Why Advantage China…? I know what you are thinking. The country is in the midst of one of its biggest health, economic, and as a result potentially societal crises. Its rise as an economic superpower will at least be somewhat reset. The Beijing leadership will have to consolidate in the wake of the political fall-out. American hawks are nonetheless breathing down China’s neck undeterred. Ethnic Chinese have been exposed to racial antipathy around the coronavirus threat.
So, what does this author mean, and what is he on about? Well, the world is a dynamic place, and no more transparent could this have been this week. While the bulk of the crisis still remains in China, the rest of the world has sadly experienced what it means to fight a virus outbreak. South Korea is particularly impacted and running against the clock to prevent worse from happening. Japan must be most attentive not to be pulled into the same place.
But even further away from Asia has the virus begun to cause headaches or mounting proportions. Italy is suffering from a massively rapid proliferation of confirmed Covid-19 cases and already mourning 12 fatalities. From the public tip-toeing of health authorities in other countries, it seems to be a certainty that the epidemic will spread across the European continent. Latin America doesn’t seem insulated, and America is confronted with its first case it cannot deduct from a source.
Confirmed cases have now been counted in 30 countries around the world. Most of them are far less equipped to respond to their crises in the making than China. Readers will be reminded of the incredible footage of a recent press conference where the Iranian deputy health minister was visibly unwell and later conceded that he was infected right there and then. It is estimated that there are thousands of cases in Iran and far more than the reported number of deaths.
All of a sudden, it doesn’t seem such a bad idea to be staying in Hong Kong. Not only has the number of cases here been confined to around 90 in the context of a 7.5 million population, it also appears that China too is getting a grip on its situation. To be sure, there are almost 80,000 cases to be accounted for, with 2,800 deaths tragically, but if the numbers are to be believed, then the daily count for new cases is increasingly regressive, as is the number of deaths.
In a world where we can only go by models designed on the experience of previous virus breakouts, this is a good thing. Of course, the validity of any predictions is based on the viability of the reported numbers, but maybe we can take some comfort in that even the WHO numbers seem to be lower than China’s official statistics, and the organisation just declared this week that the epidemic has peaked on the mainland and China could well be over the hump.
Now, as I suggested in yesterday’s
piece, the West is scoffing at everything that is Chinese, from the state-sponsored economic model to the surveillance state monitoring and controlling its citizens. It understandably offends its liberal values. But decry it or not, if it isn’t the formula to fight an epidemic and have a chance to beat it, I don’t know what is. You can’t that easily put entire cities with populations in the millions on lock-down in places like Europe and America.
So, while Europeans and Americans aren’t sure what’s hitting them, and it is poised to get worse in their geographies before it gets better, China may well be able to see the light at end of the tunnel exactly because of its policy conduct that is so frowned upon in the West. Markets at least seem to think so, as panic-selling has accelerated and Chinese shares have convincingly outperformed their European and American peers by quite a margin this week.
And no, it’s not just PBoC market support that is possibly playing a role here, as non-mainland listed shares like Tencent and Alibaba are subject to international fund flows and have equally been outperformers. The Hang Seng rally into the close of yesterday’s session is another testament to it. Apparently, when it comes down to the perceived efficacy of government action, investors who are surely all in favour of liberal values will nonetheless reward markets that reflect such controlling measures.
But again, the proof is as always in the pudding, and we will have to see this morning how Chinese markets react to yet another and this time unprecedented sell-off in America overnight. This is clearly all over the place right now, but let’s not lose our heads as others apparently do…
