Translation: “Would WHO Intervention in Coronavirus Epidemic Impact China’s Economy?”

Earlier this week CDT translated a leaked censorship directive ordering an article from the official Sanlian Life Week news magazine offline, and forbidding further commentary on the article. The article, published on January 24 as infections from the novel coronavirus that originated in Wuhan were rising sharply in China and spreading globally, examined the potential economic impact if the World Health Organization declared the epidemic a “global health emergency.” Days prior to the article’s publication, the WHO had decided against declaring the disease a global emergency, citing a lack of sufficient evidence to do so and warning that the decision could come later. On January 30, the WHO declared the novel coronavirus a global health emergency after admitting a mistake in its previous assessment.

CDT Chinese has archived the article, and it is translated in full below:

Seventeen years ago, the World Health Organization put Beijing on its list of areas affected by the SARS outbreak, and issued a travel warning on the city. As a result, China’s second-quarter economic growth dropped two percentage points, from 11.1% in the first quarter to 9.1%.

This time around, the WHO is being more circumspect. On January 5, the organization stated, “WHO advises against the application of any travel or trade restrictions on China based on the current information available on this event.” On January 23, WHO Director-General Dr. Tedros Adhanom Ghebreyesus said, “This is an emergency in China, but it has not yet become a global health emergency.” A global health emergency indicates that an illness that has spread across international borders, and that managing the outbreak requires a multilateral effort.

Of course, this is not the WHO’s final verdict on the pneumonia epidemic. The organization could change its stance if the situation continues to escalate. When the WHO released its January 23 statement, China had reported 570 confirmed cases. By the 28th, that number rose to 5,515. This rapid development could tip the balance for the WHO. On the 28th the WHO admitted that it had made an error in its risk assessment, and revised its global assessment from “moderate” to “high” and China’s threat level from “high” to “very high.”

Dr. Tedros arrived in Beijing several days ago to meet with his Chinese counterparts. If the WHO decides that Wuhan’s pneumonia epidemic is indeed a “global health emergency,” it would indicate that the crisis is no longer a domestic issue. This would crank up the pressure on China, particularly economic pressure.

The WHO’s intention is not to impose economic sanctions on the country in question, but to avert the spread of disease, and to provide more support to the countries affected, through global cooperation. When the WHO declared global health emergencies during the Ebola outbreaks in West Africa in 2014 and the Democratic Republic of the Congo in 2018, they also warned other countries not to issue trade or travel bans. Sanctions could lead more countries to falsify reports on the epidemic, making the situation even worse.

While the WHO has no intention of causing economic harm, putting a label on an outbreak sets off a chain reaction that inevitably has an economic impact on the affected country. More countries will react by issuing travel warnings or tightening inspection of imported goods from the affected area. The country where the outbreak began could even experience widespread capital flight. For this reason the WHO is cautious about declaring a global health emergency. The WHO has only applied the label five times in the past few decades, leaving many infamous outbreaks off its list.

For China, the economic impact of elevating the epidemic to a global emergency would be far greater than it was 17 years ago. The impact of SARS on China’s economy was concentrated in the second quarter of 2003, and was far smaller than had been predicted. At that time a respected economist conducted a study which “estimated the negative impact on this year’s economic growth can be kept under one percentage point. China should still have an annual growth rate of seven to eight percent.” In fact, China’s GDP grew at a rate of 10.1% in 2003, one percentage point higher than in 2002. This trend continued in the years after SARS, as China’s GDP experienced double-digit growth every year from 2003 to 2007.

SARS had less of an impact on China’s economy than predicted because the country was still in a period of growth. The market was robust enough to absorb the blow. In 2003, China had been part of the WTO for little over a year, and large-scale export bonuses had just started to kick in. In the years that followed, China revved its real estate engine, which became the strongest driver of growth. The pain inflicted by SARS was soon washed away in the rising tide of capital and double-digit growth.

But 2020 looks nothing like 2003. Seventeen years ago, the economy was unstoppable. Now, growth is gradually slowing down. China has not yet seen the bottom of its L-shaped recession. Naturally, our economic immunity is not what it used to be. 

The timing of this current pneumonia epidemic is much worse than SARS, too, falling right around the Spring Festival and thus doubling the economic blow. Spring Festival is always a period of peak consumption. This year, with everyone staying at home, most consumer activity has all but stopped. This will hit our service sector hard, and the service sector has been the our biggest employer up to this point. If the sector screeches to a halt, employment is bound to get thrown. 

