DPG China Monitor

Vol. III, Issue 2

Date: March 11, 2020
As the progression of the COVID-19 outbreak in China seemed to be slowing down after a toll of 2,981 deaths and 80,270 cases of infection, the national focus in China once again shifted to the health of the economy. While China’s state media continued to make repeated projections of the short term impact of the epidemic as mainly reflected in the first quarter of 2020, there was growing concern that the epidemic, a “Black Swan” event which has impacted around 84 per cent of China’s work force, can trigger a deep recession or even cause another Asian Financial Crisis.

As a part of the damage control exercise, the Chinese government declared a two-front war - one against the epidemic and another to restore China’s economic and social order by “scientific and orderly” resumption of work. A three-fold strategy to manage the crisis was charted.

The first element of this strategy was to ensure the “People’s Rice Bag and Vegetable Basket” through the continuous supply, quality and stable prices of commodities of daily need, because “when people have sufficient food in their hands, they won’t panic and devote themselves more actively to the war against the epidemic”. China claimed to have done a commendable job in maintaining the "lifeline," such as food and water supply, electricity, thermal oil and other daily necessities of people’s lives in the cities which are among the worst hit by the epidemic. There were, however, reports that China’s farming sector has been reeling under the adverse effect of the epidemic, with certain counties recording as high as a 90 percent dip in sale of agricultural products. As a result, there was much emphasis within Chinese policy circles to help farmers manage the ‘Spring Farming’ cycle.

Secondly, China is focusing on maintaining people’s livelihood and the employment pool. To kick start the economy, the central enterprises (petroleum and petrochemical companies, power grid and power generation companies, iron and steel producers etc.) along with other key players in the services sector have been instructed to resume production on an urgent basis, so that employment is maintained as also China’s global supply chain dominance remains unchallenged. The government, on its part, is taking extraordinary measures to ensure the “safe” return of millions of migrant workers from all over China back to work. Special attention is also being provided to SMEs which are among the hardest hit by the epidemic.

Thirdly, there is a deliberate push to transform the epidemic crisis into an opportunity, particularly in terms of upgrading China’s industrial structure, deepening supply-side reforms, and promoting technologically advanced manufacturing, unmanned manufacturing and service industries, through extensive use of big data and artificial intelligence. Further, in order to nullify the impact of harsh quarantine measures, platform economy, sharing economy, and digital economy are being encouraged.

Amidst worldwide concern over the Novel Coronavirus, China has been determining its friends in need. Japan, South Korea, Pakistan and Cambodia were extolled as true friends of China. Gestures like Cambodian Prime Minister Hun Sen’s special state visit to China in the middle of the virus outbreak, Pakistan’s decision not to withdraw nearly one thousand citizens from Wuhan despite widespread criticism, Japan’s lavish aid and solidarity as also South Korean President Moon Jae-in’s repeated assurances of backing China in the anti-epidemic fight, were hugely appreciated. China’s state media also praised Southeast Asian countries for their milder reaction to the epidemic and offers of moral support to China. While China grudgingly rationalized moves by other close neighbours, such as Russia, Mongolia and North Korea who sealed their borders with China as a preventive measure, it singled out the United States for its “ill-intended” criticism,  “fueling racist sentiment against the Chinese people and sullying China's system and its efforts to fight the epidemic”. China was also noticeably unhappy with India’s reaction to the epidemic.  “Could the Indian government have responded to the outbreak in China in a calmer, more rational manner during the early stage? Could it have shown more goodwill like Japan, South Korea, Pakistan and Cambodia,” was the refrain within sections of China’s strategic community.

China was also irked by Taiwan and Hong Kong’s reaction to the epidemic, which not only banned face-mask exports but also insisted on closing borders and preventing mainlanders to enter these regions. In retaliation, China conducted various military drills this month to bring home the point that the mainland’s military capabilities were not deterred by the ongoing virus outbreak and it maintains the will to safeguard national unity and integrity despite difficult circumstances.

 In the defence space, China's leadership highlighted the need for incorporating biosecurity as a part of China’s national security by speeding up laws and regulations on biosecurity, together with building a permanent force dedicated to the task. This added fresh impetus to the controversy over the actual source of the deadly virus. While some sections of the international media interpreted China’s focus on biosecurity as a validation of the “fringe theory” that COVID-19 had emerged from a Chinese laboratory, within China the consensus was that biological threats to China like the present epidemic were a reality that can no longer be overlooked.

Apart from fighting the deadly Coronavirus, much of China’s political energies were spent on waging a high-pitched ideological and propaganda battle. As the death toll from the epidemic rose during the month, all fingers were pointed at China’s top leadership. The public outrage following the tragic death of the whistle-blower doctor from Wuhan, Dr. Li Wenliang, further exacerbated the situation. Defending the Chinese government, China’s state media strove hard to make a case that the outbreak of the virus was a national emergency in the same league as that of bushfires in Australia, the 2009 Influenza outbreak in the US and the like. It was argued that the epidemic was not a failure of China’s political or governance system; ‘Socialism with Chinese Characteristics’ is China’s greatest avantage; and its strong and resolute leadership is the greatest guarantee to overcome a crisis like this in an efficient and orderly manner. Interestingly, there was also some public acknowledgement of initial lapses by Chinese officials and the resultant public discontent. However, it was projected that China is willing to learn lessons from the present crisis and improve its emergency response system for the future.

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