Hayward: Six Ways China Profited from the Wuhan Pandemic

Chinese President Xi Jinping raises his glass and proposes a toast during the welcome banquet for visiting leaders attending the Belt and Road Forum at the Great Hall of the People, Friday, April 26, 2019. (Nicolas Asfouri/Pool Photo via AP)
Nicolas Asfouri/Pool Photo via AP

The Chinese Communist Party (CCP) found several ways to exploit the coronavirus pandemic it unleashed, ruthlessly using the incalculable economic, political, and social damage inflicted upon the rest of the world to its advantage.

Manufacturing growth: “China finished 2020 with a 10th consecutive month of expansion in its manufacturing sector, capping a dramatic year that saw the country’s factories incapacitated by the pandemic, only to roar back as a growth engine for China and the world,” the Wall Street Journal (WSJ) reported on Wednesday.

By the end of the year, as international competition withered under coronavirus lockdowns, China’s factories were chugging away (helped along by a good deal of slave labor from the massive concentration camps of Xinjiang province).

The WSJ noted China’s retail, aviation, software, real estate, and construction sectors enjoyed months of robust growth, approaching “the highest levels in more than a decade.” Outside economists estimated China’s Gross Domestic Product would grow by 6.8 percent in the fourth quarter, driven by “continued overseas demand for Chinese-made goods.”

“China’s manufacturing PMI didn’t fall by as much as it might have in December, given that several Western countries launched another round of large-scale coronavirus lockdowns in mid-December,” the Journal explained, citing analysis from ING Bank economist Iris Pang.

This outcome is very different from early predictions that the coronavirus pandemic would ruin China’s future as a global manufacturing hub.

“The new coronavirus Covid-19 will end up being the final curtain on China’s nearly 30 year role as the world’s leading manufacturer,” Forbes predicted in April.

Those predictions were based on the notion that global supply chains would reroute around China as the Wuhan virus shuttered its factories, and international customers would grow reluctant to resume doing business with Chinese firms because they were angry about the 2020 pandemic and nervous about the next one.

On the other hand, Deutsche Welle more accurately predicted in April that foreign customers would decide it was too difficult and expensive to relocate supply chains out of China, and doing so would jeopardize their access to the lucrative Chinese consumer market. Foreign management anticipated the authoritarian Chinese government would get its factories up and running faster than competing nations with concerns about human rights, press freedom, and international scrutiny.

“In contrast to some global narratives, our China-based data suggests that the majority of our members will not be packing up and leaving China anytime soon. It is worth emphasizing that China appears ahead of the global curve when it comes to restarting the economy following months of lockdown, and many of the reasons why companies are in China in the first place still hold true today,” American Chamber of Commerce in China president Alan Beebe told Deutsche Welle at the time.

The Wall Street Journal wrote in August that far from abandoning China, American companies are coming to view its markets as a “refuge” as U.S. consumers remain nervous about the pandemic and its effect on the economy, including the ever-looming threat of more lockdowns.

On Wednesday, the Financial Times reported that Chinese censors are scrubbing excessive triumphalism from the Internet because the government is worried about angering the rest of the world by making its touchdown dances too ostentatious.

Selling coronavirus protection and medicine: Part of China’s industrial surge came from booming sales of protective equipment and medicine spurred by the coronavirus as it spread around the globe.

In July, the New York Times (NYT) observed that China had a virtual “stranglehold” over “supplies of masks, gowns, test kits, and other front-line weapons for battling the coronavirus,” and would probably be the dominant provider of such goods during the next pandemic as well:

Before the pandemic, China already exported more respirators, surgical masks, medical goggles and protective garments than the rest of the world combined, the Peterson Institute for International Economics estimated.

Beijing’s coronavirus response has only added to that dominance. It increased mask production nearly 12-fold in February alone. It can now make 150 tons per day of the specialized fabric used for masks, said Bob McIlvaine, who runs a namesake research and consulting firm in Northfield, Ill. That is five times what China could make before the outbreak, and 15 times the output of U.S. companies even after they ramped up production this spring.

The NYT noted that China was not shy about using its dominance of the medical supply chain for political leverage, demanding “profuse and public thanks” from those countries it decided to bless with sales of its vital medical supplies.

Chinese companies made such fantastic profits from selling sanitary masks that thousands of factories scrambled to repurpose production lines for garments so they could crank out protective gear instead.

“A mask machine is a real cash printer,” one Chinese sales manager declared in March.

China’s mask industry kept growing even despite high-profile complaints from foreign buyers about shoddy merchandise. Other countries scrambled to ramp up domestic production of protective equipment, but not before Chinese coronavirus profiteers raked in billions of dollars in sales.

The entertainment industry: Movie theaters are struggling across the Western world, while the Chinese box office is thriving. The U.S. movie industry’s big effort to get a holiday blockbuster into the Chinese market, Wonder Woman 1984, yielded dismal results.

This will likely give the CCP even more control over Hollywood content in the years to come than it already had, and it already had far too much. American studios will be more reluctant than ever to produce content that could anger CCP censors since the Chinese box office will be more important to them than ever. It won’t be enough to continue avoiding scripts that mention Tibet or Taiwan; American entertainment companies will find it in their best interests to aggressively curry favor with the CCP to ensure ready access to the Chinese market.

As with the predictions of doom for Chinese supply chains due to the coronavirus, there were early predictions that the coronavirus would spoil China’s ambition to become the world’s most important film market. Despondent employees of the Chinese entertainment industry spoke of a “bleak winter” last year, as the coronavirus walloped their industry at a time of rising public displeasure with heavy censorship and a massive government crackdown on tax evasion by wealthy celebrities. 

