The world was messy enough even before the novel coronavirus struck out of the blue with no regard for class, politics or nationality. The disease before which all men are equal has brought us more chaos and risks. Before humanity can recover, God gives it yet another blow.
With the Covid-19 virus going on a rampage around the world, what can people outside of the medical community know or predict? In reality, the spread, prevention and control of an epidemic is never just a medical issue. It always bears implications for politics and the economy too. When analysts place a basic understanding of the Covid-19 virus within the context of global value chains, possible global trends and developments resulting from the pandemic can be extrapolated. Such analysis and forecast do not rely on medical expertise. What I write here represents my views from over a month ago, corroborated by the current situation in Europe and the US.
...the two strategic approaches are actually in mutual conflict and bound to generate risks on a global scale.
War of annihilation or protracted war?
The Covid-19 outbreak has expanded into Europe and America, and become a global pandemic not long after the World Health Organisation raised the global risk level to “very high”. The situation is particularly severe in countries like Italy, Iran and Germany. The US announced a month-long travel ban to Europe. On 13 March, Donald Trump even declared a state of emergency in his country, and provided US$50 billion to fight the pandemic.
This far into the pandemic, certain things are clearer now, such as the choices made about national strategies and how they relate to one another. In a nutshell, the strategies adopted by the various countries for fighting Covid-19 are of two types, structured either for a war of annihilation or a protracted war. Many believe that both approaches are fine. What they fail to see is that while each of the two have their pros and cons on their own, together they form an alarming picture from the systemic point of view and given the current context of globalisation, the two strategic approaches are actually in mutual conflict and bound to generate risks on a global scale.
For the war of annihilation approach, as represented by what China and Italy are doing now, the main measures taken are the sealing off of national borders (as well as regional borders and entire cities), the banning of activities involving large groups, as well as the closure of schools and non-essential enterprises.
For the protracted war approach, as represented by what Germany and the UK are doing now, we see the limited (not total) banning of activities involving large groups, the continuance of work, the tendency to not seek medical assistance for light symptoms, and a focus on treating serious pathological conditions.
But that’s taking quite a big gamble. Who can say that the number of serious cases will indeed be small? Who can guarantee that the people will indeed abide by the given arrangements and stay orderly?
The purpose of a war of annihilation is to bring about a decisive outcome in one go, and eliminate the virus completely. It is impossible to keep it going for a long time because the cost per unit time is very high. The point is to fight and win the war quickly.
Protracted warfare, on the other hand, does not work this way. It takes advantage of the low fatality rate of the disease, and attempts to establish coexistence with the virus. Maintaining that their citizens should take conscious action on their own to counter the disease, proponents of this approach aim to build up communal immunity. While the cost per unit time, in this case, is lower, the lingering consequences are nothing to be sneezed at. The majority of the country’s population would very likely be infected at the end of the day. To adopt such a national strategy is to wager that the serious cases would be very small in number and in fact be far outnumbered by the non-critical patients. Medical resources would therefore not be maxed out, thereby lowering the chances of social unrest. But that’s taking quite a big gamble. Who can say that the number of serious cases will indeed be small? Who can guarantee that the people will indeed abide by the given arrangements and stay orderly?
For the containment of a contagious disease, quarantine remains the most important measure to be taken. That is common sense. Where the traditional social spaces can be easily cordoned off, the war of annihilation approach is hence the right way to go. However, for such an approach to be effective, three conditions must be satisfied concurrently. Firstly, the action must be restricted to a specific area — say, a particular country or province. Secondly, conditions must be in place for successfully isolating the inside of the area from the outside, and the cost incurred from such a lockdown has to be bearable. In an open space with much mobility, engaging in a war of annihilation cannot possibly work. Thirdly, there must be no imported infection from outside the area. Only when these three conditions are satisfied concurrently can a war of annihilation within a specific region possibly be effective. If even spatial isolation fails to put an end to the virus, it means more trouble ahead.
Two conflicting strategies
When such a region undergoing annihilation warfare is forced by circumstances to carry out exchanges with a region in a protracted warfare mode, the former will face reintroduction of the virus even when the disease has already been successfully eradicated within its borders.
Both the war of annihilation and the protracted war approach have their weaknesses, but that’s not the worst part. The worst thing is actually the mutual conflict between the two. The three conditions that will make annihilation warfare effective are directly at odds with the strategy of protracted warfare. The latter approach seeks coexistence with the virus, which means the virus will continue to exist outside of the annihilation warfare region. In traditional societies, the industrial chains in various regions were simple, interregional dependence was low, and the mobility of the people was generally very limited. Therefore, in a war of annihilation against a disease, people inside and outside the locked-down area could still bear the prolonged isolation.
