Politics and the coronavirus

Politics and the coronavirus

by Pininvest Analysis

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Pin-insights
The coronavirus has – almost shockingly – laid bare unvarnished ambitions and awkward compromises within each continental block, America, China and Europe

While it is true that initial responses to the health scare were driven everywhere by domestic constraints, the virus has already ‘escaped’ from its natural habitat of spreading the disease, mutating into a diplomatic weapon wielded offensively (by China), defensively (by the European Union) or as proof of its special status (by the U.S.)

It is still early days and no observation can be drawn conclusively but some facts stand out doggedly

  • China’s ambitions in South-East Asia are boosted
  • America’s domestic rifts are a dangerous distraction
  • Europe’s awkward Eurozone compromises are brought to breaking point

With more to come ?

 

***

 

From the very first day of outbreak in Wuhan, Hubei province, China, in December ’19, coronavirus has been an intensely politically affair

Albeit in different terms in authoritarian and democratic regimes, leaders the world over have been confronted in strikingly similar terms by their people, exposed to physical danger and feeling let down by their leadership

 

From Hua’nan seafood market in Wuhan

In China, the sensitivity of the Communist Party to any comment falling outside party guidelines has inhibited officials up and down the country’s institutions

According to the Wall Street Journal (pay wall), Zhong Nanshan, one of China’s most highly regarded epidemiology experts (who had also played a key role in combating SARS) and the leader of the National Health Commission’s task force on the epidemic, said officials had identified a coronavirus by Dec. 31 and took too long to publicly confirm human-to-human transmission

Doctors – becoming aware of the ‘SARS-like’ virus and its high degree of contagion by late December – had to contend with a rickety healthcare organization since the sick merchants of the Hua’nan seafood market in Wuhan reported to small local – cheap and ‘off-the-grid’ – clinics rather than the city’s hospitals

Still, the Chinese healthcare system managed to identify the new risk with speed, in less than two weeks after emergency entries of Hua’nan patients between Dec.10 and Dec.16

As is well-known today, official response of hospital authorities was less impressive with blatant efforts to repress the information shared by medical doctors with their students – a policy highlighted by the infamous self-criticism letter of Doctor Li Wenliang of Wuhan Central recognizing his warnings “had a negative impact.” Doctor Li was to die from the virus in February

The Wuhan Institute of Virology revealed later that it had identified a new coronavirus and mapped its genetic sequence by Jan. 2 2020 but in the first week of the New Year, officials both in healthcare departments and at city & provincial level were determined to downplay risk

Again following the WSJ, on Jan. 5, a medical research center in Shanghai notified the National Health Commission that one of its professors had also identified a SARS-like coronavirus and mapped the entire genome using a sample from Wuhan

A sense of urgency gained only slowly across health- and political institutions which in turn affected transparency in communication with the World Health Organization (WHO), where China wields much influence…

Two successive teams of experts sent by the Chinese government to Wuhan, one before mid-January downplaying risks of human-to-human transmission and a second, led by above mentioned Dr. Zhong on Jan. 18, the very day local authorities wend ahead with the mass Chinese Lunar New Year banquet (where families pose for group photos and use chopsticks to share dishes)

And reversing the previous report, it was on the later team’s recommendation that President Xi locked down Wuhan, impacting 20 million people, on January 23

Key factors remain unknown or uncertain as of this writing, such as the true number of deaths by the virus in Hubei province, probably much larger than officially declared, or the precise information provided (or withheld) from the WHO in the initial stages of the epidemics

But the effectiveness of virus containment, once China’s government swung into action, cannot be doubted

 

to Western response

Forewarned, aware of the high potential of contagion by mid-January, with access to the genome made available by China on Jan. 12, Western response remained subdued, under the assumption the new coronavirus would not spread any more than SARS-cornavirus had

Laser-focused on domestic control of the crisis, China could also have been reluctant to share the true scale of the epidemics, so as to avoid uncontrolled health scares across the country

Furthermore, castigated in some countries at the time for alarmist precautionary measures of massive mask and vaccine stocks, politicians – and their heath advisors – waited and waited some more