Today, China’s theater industry is recovering steadily, as the public seems more eager to return to cineplexes than Americans — who have grown comfortable with home streaming and have been bombarded for months with persistent, but scientifically unfounded, warnings that theaters are dangerous.

In October, the Hollywood Reporter declared China has officially surpassed North America as the world’s biggest film market. Chinese ticket sales rose to $1.988 billion in 2020, while North America’s slid to $1.937 billion. The article noted that China’s “tens of thousands of theaters are operating at 75 percent of usual seating capacity,” while American theaters remain shut down or nearly deserted.

Belt and Road: China’s massive international infrastructure program, the Belt and Road Initiative (BRI), appears to be back on track after predictions the coronavirus would cripple the economies of both Beijing and its Third World customers. 

In fact, the Chinese government is boasting that BRI is bigger than ever, fueled by China’s growing economic strength relative to the virus-panicked Western world. BRI is flexible enough, and its long-term goals vague enough, to avoid embarrassing headlines about collapse or failure. 

According to the Chinese government, fewer than half of its Belt and Road projects were significantly damaged by the pandemic. Foreign debts to Chinese banks skyrocketed as the pandemic rampaged through developing nations, but cynics would call that a feature rather than a bug because China’s long-term goal is debt colonialism: taking control of valuable real estate and assets from countries that cannot afford to repay their BRI debts. If the end result of the pandemic is BRI chugging ahead a bit slower, while all of China’s clients fall much deeper into debt, it will be a huge net plus for Beijing’s strategic ambitions.

Science and technology: Fox Business noted on December 9 that China is using the pandemic to muscle its way into leadership positions in various technology sectors, including high-end electronics and biotech.

“Because of the COVID-19 [Chinese coronavirus] global pandemic, China is emerging as a biotechnology superpower, poised to surpass the United States, particularly in genomics. China is a worldwide major supplier of PPE, and COVID-19 testing kits is cashing-in to the tune of billions of dollars. China is positioned to do the same thing with regards to COVID-19 vaccines,” said defense analyst John Wood.

Wood added that China’s fascist system — which fuses its “private sector,” political leadership, and military together — make it “well placed not only to weaponize but to assume the global strategic commanding heights over biotechnology.”

Chinese shipments of tech products to the United States grew by 37 percent during the pandemic and are expected to continue growing next year. Fox Business correspondents warned that heavy government subsidies and a flood of relatively cheap production capacity, compared to the timid and locked-down Western world, could help the Chinese “pick up market share in a variety of technologies and sectors, from information and communications technology (ICT) to 5G/broadband to shipbuilding.”

The struggle to push back against Chinese infiltration and domination of the Internet took a definite hit in 2020 as China’s tech giants reaped incredible profits, making crusades to keep Chinese technology out of developing networks more difficult. Chinese tech billionaires made so much money that the CCP decided to yank on their choke chains and remind them who is the ultimate boss.

China’s bid to become a dominant player in cryptocurrency, once dismissed as a totalitarian joke, has become a very serious threat. Some analysts believe China is now in position to use its national digital currency, combined with the economic and political leverage it gained through Belt and Road, to displace the U.S. dollar as the preferred global exchange medium.

Geopolitical influence: China is flexing its muscles in several major geopolitical conflicts while the rest of the world cowers in the shadow of its coronavirus. 

CNBC warned on Tuesday that China may have effectively crippled the economy of Australia during the trade and diplomatic feud that flared up during the pandemic, kneecapping one of the CCP’s major opponents in the Pacific theater.

The Center for Economics and Business Research (CEBR), a U.K.-based think tank, reported this week that China has widened its economic lead over its major land rival India, gaining roughly five years of projected development during the pandemic, while India lost five.

A bipartisan U.S. congressional report in May found China using the pandemic to increase military and political pressure on Taiwan. While the U.S. strengthened its relationship with Taiwan throughout the coronavirus crisis, other nations became more apprehensive about displeasing Beijing by supporting Taipei.

China used the pandemic as cover to ruthlessly strangle the Hong Kong pro-democracy movement and wipe out the last serious remnants of the island’s autonomy. Most of Beijing’s major opponents in Hong Kong are now silenced, imprisoned, or fleeing into exile.

“Hong Kong people now face two plagues from China: the coronavirus and attacks on our most basic human rights. We can all hope a vaccine is soon developed for the coronavirus. But once Hong Kong’s human rights and rule of law are rolled back, the fatal virus of authoritarian rule will be here to stay,” barrister Martin C.M. Lee warned in a Washington Post op-ed written soon after he was arrested for violating the draconian “national security law” imposed by Beijing.

China significantly increased its military presence in the South China Sea at a time when the rest of the world was preoccupied with the pandemic. The U.S. State Department accused China of “exploiting” the pandemic to “expand its unlawful claims in the South China Sea” in May. 

Chinese analysts believe they are now on track to surpass the United States as the dominant global power before the end of the decade, a feat made possible by the tremendous damage inflicted on the U.S. economy and society by the coronavirus. 

China’s determined adversary in the White House, Donald Trump, will soon be replaced by the vastly more Beijing-friendly administration of Joe Biden — a political conquest for the CCP that would not have been possible without the pandemic. (For a taste of things to come, consider how much influence the U.S. entertainment industry has over Biden’s party, and how insistently they will be that Biden craft policies agreeable to China to preserve their access to Chinese investors and ticket buyers.)

China’s authoritarian ideology was spreading across the free world at an alarming pace even before the pandemic, and the process has only accelerated due to the pandemic as the free world grows accustomed to speech controls, surveillance, and curtailed freedoms justified by the battle against the Chinese coronavirus.

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