Coronavirus — next steps

While in Islamabad, UN Secretary-General Antonio Guterres expressed confidence in China’s efforts to combat the outbreak of the novel coronavirus pneumonia, or COVID-19. The pandemic is now spreading due to lack of preparation, the incubation period of the pathogen, and additional factors such as misinformation. With a confirmed contagious two-week incubation period with no symptoms, this bug can spread.

To be sure, the coronavirus did not originate in the Chinese military BSL4 lab in Wuhan. It almost certainly originated naturally in wild bats, with possible amplification in an intermediate species according virologists.

The shutdown of human mobility in a country such as China is remarkable, especially in the conditions shown on state television. It is estimated that 760 million people are living under some kind of residential lockdown. It is one of the largest quarantines ever involving civil response, even in China. To do this, almost a month after the outbreak, a major error, Beijing is relying on local party officials, police and so-called grid workers. These party officials are effectively closing down many cities to outsiders. It is very likely that more than 100 million people are being limited in how often they can leave their apartments, in addition to the other hundreds of millions in other infection zones in the country.

Under these conditions in China, rules can be random and enforcement arbitrary by officials made up of grassroots communist party officials known as "grid workers." In Chinese cities that are in lock-down, party officials established a grid system in the urban area divided into tiny quadrants for disease monitoring and enforcement of remaining indoors. At a village level, many of these officials are setting up barricades to control the flow of individuals and effectively shut down human mobility. There is a large army of these communist party workers who have been mobilized. In Zhejiang, 330,000 grid workers are on the job, basically more than one for every 200 people in a province of 60 million. Chongqing has 118,000, Guangzhou has 177,000, Hubei has 170,000, and Sichuan has 308,000. This civil defense army does everything from manning checkpoints to delivering food to the quarantined. Naturally the Chinese response is based on Beijing’s own experience in handling disease outbreaks. Other states are already being tested on their disease response capability, and some countries are facing some challenges with escaping quarantined patients, including in the US.

In Chinese cities that are in lock-down, party officials established a grid system in the urban area divided into tiny quadrants for disease monitoring and enforcement of remaining indoors.

Dr. Theodore Karasik

The economic front is messy and will have an impact on the economies of Northeast Asia and beyond. China and Japan are already reporting drops in their economic output and South Korea is facing a similar slump.  The interruption to the supply chain is reverberating sharply. The anti-disease measures closed factories that supply the world with smartphones, furniture, shoes, toys and household appliances. That sent shockwaves through other developing countries that supply industrial components and iron ore, copper and other commodities. South Korea and other economies that rely on China as an export market face potential job losses. E-commerce companies are hiring extra workers to cope with a flood of demand as families stay home and buy groceries online. 

The coronavirus is reducing China’s total petroleum and liquid fuels demand by an average of 190,000 b/d in 2020. This forecast is based on estimates of three separate components, including the reduction in demand for petroleum and liquid fuels caused by the decline in Chinese economic activity as measured by gross domestic product (GDP); the volume of foregone jet fuel consumption in China caused by flight cancelations; and the additional impact on China’s demand for other transportation fuels. The difference between the forecasts is driven by a combination of lower-than-expected heating fuel consumption caused by the Northern Hemisphere’s warmer-than-expected winter, an expected slowing of economic growth in general, and the particular economic effects of the virus distribution.

When SARS struck, China was entering a history-making boom powered by construction and exports. Growth peaked at a blistering 14.2 percent in 2007. By contrast, the latest virus hit in the middle of a slowdown. Streets in Beijing and other major Chinese cities are still empty and eerily quiet. Even if Chinese auto manufacturing and other business resumes as planned, activity will not be back to normal until at least mid-March with possibly no real recovery until May or June, or perhaps later. Nobody knows right now, and many multinational firms have been caught unprepared for such an event in terms of economic impact. Global flight carriers have cut their transport to China until almost April 1. Recovering from that closure — think of the missing passenger and freight volume — will take time to recover from the backlog and will be affected by the spread of the virus in other countries that trade or transit to China.

It is important to remember that the virus is not just an epidemic but is also becoming part of an "infodemic." Fake news about the coronavirus can be highly damaging. Only primary trusted peer-reviewed medical sources, especially the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC) should be read. Politicians will exploit this situation, causing more damage based on self-interest. Around the globe, some countries will be able to handle the coronavirus for a time. The forecast is that through the early summer, virus cases will begin to decline, along with the unexpected social and economic reverberations caused by this pandemic.

• Dr. Theodore Karasik is a senior adviser to Gulf State Analytics in Washington, DC. Twitter: @tkarasik