February 5, 2020 / 2:41 PM / 2 months ago

Breakingviews - Hadas: China virus upends development hierarchy

LONDON (Reuters Breakingviews) - China’s newest virus demonstrates the ambiguities of globalisation and economic development. It is too early to know exactly how contagious, deadly and economically damaging the coronavirus or any of its mutant strains will prove to be. However, the outbreak that had claimed 427 lives as of Tuesday can already teach three basic lessons.

Staff members wearing masks are seen next to a sign showing quarantine notice relating to the coronavirus epidemic at a quarantine station at Narita international airport in Narita, Japan February 4, 2020.

The first lesson belongs to the 21st century: modern science is remarkably effective. The Chinese authorities first recognised a serious health issue from Dec. 8. Barely a month later, scientists had sequenced the genome, so they knew exactly what they were fighting against. By the beginning of February, the Chinese National Institute for Viral Disease Control and Prevention claimed to have developed an inexpensive kit which can detect the presence of the pathogen in 15 minutes.

That boast may prove premature, but it is virtually certain that the global effort will soon produce a rapid and accurate test. Research is shared online, so that best practices for treatment can spread around the world even faster than the virus, which mainly travels by aeroplane.

The second lesson is much gloomier: techniques for dealing with pandemics have changed little since the 19th century. Surgical masks are now high-tech, but old-fashioned handwashing is still the core technology for preventing contagion. And by far the most effective way to limit the spread of a virus is to physically isolate all people who may be infected.

The method is being followed with increasing thoroughness. Chinese authorities are building special coronavirus hospitals in Wuhan, the city at the epicentre of the outbreak. Travel in and out of the People’s Republic has been sharply curtailed, including closing the casinos of Macau for two weeks. Around the world, governments are imposing voluntary isolation periods and involuntary quarantines.

This isolation therapy is medically crude but effective. Economically, it could cause global pain.

That is a change from the old days. When international trade and travel were limited, quarantines hardly affected the course of the global economy. Today, though, many industries rely on long multinational supply chains. If virus-related frictions persist, they are likely to slow production of anything made in China, including many components of goods assembled elsewhere.

International tourism, which is now a big business, is another high-profile victim. The price of oil is a more significant indicator, since it often falls with economic activity. The cost of a barrel of Brent crude is down 16% since the beginning of the year. No wonder that Saudi Arabia is considering cutting oil production by a million barrels a day, about 1.2% of global output, according to the Wall Street Journal.

If the virus is not controlled quickly, global economic growth for 2020 will slow sharply. That’s what happens when a 19th century solution is applied to a 21st century problem.

This possible slowdown could have been avoided with the thorough application of some 20th century techniques. That is the third lesson: developing countries need to push investments in public health higher up their national agendas.

Public health is always at the centre when the poorest countries start to get richer. More people get access to such basic goods as vaccinations, clean water, education and adequate nutrition. These factors help explain much of the increase in average global life expectancy, which has risen from 46 years to 72 years since 1950, according to the Our World in Data website.

As wealth increases, though, what might be called public health infrastructure is often neglected. The backstory of the coronavirus is good example of what has not been done. The Chinese food chain is poorly supervised in general, and it seems that an unsanitary seafood market in Wuhan helped spread the virus.

Far fewer people would probably have been infected if 20th century technology was more widespread. Advanced economies monitor food temperatures, the freshness of products and the purity of water. Possibly dangerous waste products are kept safely away from workers and customers. However, organising all those systems requires social commitment, not least because they require a cadre of basically honest inspectors and bureaucrats.

The Chinese authorities have not entirely ignored this sort of public health work. They are now investing heavily in a modern medical system, but until recently they put far more energy into glitzier initiatives such as developing tourism, high-speed trains and advanced weapons. If only the ruling Communist Party had been as committed to food safety as it is to policing ideological purity.

The governments of some poorer countries, including Thailand and Cambodia, have taken their own chances with public health, by developing their China-centred tourist industries far more enthusiastically than their public health systems. If the new coronavirus spreads rapidly, the authorities in those lands may struggle to establish effective quarantines. Even if the worst is avoided, their development choices now look dangerously lopsided.

As the human and economic costs of dealing with the coronavirus rise, the importance of balanced development and multidimensional globalisation becomes clearer. It is far better for gross domestic product to advance a little more slowly if that means growth is a lot healthier.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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