China, a Vulnerable Power

SARS. There are four letters that in China evoke the worst memories. Severe Acute Respiratory Syndrome is a virus of similar origin to the coronavirus although more virulent that left the Asian power in the beginning of this 21st century in shock. Almost 800 people died, and 8,000 were affected worldwide. The Chinese economy suffered 1%. China is afraid of experiencing a sequel. And the world too. It is the litmus test for the second global power and its president, Xi Jinping.

“We can win the battle to combat this epidemic with prevention and control,” said Xi Jinping at the conclave of the Standing Committee of the Chinese Communist Party convened on Saturday, 25 to address measures to combat the coronavirus. In the newly released Year of the Rat, when the goal of achieving a “modestly affluent society” seemed within reach, this epidemic can derail all plans.

“We have the image of a highly developed country, but China has lived together for centuries. The differences in terms of development are very significant, for example, in the countryside and the city. China is advancing at a great pace but with great territorial imbalances. The change in 50 years is spectacular but there are great differences between some areas and others, “says Xulio Ríos, director of the Observatory of Chinese Policy.

There are more means than 17 years ago, but even the investment in health does not correspond to a country that is the second global power. In a ranking of 191 countries and regions, China ranks 80th for its public spending on health per capita.

A highly centralized power

The first case was detected on December 12, but local authorities were reluctant to assess the severity of the crisis, largely due to the great centralism of political power in China. When the mayor of Wuhan was asked in an interview on official radio why he had not given importance to this epidemic from the beginning, Zhou Xianqang said that his hands were tied. “I needed permission from Beijing to make it public,” he replied. He has offered his resignation in any case.

But Beijing waited a few weeks to sound the alarm. Now, however, the official slogan is transparency, at least facing the gallery, because there are those who suspect that the number of those affected is seven or eight times greater. Xi Jinping has insisted that you have to cooperate with the World Health Organization and give clear information quickly.

Still, there is a big difference between the reaction with this coronavirus and with SARS at the beginning of this century. Now it has taken weeks but then it was months and SARS was much more virulent. The coronavirus mortality rate is less than 2%.

“There are very important differences from SARS when it comes to management. At that time the great reproach from the international community was the lack of transparency and the lack of cooperation with WHO for a long time, which contributed to aggravating the situation. It generated mistrust regarding China. It was a failure and the international image of China was damaged “, highlights Mario Esteban, principal investigator at the Elcano Royal Institute, who experienced the SARS crisis in Beijing.

“Now China has reacted faster. The relationship with the WHO has been more fluid. Always in difficulties. There has not been such an obstructionist task, “adds the expert. Due to this more open attitude, China has so far contained criticism from the WHO or from other countries, although in certain latitudes such as Australia anti-Chinese sentiment grows.

However, the Chinese population is outraged because they believe that the state must protect and care for its people, and there have been failures here. The protest at the moment is observed especially on social networks.

It is still too early to know what impact the coronavirus will have. There are experts who assure that its impact will be much less than SARS, but others, such as Guan Yi, from the University of Hong Kong, anticipate that it will be ten times more powerful than the epidemic that spread in 2002 and 2003. In fact, the The Lancet magazine has just published that in Wuhan there would be some 75,000 infected and not less than 10,000 that are currently recognized by the Beijing government.

Be that as it may, China has shown another face to the world, far from the great technological leading power that dominates 5G like no other. There is a China that advances unstoppably in its underground conquest of the world, but there is another China that is far from being a developed country, where there are markets where animals are sold in unsanitary conditions. Authorities activated measures against these practices after SARS, but beliefs difficult to eradicate still persist.

This new virus originated from a seafood market in Wuhan City, coronavirus zero zone. There, as in many markets in China, all kinds of animals came, also wild, alive and dead. SARS also originated in a similar market. In that case the virus came from a reservoir of bats and from there spread to civet cats, whose meat is considered a delicacy in southern China. The current virus, 2019-nCoV, probably comes from snakes.

We have the image of a highly developed country, but in China several centuries coexist. The differences in terms of development are very significant, for example, in the countryside and the city. China is advancing at a great pace but with great territorial imbalances. The change in 50 years is spectacular but there are great differences between some areas and others, “says Xulio Ríos, director of the Observatory of Chinese Policy.