In the present age of globalisation, however, the industrial chains of different regions are closely interlinked, the level of interdependence is high, as is the general mobility of people. A prolonged lockdown is thus no longer bearable for those within and outside the area in question. When such a region undergoing annihilation warfare is forced by circumstances to carry out exchanges with a region in a protracted warfare mode, the former will face reintroduction of the virus even when the disease has already been successfully eradicated within its borders. When the annihilation region can no longer bear the enormous cost of its thorough approach, it can only give up on its war of annihilation and opt for a protracted war — that is to say, coexistence with the virus. But, of course, if some heaven-sent help descends upon the area under annihilation warfare — for example, if the heat of summer happens to be effective against the virus and kills it off — the people would be ever so thankful. Nevertheless, one cannot pin their hopes on the fortuitous when analysing the problem and devising a solution to it.
Italy is a small country with very incomplete industrial chains. It relies heavily on imports. Can it cut itself off for a long time from strong nations, such as Germany? The answer is no.
How long can each country keep it up?
Let’s look at Italy. How long can it keep its war of annihilation going? I have my serious doubts. Italy is a small country with very incomplete industrial chains. It relies heavily on imports. Can it cut itself off for a long time from strong nations, such as Germany? The answer is no. Well, then, can Italy insist over the long run that all individuals coming in from outside the country undergo a 14-day quarantine? Again, no, because the cost would be too high. The people who need to cross national borders during the outbreak are usually not tourists but service personnel, businessmen or public servants. When matters are put on hold because of a 14-day quarantine, most business operations would wither save for the service-related.
Relatively speaking, China is doing better. First of all, the Asian giant has complete industrial chains, especially for middle and low-end industries, as well as industries producing everyday necessities. China is blessed with abundance. The second thing to note is that China has a strong capacity for social mobilisation – to put it in another way, its people are more obedient. Thirdly, the savings rate of Chinese residents is relatively high, so the people can support their own lives for a longer period. Thus, to sum it up, when it comes to giving up on economic growth and securing a basic level of living, China is in a better position than mid-sized and small countries.
Can China bear the cost of drastically reducing its interchanges with a considerable number of developed countries, inclusive of the US, Germany, the UK, Japan and South Korea? Will it be able to maintain the implementation of a 14-day quarantine for people coming in from outside its borders? I’m afraid the answers to the above tend towards the negative.
For these reasons, some people prefer to think that as long as China shuts its doors and wages its war of annihilation, gets everything under control, the country will win, be safe again and return to normal. In reality, it is hard to be so optimistic. Ever since the disease broke out in Japan and South Korea, the immediate environment around China has quickly become more dangerous. China’s annihilation warfare strategy of bringing the entire country’s resources to bear on defending Hubei and Wuhan (and by extension, the whole country and, indeed, the whole world) is being put to the test. The test will only get tougher if the virus-struck US and Europe choose to enter protracted warfare mode. Can China bear the cost of drastically reducing its interchanges with a considerable number of developed countries, inclusive of the US, Germany, the UK, Japan and South Korea? Will it be able to maintain the implementation of a 14-day quarantine for people coming in from outside its borders? I’m afraid the answers to the above tend towards the negative. China must therefore have a Plan B in place. How long can it keep the war of annihilation going? What will the cost and consequences be if it switches to a protracted war? Behind these questions are the need for planning and preparations.
Devastating impact of either approach
Thus, within the global system, the annihilation countries will suffer a more serious loss. Ultimately, they will not be able to keep the war of annihilation going in the long run, and may have to switch to protracted warfare
By looking at the general impact of the pandemic on the industrial chains, we can have some idea of the enormous cost incurred from the counter-pandemic efforts (especially where the annihilation warfare approach is adopted). In the US, the tertiary industry contributes to a very significant part — more than 80% — of the GDP. The same industry has also seen a great increase in its share of China’s GDP over the last few years, with the percentage reaching 53.9% in 2019. The tertiary industry is precisely what is hit hardest by the ongoing counter-epidemic efforts. The numbers for the tourism sector have almost hit the floor. The aviation sector is suffering a serious loss. The Chinese aviation sector lost 24.59 billion RMB in February alone. Its F&B sector has shrivelled tremendously too, as the example of Chengdu shows us.
Chengdu and Sichuan in general are relatively safe; a restaurant-goer here who takes basic protective and preventive measures properly is less likely to get infected than meet a serious traffic accident. Government agencies are also actively encouraging F&B outlets to open for business. And yet, despite all this, people are still staying away from the eateries. The restaurants are suffering from very poor business. Some industries have arguably taken a fracturing blow. The resultant fracture is expected to propagate throughout the industrial chain, affect the entire economic system and thereby impact the social system.