It has indeed been fortunate for political opponents to benefit from hindsight to criticize governmental decisions – and postponements – as the virus started to rage in Italy from late February (with 322 cases on Feb. 25th and 10 000 two weeks later) and across Europe

Every decision, the number of masks available in each country, the volume of daily tests possible or the lack of sufficient breathing ventilators in intensive care, is feeding the frenzy of self-appointed ‘experts’ and politicians hoping to cash-in on public scare

It is true availability of ICU ventilators per 100 000 population aged 65+ varies greatly according to The Economist March 21, 2020 (pay wall) with a cluster of countries around 25-30 ventilators and countries as the US, Germany and Austria with 3 to 4 times more machines. But then, it so happens that 80 to 90% of the ventilators in the US are in use for non-covid patients…

In Western democracies, reluctance to submit to extreme measures which are so hard to conceive is not that different from Chinese leadership’s attempt to ignore warnings for consequences they could not fathom

Delayed responses of 3 to 4 weeks between awareness and official rulings have been more or less similar… feeding today’s Chinese discourse pointing at the high-handed mismanagement of Western democracies for an entire month (since President Xi’s lock-down decisions of January)

… the West reciprocating with early official Chinese inconsistencies and repression resulting in needless and tragic deaths

True either way, political posturing has a purpose, setting the stage for post-covid reckoning…

 

Virus politics

Healthcare measures countering epidemics do not lend themselves to straightforward public communications because the speed with which the virus will spread – or not – sets the agenda

Leaderships find themselves at a loss to strike the right balance and the public – late in measuring their exposure to disease – will swing between misplaced confidence and over-the-top alarm

The political framework will be strained – for lack of alternatives which usually feed the democratic debate – and, worse, exposed to fear-mongering social networks and populist discourse of fringe parties

Institutional frailties – as witnessed in China with protests following the death of Dr. Li and in the West by disenfranchised voters – may be troubling because of outsized and often vocal protest across the world

They are not, hopefully, agents of profound transformation within nation states over time

Not so in geopolitics between national entities if, at the risk of being arbitrary, a focus on the three regional blocks formed by China, the US and Europe proves relevant….

International politics of each regional entity has a ‘long tail’ with historical determinants weighing on every choice but the coronavirus has – almost shockingly – laid bare unvarnished ambitions and awkward compromises within each continental block

 

America

In America, the President is in the grip of an ever-tightening web of paradoxes – proponent of go-it-alone policies, in a power play putting the country aloof, free of the contingencies of multilateral support, Mr. Trump has attempted in vain to push the global reality of coronavirus back

First by painting the alarm sounded by the experts as a plot to undermine his presidency, then by dispensing unwarranted reassurance of the virus’ minor health risk, later by highlighting his commitment to keep the economy in high gear and finally by attempting to acquire foreign research from German and Italian firms, Mr. Trump has rallied his traditional base

Racing across borders, jumping from on state to the next, the virus has been left to its devices, in a country where top quality health care is certainly available, but hardly to everyone, where sky-high health costs have burrowed large uninsured swaths of the population in debt and where a patchwork of state health policies disconnects from weakened federal oversight

Fighting their own domestic battles against the virus, America’s allies may be watching in dismay and with growing concern how a misguided Administration throws good money - $2 trillion later – at an epidemic crisis now.

The viral trajectory could, according to forecasts published by a team of scientists based at the Imperial College in London on March 16th, result in 2.2million American deaths without any mitigation. Limited measures – but not the radical steps implemented in China and in most of Europe – could cut that number in half

Belatedly, the US will probably put its great scientific and economic strength behind all-out efforts to contain the viral attack as the voting public comes to accept severe limitations to liberties they took for granted

Belatedly, indeed… and China will watch with a measure of glee while the effort distracts America from its international charges

 

China

From a Chinese perspective, the foreign policy of the US is so widely counterintuitive as to command a measure of caution from the country’s top strategists

China’s engagement in South East Asia is so persistent, its military, economic and political interests so obvious and well-advertised that a reminder of the profound world power shift in-the-making is embarrassing

Fresh out of the viral crisis, demonstrably in command and its poor initial response airbrushed from public discourse, China is unquestionably today the stable power of reference in the larger region, a fact of which Thailand, the Philippines and Malaysia are fully aware

