The September 11 terrorist attacks brought us TSA security, not to mention the regime change wars no one can stand anymore.
The great financial crisis brought us quantitative easing, and other measures unified across the world’s central banks to better inoculate the system against major market meltdowns.
The new SARS coronavirus will forever put a damper on U.S.-China relations.
Over the last several weeks, the Chinese government has, on one hand, kicked out Wall Street Journal reporters for their coverage of the outbreak; blamed the U.S. military for bringing the virus to Wuhan; and demanded U.S. media in Beijing that has locals on staff to cut them loose.
On the other hand, they have either offered, or have sent ventilators and surgical masks to Italy as hospitals there cope with the onslaught of a deadly new pathogen that has lead to respiratory failures that killed some 13,101 people worldwide as of Sunday morning. Most of the dead are Italians in northern Italy and not people from Hubei, China, where the virus was first discovered in early December.
For weeks, many in the “decouple” camp — those who would prefer it if U.S. multinationals made their chemical mixes and widgets at home, or at least somewhere in the Americas instead of in China — felt that the outbreak has forever changed China’s role as global manufacturing hub.
That was before the Western world, the buyers of most of the products made to export out of China, got even more sick than the Chinese. For the moment, they’re not exactly in condition to make things at home.
With 307,382 cases globally, which includes those who have recovered and died from the COVID-19 disease caused by the SARS-CoV-2 virus (aka the new coronavirus), China is now home to the least of them. Italy is the new Hubei. As will be France, Spain, Germany and most likely Switzerland and the U.K. The U.S. is on deck.
Besides the unknowns of the public health emergency, which has new news almost daily, what seems clear is that the U.S. government has had it with China. The trade war was a start. COVID-19 panic shutting down entire nations just exacerbates things.
In Washington, Trump has gone from “the hysteria is a hoax” (denial) to “China has to pay for this” (anger) in America’s newfound coronavirus stages of grief.
“The world is paying a very big price for what they did,” Trump said, referring to his claim that Chinese officials did not fully share information about the outbreak after it began in Hubei.
“It could have been stopped right where it came from,” Trump said at a White House news conference.
Clearly, Trump sees all of this as China’s fault. We all know perception is greater than reality.
This is as much Italy’s fault. And France’s at this point as it is China’s.
Why? Because Italy was zipping people in and out of Hubei textile mills during the height of the outbreak in February. Unwise, to put it kindly.
After the China cases were cured here in the U.S. following travel bans, we were bringing in people from the Diamond Princess cruise ship docked in Japan; people who had mingled with European travelers.
Then new cases began popping up from Americans who had been to Italy. Others mingled with European business travelers, like those in attendance at a Biogen conference in Massachusetts.
It spread like wildfire from there, running through the community, leading two of America’s most important states — New York and California — to place its residents in stay-at-home quarantine.
With Trump having no problem finger pointing, Chinese Foreign Ministry spokesman Geng Shuang said on Wednesday that China would be “compelled to take further countermeasures” if the U.S. continued down the “wrong path”, which should be taken to mean blaming China.
The feud between the world’s two biggest economies comes at a bad time. The U.S., and the world, could uses China’s help here. Do they even want it?
As Brian McCarthy, chief strategist for Macrolens, a big picture investment research firm in Stamford, Connecticut put it on Friday in a note to clients, you know it’s bad when even The Washington Post is backing Trump on the China bashing.
In an op-ed titled titled, “This virus should be forever linked to the regime that facilitated its spread” WaPo columnist Marc Thiessen posed this question to readers:
“Want to know why the U.S. economy is in free fall? Why restaurants and bars are closing, putting millions out of work, and why the airline industry is facing possible bankruptcy? Why schools across the nation are shutting down, leaving students to fall behind and parents without safe places to send their children everyday? Why the stock market is plummeting, wiping out the retirement and college savings of millions of Americans? Why the elderly are isolated in nursing homes and tens of millions who don’t have the option of teleworking have no idea how they will pay their bills?”
The answer: it’s the Chinese communist party’s fault.
When doctors from Wuhan first discovered the new SARS strain in early December, Hubei leaders put a muzzle on them. They censored their social media posts, deemed them all rumor mongers, and arrested them.
One doctor, named Li Wenliang, died of February 7, shortly after being released by a Chinese court that exonerated him and returning to his hospital to help patients with COVID-19.
On March 18, the National Review, called the new coronavirus “Xi’s disease.”
“We do not blame the Chinese people for the fact that a novel coronavirus cropped up in Wuhan,” their editors wrote. “We blame the government in Beijing for making the problem dramatically worse by trying to cover it up.”
China is a big country. Provincial leaders have power. It might not have been Xi who ordered the doctors to be censored. It is just as plausible that it was the handiwork of local Party bosses. Xi has since ordered the firing of a few of them already.
If the most grim predictions of how this pandemic spreads through the world are correct, then more than half of Californians catch the bug, according to governor Gavin Newsom; and nearly two-thirds of Germany, according to chancellor Angela Merkel. If so, we have a long way to go. Like millions of more people to go. China would appear almost unforgivable if it shakes out like that over the next 12 months.
Some Senators, led by the likes of Tom Cotton and Marco Rubio have proposed legislation to bring certain supply chains back to the U.S. and out of China.
For Arkansas Republican Cotton, it’s the inputs used to make pharmaceutical drugs, including over the counter medications like Tylenol.
“It’s time to pull America’s supply chains for life-saving medicine out of China and make the Communist Party pay for contributing to this global emergency,” he said last week.
Picture this: the trade war was like Trump taking a massive ice pick and driving it into the ice, Xi Jinping standing on the other side. The ice cracked. Water leaked through. It’s not so solid anymore. The ice sheet isn’t necessarily thin, but it’s no longer safe. You wouldn’t take your kids ice fishing on it, or take the truck out for a spin with chained tires.
Now there are dozens of Trumps, of all sizes and strength, doing the same. Their power is not as great; their influence maybe a lot less, but they are hacking away nonetheless. There will be ice drift here and there.
None of this means that China is doomed, of course.
China is changing. It is no longer dependent on exports. Its workers are smart and the country seems to have no shortage of capital, despite rising debt loads that scare the likes of Xi and some on Wall Street.
The next big semiconductor chip maker may very easily be Chinese.
The next Celgene or Amgen may very well be Chinese.
They’re not going to go back to stitch and sew factory work, and $1 a day makers of Happy Meal toys. Those days are done. But so are the days of China being the indispensable manufacturing nation.
Need ventilators? China has them.
Need surgical masks? Well, we’ve got to call our factory in China and hope they don’t need them for their own people.
Need some drug? All the ingredients are mixed in China.
Want to go green? Most solar panels are made in China. Wind turbines, too.
As they say on ESPN, C’Mon, man!
The longer the pandemic lasts, the more likely the frustration with China grows. And as the U.S. tries to recover from what may end up being a contracting economy in 2020, what is stopping the Trump Administration, especially if re-elected, from offering major perks to U.S. companies who leave China?
When asked at a press conference last week if there would be repercussions for China, Trump said, “I don’t want to comment on that right now.”
China bungled its initial response, but its experience in turning the tide against COVID-19 holds valuable lessons for other countries, writes China Briefing columnist for the South China Morning Post, Wang Xiangwei.
“Now is the time for Trump and Xi to forget tit-for-tat squabbles and pick up the telephone,” he says.
It’s a good idea.
Depending on how bad this gets in Europe, and of course here at home, the probability of some sort of rupture between China and the U.S. rises more than it did in the trade war.
It rises, in fact, as exponential as the infection rates of the new coronavirus.