China’s service sector has exploded in the past few years, contributing 59.4% to overall economic growth. That is 20 percentage points more than in 2003, which means the pain will be that much greater this time around. 

If the WHO decides to call this pneumonia epidemic a global health emergency, China will really feel the heat. As the number of people coming to China for work and travel plummets, tourism, aviation, restaurants, and the food and beverage industry will all face setbacks; exports could face greater restrictions, knocking them down before they have a chance to get out from under the Trade War; as people pull out of China, foreign investment will wither… During SARS, the WHO listed Beijing as an affected area in April, then lifted both the label and the travel advisory on June 24. The city was not on the WHO’s “blacklist” for long, perhaps minimizing its effect on China’s economy. The WHO is more amenable to China right now, but the current situation is anything but certain. 

As the outbreak progresses, more and more people are blaming Wuhan for failing to promptly inform the public of the situation. Early on, the city government stated that “there has not been acute person-to-person transmission” [of the novel coronavirus]. People let down their guard and inadvertently infected others, fueling the spread of the virus. This echoes the SARS epidemic, when then-Minister of Health Zhang Wenkang laughingly told the press, “Working in China, living here, traveling here, it’s all safe! You’re safe whether you wear a face mask or not.” Just three days later, Beijing was put on the affected areas list. In an interview, Wuhan’s mayor, Zhou Xianwang, acknowledged that the city had not been forthcoming about the epidemic, but argued that “as a local government, I had to wait for authorization before I could release that information. This was not understood at the time.” There is a lot behind that statement. 

2020 is a special year for China’s economy, a year when many promises come due. In December, the Central Economic Working Conference highlighted “maintaining the rational route of economic movement, guaranteeing the comprehensive establishment of a moderately prosperous society and the fulfillment of the 13th Five-Year Plan, gaining the approval of the people, and enduring the test of time.” There is also a quantifiable goal for 2020, a goal that has been brought up again and again since the 18th Party Congress: by the end of the year, China wants its GDP to be double what it was in 2010. According to economists’ calculations, China can meet that goal as long as it can guarantee 5.6% growth through 2020. Even though the economy is facing pressure, doubling the country’s GDP by the end of the year should not be a problem.

But not long after the Economic Working Conference wrapped up, the pneumonia epidemic hit. Suddenly that double GDP figure went from a foregone conclusion to a multi-layered drama, no doubt posing an enormous challenge to the [central] administration. If the outbreak can be contained, there is still hope for meeting that GDP goal. If, however, the WHO intervenes, that will imply that the pneumonia epidemic has risen to the level of global emergency, and that GDP dream could be tough to reach. 

Most people, though, do not really care about GDP. The 2019 economic data released by the National Bureau of Statistics a few days ago indicates that per capita GDP has for the first time surpassed US$|}10,000. But the news has not left most people feeling better off–instead, they complain that they’re dragging behind again. For the same reason, it does not make a difference to most people whether GDP growth in 2020 is 5% or 6%, or whether it doubles from 2010. What they do care about is a sense of practical gain, not that they have traded their basic health and safety for some cold number. 

Following the WHO director-general’s visit to China, it looks as if the WHO will make a more thorough evaluation of the epidemic. If this would help to end the outbreak sooner but would sully our beautiful economic data, would you welcome the WHO, or resist them? [Chinese]

Prior to the WHO declaration, data showed that China’s economy was already being impacted by the coronavirus, in part due to the controversial lockdown of Wuhan and nearby cities interrupting the normal flow of Lunar New Year transit. Economists have predicted that the coronavirus could slow China’s quarterly growth rate by two percent, equivalent to a US$62 billion loss in growth–a bigger economic hit than SARS in 2003.

Beijing has been tightly managing the narrative on the virus, leading to a surge of public anger from citizens confused about the nature of the illness and frustrated by misinformation and censorship. CDT has also translated another leaked censorship order to delete a Beijing Youth Daily interview with an anonymous Wuhan doctor, one of eight disciplined in early January for spreading rumors. Vice reports that authorities have further cracked down with threats of three to seven years in jail for those who “disrupt social order” by sharing unsanctioned information about the virus.

Translation by Anne Henochowicz.


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