If most countries choose to go with protracted warfare, it would be unfair to those in annihilation warfare mode. This is because, firstly, since they are seeking coexistence with the virus, the protraction countries do not fear contagion from the annihilation countries, whereas the annihilation countries must guard against viral transmission from the protraction countries. This leads to the second point: the protracted warfare countries have no need of putting up a wall, and can proceed with normal engagements between themselves. Not only will the existing industrial chains between them not be disrupted, these chains may even become reinforced. On the other hand, the countries in annihilation warfare mode will need to set up defences everywhere, and will not be able to engage with other countries normally. As a result, they will spend much more money in carrying out international transactions than the protracted warfare countries do. Thus, within the global system, the annihilation countries will suffer a more serious loss. Ultimately, they will not be able to keep the war of annihilation going in the long run, and may have to switch to protracted warfare. When that happens, the whole world will likely find itself in one big, contaminated environment. Most people will get infected at one time or another. With the ripple effects going around, it will just be a matter of time.
If things go out of control in Europe and the US, and they adopt the protracted warfare approach, economic activities and interchanges in the West can still proceed as per normal, whereas China cannot proceed with normal engagements with these countries. All Western travellers to China will have to be quarantined for 14 days, which translates into an incredibly high cost of transaction. For Europe and the US, the harm is one-sided — that is to say, only Sino-European or Sino-American engagements will be impaired. For China, however, it will be a double whammy since both Sino-European and Sino-American engagements will suffer. The loss for China will obviously be greater.
Global systemic risks and historic shifts
A serious epidemic is unlike other disasters. Most other disasters, such as earthquakes and tsunamis, are one-time events that last for a relatively short time. People can still move around actively even as these events occur. A serious epidemic, however, is destructive not only to physical well-being, but also in terms of hindrance to human behaviour. It hinders people from restoring the chains of social life that have been disrupted. Without even going on to think about the secondary consequences, the direct destruction from the immediate impact of an outbreak normally lasts for months at least.
A serious epidemic is unlike an actual war. Where cannons and missiles criss-cross, there is distinction between the different sides opposed to each other. Such distinction is irrelevant to a spreading virus. In this age of globalisation, no single country can stay fine in isolation from the rest of the world. The top priority for all parties now is really strategic coordination and overall planning. Helping each other out with supplies and manpower comes second. The various countries of the world ought to have come together for a general consultation, come up with a coordinated strategy for fighting Covid-19, and avoided a conflict of strategies. Unfortunately, they are each doing their own thing presently.
Coupled with the fracturing and serious damage of certain other industries, the repercussions will propagate throughout entire industrial chains and cause chaos in the social system.
In the following weeks, how the pandemic unfolds in the US and Europe will determine its global scale and trend from here on. Based on the current situation, it is difficult to have an optimistic outlook. Things are almost certainly going to get worse. The following is very likely to happen: many countries will see their medical resources max out — that is to say, the breakage of the medical chain. Coupled with the fracturing and serious damage of certain other industries, the repercussions will propagate throughout entire industrial chains and cause chaos in the social system. Subsequently, the chaos in a particular country (especially a major power) will spread to other countries as well. The whole world will be subjected to some serious systemic risks.
All men are equal before the Covid-19 virus. Perhaps we are being thrown into an era of perpetual strife for health and luck.
Historically, it is not uncommon to see the course of history change because of a serious outbreak. Within the context of globalisation, the destructiveness of the present pandemic may be unprecedented in history. Not only will the history of some countries take a different turn, international dynamics will also be altered. In fact, if certain major powers respond unwisely, thus allowing the pandemic to exacerbate internal conflicts, a geopolitical shift is to be expected. When the dust settles, we will not proclaim which country emerges better than others, but shall only whisper which ones come out less battered. In this sense, in this age of globalisation, the entire human race is in truth a community of common destiny, regardless of whether or not it should be so (or whether or not we acknowledge it as such). As Mao Zedong once put it: “The whole planet feels the cold and heat together."
Swept along by the vast currents of history, the individual seems so insignificant. What is our place as individual human beings in this global catastrophe? All men are equal before the Covid-19 virus. Perhaps we are being thrown into an era of perpetually striving for health and luck.
Related Readings: Covid-19: US needs to revive its manufacturing industry and rebuild itself | Trading places: A confident China and an insecure America? | Covid-19: Can the global economy operate without China? [Part One]