source of imports for 65. One of those is America, and the second one is Australia, whose economy is unusually dependent on China, and a coronavirus-driven slowdown could mean billions in lost revenue. And the other is Italy now facing a rising likelihood of a technical recession in the first quarter of this year as the outbreak threatens to further damage an economy that was already shrinking. The Italian economy contracted 0.3 percent quarter on quarter in the final three months of 2019, the steepest decline in six years, and the global economic impact of coronavirus could drive a further contraction in the succeeding quarter.

The threat from the Chinese lockdown to Australia’s tourism alone is very significant. China provides around 15-16% of visitors to Australia but they are the biggest contributors to the Australian bottom line when they are here, outspending American tourists by a ratio of three to one. Their spending of $12-16 billion is greater than American, British, Japanese and New Zealand tourists put together. Australia’s education sector — at $34 billion, revenue from overseas students is Australia’s second biggest export behind iron ore — is also crucial, and again highlights how exposed Australia is if students cannot leave China to start their courses this month.

In case of America, a loss of a fraction of a percentage in the American GDP growth during an election year could have more than a material impact on the result of the 2020 elections. After all, the 2016 election was decided by the narrowest of margins. Donald Trump would not have become president if not for 80,000 votes going his way in three key states: Michigan, Pennsylvania and Wisconsin. Trump’s strongest suit for re-election is the economy, even if he always exaggerates his own economic record and takes credit for a recovery that started and was by many metrics better under Barack Obama. In a tight race, it is conceivable that by shaving a small slice off of America’s economic growth, the Wuhan coronavirus could hurt Trump’s re-election campaign enough to change the outcome in November.

Airlines too are the latest casualties, expecting to lose $29.3 billion of revenue this year due to the outbreak. The International Air Transport Association has already predicted demand for air travel will fall for the first time in more than a decade. Airlines in China and other parts of the AsiaPacific region are expected to take the vast majority of the impact.

Viruses don’t see borders, even if politicians in an age of nationalist drift quickly opt to shut them amid fears of a global outbreak. Today’s globalised economy also means that one country’s health crisis can easily become another’s country’s political wild card.

Note: Saira Baig is a freelance writer focusing on politics in Asia, the Middle East and Latin America, feminism, fashion and cinema, and also a frequent contributor to The Lahore Times, Pakistan, The Daily Notable, Pakistan, The Express Tribune & International New York Times, Pakistan & the United States, Southasia Magazine, Pakistan, Spectra Magazine, Pakistan, Sri Lanka Guardian, Sri Lanka, and The Journal of Turkish Weekly, Turkey.

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