With soaring infection rates and economies bracing for their lowest growth since the 1997-98 Asian financial crisis, all the countries will turn to China for medical supplies, for advice to contain the health crisis and for economic assistance

By withdrawing early in his presidency from the Trans-Pacific Partnership (TPP) multilateral trade pact, which excluded China, and was designed to counterbalance the country’s influence in the region so central to America’s security across the Pacific, Mr. Trump set the course

It may be argued that China’s rising economic influence across the region would be difficult to resist anyway, but by delaying conflicted interactions in the region between the two world powers, America’s willingness to stay engaged would have made a difference – allowing time for national strategies to compromise on their respective ‘satrapies’

That was then and the October ’18 declarations of intent by Vice-President Pence notwithstanding, the US Administration deliberate snub of the November ’19 ASEAN meeting in Bangkok already left the region’s traditional American allies empty handed

This is now, the post-coronavirus new diplomatic world in South East Asia

In the words of President Duterte of the Philippines, in a March, 12 televised address
“You know President Xi Jinping, for all of his goodness to us, wrote me a letter and said that he is willing to help. All we have to do is to ask”
“Maybe there will be time if things deteriorate that I have to call on China to help. [President Xi] said that they have managed the crisis very well in his country and he is very much willing to help if needed”

The US officials do not need to be reminded this is the President of one of America’s two treaty allies in Southeast Asia, an ally who in February announced that it would cancel a military pact allowing free access to American troops, equipment and vessels in the country – a very long way from broad access to the Subic Bay facilities as discussed in our ‘not so Pacific Islands

If indeed the post-WW II (1945) and post-Korean war (1950) network of military and diplomatic alliances is wobbling, the shock waves will be felt not only in Japan, in South Korea and in Australia, but around the world – in Western Europe still clinging (but only just) to the principles of the NATO shared defense

The coronavirus seen as opportunity to further a long term Chinese strategy

Such is the reality of coronavirus international politics

 

Europe

A reality with which European have to come to terms urgently

Europe has been widely derided for its ‘lack’ of responsiveness in the health crisis, never mind the fact that healthcare is not included in the portfolio of the European Commission

Setting its sights on the financial exposure of some of the weaker economies (Italy and Spain, possibly France), the European Central Bank (ECB) committed to still more quantitative easing (after a failed attempt to claw back at the end of 2019)

With the purchase of government bonds and company equity, the ECB will relieve the pressure on highly indebted states of the Union – foremost Italy – but the yawning gap between the countries addicted to deficit finance and the Northern fiscal conservatives is more daunting then ever

As today’s health crisis prepares to mutate into a budgetary crisis across the Union in an attempt to regain economic momentum, Europe – empowered by the creation of the euro-zone 20 years ago – has to strengthen the currency’s imperfect fiscal pillar and, simultaneously, underwrite transfer mechanisms between countries of very different demographic and economic make-up

Coronavirus is a bitter reminder of familiar flaws, but Italy’s response to Covid-19 of €28bn compares sadly with the €750bn rescue package of the German economy and France’s €300bn credit guarantee is not exactly supportive of local small business on the verge of closure either

Because more direct financing will be needed across Europe, heated debate around measures of burden sharing can be expected, as we hope to discuss in “the economics of coronavirus”

Conceivably, a mix of financial guarantees will – again – save the euro, as well as Europe, of itself but the fact remains the bond based on trust between members of the Union has been badly damaged in the health crisis

Italy has been left to its own devices in the initial stages of the viral tidal wave and its weak finances could still bring down the country – and the euro zone as well

…none of which amended the shrill voicing by the Northern countries (Germany, the Netherlands or Finland…) of fiscal correctness and their refusal to commit to financial burden sharing

The split between North and South only seems to deepen; by ignoring the abyss at their peril, the European partners may finally put the many critics of the Eurozone right


As it happens, the coronavirus does not open a new era in politics but, by uncovering the frailties of multilateral compromise, by revealing raw ambitions of territorial influence and by driving populist agendas to their impossible end, the virus contrives the players to spread their cards and choose