Tuesday, March 17, 2020

China And The New World Order After Covid-19

To start the day, two good reads on China--the role its hegemonistic ambitions played in spreading Covid-19 globally, and the possible repercussions for China.

We can all understand how China's role in world trade has fueled the spread of Covid-19. The fact that those countries nearest to China--South Korea and Taiwan--seem to have been the best prepared and to have reacted the most effectively may not be coincidence. Countries further afield from the Middle Kingdom were more inclined to view this as happening far away.

Today at The Federalist Helen Raleigh explains the linkage between China's One Belt One Road (OBOR) neo-colonialist initiative led directly to the Covid-19 debacle in Italy and Iran. It's a lesson on getting one's own house in order and keeping Chicoms at arm's length--literally and figuratively. Fortunately for the US, we have a leader who acted decisively even as the Establishment was seeking to oust him.

Iran and Italy's economies are worsening, and their people are suffering most in this Wuhan virus outbreak — all because of their leaders’ short-sighted and foolish decisions.

Italy and Iran have very different social, economic, and political systems. Yet both nations share something in common: Their leaders refused to implement economic and political reforms in their nations. Instead, they sought close ties with communist China in recent years, selling out their countries and their people’s interests, hoping Beijing’s red capital would rescue their failing economies. Now their economies are worsening and their people are suffering most in this outbreak — all because of these leaders’ short-sighted and foolish decisions.

Victor Davis Hanson has an excellent article at NRO that focuses on the boomerang effect that the Covid-19 crisis could have on China's ambitions--hopefully:

China Boomeranging
Its bad behavior in the wake of COVID-19 will leave it in its weakest global position in memory. And the U.S. will emerge stronger.

Of course, never underestimate the shortsightedness of the corrupted Western societies and their leaders. Again, the US is very fortunate in its president at this juncture. As an aside, Hanson is on a similar page to the one I'm on in expressing optimism for the US situation. Excerpts:

Sometime in late November the Chinese Communist Party apparat was aware that the ingredients of some sort of an epidemic were brewing in Wuhan. Soon after, it was also clear to them that a new type of coronavirus was on the loose, a threat they might have taken more seriously given the similar Chinese origins of the prior toxic SARS coronavirus and the resources of a Level 4 virology lab nearby. 
Yet the government initially hid all that knowledge from its own people in particular and in general from the world at large. Translated into American terms, that disingenuousness ensured that over 10,000 Chinese nationals and foreigners living in China flew every day on direct flights into the United States (Washington and California especially) from late November to the beginning of February, until the Trump travel ban of January 31. 
All this laxity was also known to the Communist apparat in Beijing, which must have been amused when Trump was roundly damned by his liberal critics as a xenophobe and racist for finally daring to stop the influx on January 31 — the first major leader to enact such a total ban. 
Yet, no thanks to the Chinese, America, so far, has been comparatively lucky — despite the grave risks of damaging a multi-trillion-dollar economy with the strictest quarantining, isolation policies, and social distancing in its history. Half the country lives in the interior away from ports of entry on the coasts. Medical care, sanitation, hygiene, and meat markets operate on different premises than in China, ... The result is that as of mid-March, the U.S., the world’s foremost immigration destination and among the most visited of nations, had suffered fewer virus fatalities than some European countries a fifth or sixth of its population size. 
No doubt when mass testing begins, the figures of known cases will soar, and fatalities will rise. Yet while we know pretty well the number of Americans who have died from the virus, we have in truth little idea of how many now carry it or how many have recovered from it, without knowing what sickened them or even whether they were ostensibly sick at all. In other words, the rate of new cases identified by testing may exceed the rate of new deaths, apprising us of a more precise — and perhaps lower — degree of viral toxicity. 
Whereas annual flu toxicity is adjudicated by modeling case numbers, and by sophisticated and learned guesses at the number of likely infections, so far the death rate of the coronavirus is calibrated a bit differently — apparently predicated both on known deaths and known cases. When we make facile comparisons between the flu and coronaviruses, they may prove valid, but for now it’s still wise to remember that annual flu cases could be fewer than what is guessed at through modeling each year, and corona infections may be higher than the current known numbers of confirmed positives. The former reality might mean that the flu is at times a little more lethal than we think and the corona virus a little less deadly. That is not to suggest that most strains of flu are as lethal as the coronavirus, only that for the vast majority of Americans the current U.S. COVID-19 case-to-fatality ratio of 2 percent may eventually prove less, and influenza’s commonly cited 0.01 lethality rate may prove higher. In any case, 98–99 percent of Americans may well recover from the coronavirus — a rate that is not typical of most of history’s plagues. 
The realities are paradoxical: If the coronavirus infects as many Americans as an average flu strain, then ten times more Americans could die — mostly over the age of 65 — even as the vast majority of all Americans will not. Statistics change hourly, but the CDC as of the afternoon of March 16 reports that there are currently 3,437 cases of known coronavirus infections and 68 deaths attributed to the virus, or about two deaths per 100 infected — the majority of them again likely over 65. 
The coronavirus could be the straw that breaks the proverbial back of the Chinese camel, stooped under the recent weight of a trade war with the U.S., the revelation of 1 million Uighurs in reeducation camps, the crackdown on Hong Kong democracy protesters, and news of the sprawling Chinese internal-surveillance apparat. The world is now both terrified and put off by China, and such anathemas will only harm its already suspect and misbegotten Silk Road neocolonial schemes. 
Here in the U.S., COVID-19 will create bipartisan pressure to adopt policies of keeping key U.S. industries — such as medical supplies, pharmaceuticals, and military applied high-tech — in America. Americans will not again wish to outsource the vast majority of their chemotherapy-drug, antibiotic, and heart-medicine production to a government that cannot be trusted and that sees such globalized output as a weapon to be used in extremis


