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Spurning China's gift of experience: Daryl Guppy
3 Apr 2020

 

 

Chinese medical experts share their experience in COVID-19 prevention, control and treatment with their Lao counterparts in Vientiane, Laos, March 30, 2020. /Xinhua

 

Editor's note: Daryl Guppy is a national board member of the Australia China Business Council. He is the Australian representative with the Silk Road Chambers of International Commerce and an international financial markets technical analysis expert. The article reflects the author's opinions, and not necessarily the views of CGTN.

 

Following 2008, China gifted the world an economic recovery from the global financial crisis (GFC) by embarking on a massive infrastructure spend. Chinese capital was eagerly sought to keep many Western companies afloat. Some countries have never forgiven China for taking this lead.

 

Today, China is gifting its experience with COVID-19, its knowledge, its medical supplies, and its skilled staff to those who need it. This includes hospital staff in Italy and medical supplies to the UK.

 

For some, this hand of global co-operation is treated with the same type of suspicion that followed the GFC recovery. This gives rise to three distinct narratives, none of which are favorable to China.

 

The first narrative blames China for the COVID-19 outbreak. This story is filled with social media distortions that have been accepted as truthful by some world leaders. China's rapid sharing of the COVID-19 genome sequence and other information is conveniently forgotten.

 

This story also implies that China is somehow responsible for the inability of Western governments to plan ahead for an effective health response. Unlike China, they had several months warning, but COVID-19 appears to have caught Italy, Spain, and the United States by surprise.

 

The second narrative imagines a nefarious motivation behind China's sharing of staff, medical supplies, and experience. It is painted as a deliberate extension of China's soft power and designed to enhance China's position as a global leader, particularly at the expense of the United States.

 

Without a doubt, China's soft power will be enhanced by its high level of cooperation with the WHO and its generosity in delivering aid, not just to Europe, but also to third world countries that have inadequate health systems.

 

This stands in stark contrast to the response from the United States that remains active in continuing sanctions that halt the supply of medical aid and with interfering in countries, such as Venezuela, to achieve political, not health, outcomes.

 

Whether soft power expansion is the primary motivation of these Chinese measures is a moot point, but it is also clear no country ever gives aid as straight charity.

 

There is nothing to stop the United States extending the same helping hand but President Trump's policy of "America First" is a significant factor in precluding offers of assistance.

 

Already this narrative has metastasized into a more concerning impact with some countries declaring Chinese investment capital is not welcome to come to the rescue of failing companies.

 

The most explicit of these declarations has been made by Australia, frightened of a repeat of the post-GFC China investment boom that powered the Australian economy for a decade.

 

Despite this fear, China with just 1.8 percent of foreign investment in Australia in 2018, is the ninth largest foreign investor in Australia, coming after the U.S., UK, Belgium, Japan, and Singapore.

 

The increasingly widespread adoption of this narrative presages a change in global investment flows post-COVID-19 and this will impact on the speed and efficiency of economic recovery. Companies will require recapitalization and the choice is either genuine new capital investment, or the so-called helicopter money created by simply speeding up the printing presses.

 

The third narrative rests on the idea that the world has become too dependent upon China. It's claimed the contraction in global trade due to country lockdowns is evidence of this over-dependence on China. This most often relates to the supply of medical equipment and drugs – items which 3M, GlaxoSmithKline and other Western companies were more than happy to outsource to China and then resell at significantly higher prices in their home markets.

 

 

Chinese Ambassador to Sudan Ma Xinmin hands over medical supplies to a senior Sudanese official during a donation ceremony at the headquarters of Sudan's Council of Ministers in Khartoum, Sudan, March 31, 2020. /Xinhua

 

True or false, the potential outcome remains the same. Post COVID-19 will see pressure to shift away from made-in-China imports and their replacement with more expensive substitute products. Whilst appearing to assist economic recovery with the development of "new" businesses, the result will be more expensive products that will hamper the speed of recovery.

 

For decades, Western economies have benefited from the deflationary impact of cheaper imported goods from China. The time when this was restricted to handyman tools has been superseded by high end products like medical equipment. The deflationary role in improving business efficiency and productivity cannot be underestimated.

 

Residents in Western countries are moving into extended periods of self-isolation and this has resulted in national isolation as borders are closed and connections severed with the world. Restoring these connections, both logistical and social, will be difficult, as the long suppressed suspicion of "foreigners" has been given "legitimacy" by contagion fears.

 

It is foolish to imagine that the world will emerge from this fearful economic hibernation much the same as it was prior to the pandemic. The challenge is to acknowledge the changes and adapt global business models accordingly. Just what shape these will take is unknown but, in some quarters, the anti-globalization narrative is morphing into an anti-China narrative.

 

Business, and business organizations have an important role to play in countering this developing division. Cross border business groups like the Silk Road Chamber of International Commerce are more important than ever because they connect business interests which, in turn, must guide the decisions taken by political leaders.

 

Global prosperity rests upon open borders, free trade and a commitment to global cooperation despite any inclination to do otherwise. This requires improved engagement with China, not disengagement.

 

The pandemic is an opportunity for global leaders to show their true colors. First, in the protection of their citizens in this health crisis; second, in the way they deliver humanitarian support beyond their borders by sharing knowledge; and third, in the way they cooperate to shape the global economic recovery.

 

Source: CGTN