There are more means than 17 years ago, but even the investment in health does not correspond to a country that is the second global power. In a ranking of 191 countries and regions, China ranks 80th for its public spending on health per capita.

Social networks are burning in China with this crisis. The Chinese have a very paternalistic vision, which sometimes works in favor of the government. They are willing to sacrifice many liberties. However, the population is very demanding in terms of the protection they believe the State must provide them. They complain about the health and economic impact, “says Mario Esteban.

Contrary to what happens in the case of political criticism, official censorship has allowed these messages to spread. In this case, the strategy may be to let them vent in the networks to prevent anger from reaching the streets. The central power is also trying to make local authorities appear responsible. In fact, criticism fails to question President Xi Jinping.

Unpredictable economic impact

There is no doubt that this epidemic will have an impact on the Chinese economy and the global economy. China now accounts for 18% of global GDP. It is still early to quantify it, but it will be relevant, according to experts. When China was already struggling to meet the 6% annual growth target, this epidemic will make this goal virtually impossible.

Just when it was beginning to see the light on the horizon of the trade war with the United States, this new crisis arose that would have to lead China to ask basic questions about its development. According to Financial Review correspondent Michael Smith, “China’s worst health crisis since SARS is a severe blow to its strongman, Xi Jinping.” In fact, Smith considers the virus to be “the last…

Just as it was beginning to see the light on the horizon of the trade war with the United States, this new crisis arose that would have to lead China to ask basic questions about its development. According to Financial Review correspondent Michael Smith, “China’s worst health crisis since SARS is a severe blow to its strongman, Xi Jinping.” In fact, Smith sees the virus as “the last challenge” the Red Emperor faces, at a time of slowing the economy, with protests in Hong Kong still to be stifled and the trade war half-resolved.

In fact, this crisis has highlighted a centralized model that in theory would make him ultimately responsible for any decision. Also of all the achievements. Even if the situation calms down from the next few days, when the spread has peaked, as long as there are no new cases and those that are already reported are controlled, the effects of this partial suspension of activity in the country will be significant .

«From the outset the impact is going to be remarkable. Keep in mind that the trend is a reduction in the growth rate. Last year it ended with 6.1%, within the targets, but very fair. The cost of this crisis can be three or four times more than the SARS crisis of 2003. In 2003 it was 5% of global GDP, today it is 18%. China’s growth in the first quarter will be at most 5%. At a time of crucial internal demand for the New Year party. Not only will it be noticed on the subject of consumption, but also public spending », explains Xulio Ríos, author of La China de Xi Jinping.

“It all depends on whether the measures taken work. If that happens, it can be reversed in favor of the Chinese government. It is a very important challenge. The response of the Chinese authorities, especially the government, is being more forceful than in 2002. But China, despite being the second world economy, in many cases is like a developing country, “adds Xulio Ríos.

The coronavirus crisis has hit many companies with businesses in China hard. British Airways was the first airline to suspend its direct flights to and from ground zero. Later, the same measure was adopted by Lufthansa, Swiss Airlines and Austrian Airlines. The share prices of British Airways and other companies have suffered. Cathay Pacific has halved the number of flights departing or arriving in deep China.

Tourism-related companies are the most affected, but there are factories that have also closed. Starbucks has announced the closure of half of its 4,300 stores. Other companies that have applied the blind are numerous McDonald’s restaurants and H&M and Uniqlo stores, according to the Financial Times. In six provinces they have asked all companies whose activity is not essential to stop everything until further notice.

Even companies linked to the technology sector are suffering from the virus. The Foxconn and Pegatron plants, dedicated to assembling parts of the Apple, have left the activity for the moment, as well as facilities of Samsung and the Japanese Murata.

Another sector affected has been the engine due to the temporary suspension of the Toyota and Hyundai factories. Other companies such as Honda, Renault, PSA, and Nissan have begun to evacuate their foreign personnel. GDP is likely to barely grow 5% in this first quarter. The psychological impact would be significant.

In turn, they have suspended the Winter Games, the Football League, and it remains to be seen what happens to the parliamentary sessions scheduled for March. It remains to rely on the one hand on science and in turn on the good omens that are associated with the recently started Year of the Rat. In the Chinese horoscope the beginning of each decade is in itself a positive omen. A new era begins with energy and everything bad is left behind. Ev

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