  1. I was with VDH up until he said "bipartisan pressure." It was bipartisan pressure, over regulation, government meddling, bribes, etc., that hurt American industry, and helped unleash the ghouls on Wall Street, so they could merge and acquire (destroy) and monetize and take off-shore everything from toothpicks to sheet rock (we'll step around the drug issue).

    Industry and manufacturing will know what to do. I can't wait to hear the bleats of "racism" from the likes of Romney and packs of greater fools (Democrats) if industry moves back into Akron.

    This virus is a wake up call from hell.

    Globalism: RIP.

    1. The 'debate' over globalism can be analyzed and resolved without resort to racism or nationalism or, really, any other 'ism'. The problem has been 'our' failure to price in various objective externalities inherent in doing business with China. This failure, while always apparent to many, has become increasingly obvious in the Time of Trump, and even more so since the advent of Covid-19. A flat screen for $200 is a very seductive offer, but the purchase price unfortunately does not include differences in the substance and application of not only employment and labor laws, environmental laws, trade laws, and intellectual property rights, but also heretofore down-played balance of trade and national security issues.

      I suspect that a fuller understanding of the consequences of these real externalities will inevitably result in a rebalancing of global manufacturing.

      You can take it to the bank!

    2. As long as I'm ruminating about economics, I want to throw out the observation that with record low interest rates (approaching 0% for 10 year treasuries) corporations and individuals will be able to refinance their loans resulting in substantial interest savings over the balance of their terms. From a macro perspective, this will also ultimately help businesses and individuals weather this storm.

  2. Iran per another NR article had the issue the top clerics, were pushing Islamic Medicine, vs. Western Medicine.

    Two other areas that are poison pills for China:

    1. Uyghurs Forced Labor, and Trump reinstated penalties for use of slave labor on products

    2. Trump has increased labeling requirements on country of origin for Pharmaceuticals, including ingredients. It was mentioned at one of the Coronavirus pressers he did.

    China Law Blog has a post about why manufacturers will keep on using China

    My view:

    1. Trump ended the unfair postal shipping. It was cheaper to ship a 1 lb item from China to the US, than I could ship within the US. This devastated a lot of small sellers. This goes into effect in July of 2020.

    2. The Sales Tax Debacle is still hurting small businesses.

    3. The cost vs risk of doing business in China has increased dramatically. A lot of companies wills seek to reduce that risk, and Trump is focused on ending unfair trade with China. The CoronaVirus gives Trump a huge lever, and he will use it.

    4. Automation cuts a lot of the advantages there were for having a business in China, plus the cost of transportation. If Trump can continue to cut red tape, it will help the US economy a lot. The new NAFTA will move a lot of production to Mexico, from China.

  3. Interesting post at the Federalist on why Italy and Iran got clobbered by the Wuhan virus:

    1. Obviously I wouldn't say it's the whole explanation. The author possibly exaggerates the effect of what she's writing about. But it's nevertheless a real effect.

      But if one person from China brought the virus to Seattle, as you pointed out, how much more damage could be done by larger numbers flying back and forth?

      On another front, it's a mistake to extrapolate to our situation from Italy, China or Iran. There are more variables involved than we can count. And we don't even know what they are!

      I don't know anything about Italian health care, the quality of Italian hospital staffing. All I know about China is that it has a lot of people, 130 million of whom have hepatitis B.

      Did that play a role? How would we know?

      We're in terra incognita. We should stop acting like we know what the right thing to do is.

      We don't.

    2. Thanks for the reference to the Federalist, Titan 28. But instead of cutting and pasting it into a browser, I think most will find it more convenient to just click on the link Mark has provided in his blog post. ;-)

    3. Tx, Bro. :-) I always like it when people read my posts.

    4. Sorry, Mark. I did click on the heading in your post and read the piece, then went over to PL, saw it there as well, and blah blah blah.

      What a dunce. I'm tempted to delete my post, but feel I should walk around with the knife in my head a while longer.