Party chief Xi Jinping recognises the test posed by the coronavirus for his globally-promoted governance model
Senior leadership issues warnings almost daily against ‘formalism’ and ‘bureaucratism’. These are classic instances of ‘political decay’. Coined by Francis Fukuyama, the term has US politics in mind, but symptoms of decay can be found in all political systems. A key manifestation is recreancy, ‘the failure of institutional actors to carry out their responsibilities with the degree of vigour necessary to merit the societal trust they enjoy’ (William Freudenberg).
These defects damage bureaucracies in both democracies and single party states, as political outcomes are harvested by special interests, rather than being directed towards the public good.
The shortcomings of China’s state response are all the more stark against the claims of the ‘China Dream’ (中国梦) and its rhetorical successors, the ’China Solution’ (中国方案) and ‘China-governance’ (中国之治). The Party under Xi is ever more intent on telling the China story in these terms, amounting in recent years to insistence that its political values are suitable for export to the world at large. As day follows day of disquieting developments, the related rubric of a ‘community of human destiny’ becomes ever less reassuring.
policy community in the know
These troubles have long been recognised by China’s policy community. The central government takes note, from time to time, of their carefully couched warnings. Institutional innovation, the logical answer to political decay, has become a rallying cry in the Xi era.
But tension between innovation and another Xi rallying cry, ‘stay faithful to the original mission’, is becoming troublesome. The mission in question is to rejuvenate China as a unitary political entity under the Communist Party. What if the innovations needed to control a deadly virus require departure from the original mission?
For many in China, ‘loyalty to mission’ fails to address the multiple malfunctions of the post-SARS system. Many of these are classic ‘disconnects’, ambiguities in the chain of command, due to China’s sheer social and political scale. Endless levels of government leave the grassroots at the end of long administrative chains: the Hubei and Wuhan governments became invisible during the initial stages of the crisis, while waiting for directives from the centre. Crucially, propaganda and security outrank health—as instanced in the composition of the new Central Leading Group for work to counter the new coronavirus that includes only one member with health credentials.
epidemic vs Party
The CCP’s latest narrative is that this is a ‘people’s war’, a Maoist term once made famous by Lin Biao 林彪, but now meant to signal the commitment of the entire nation to defeating the epidemic. The crisis is also framed as ‘testing the political quality and ability of cadres and their work style’, as well as their capacity for ‘maintaining the fight’.
Casualties in a war are caused by an enemy. A virus is unconvincing in this role; discontent with the state begins to seem closer to the mark. Now the immediate goals are maintaining ‘steadiness among the people’ and ‘securing their confidence’.
health innovation and medical technology
Improved quality of life, above all health and clean air, are pledged by the Xi administration as integral aspects of China-governance. The post-SARS public health emergency response system cost the state more than C¥20 bn to build. Very quickly able to publish the 2019-nCoV genetic code, the system failed to invest in the provision of care needed to manage the next epidemic.
The Party has tackled the crisis with a flurry of policy measures. Expect to see more public health and medical research funding, above all in the national research megaproject on health, with goals set for 2030. Regulatory changes in relation to biotech and pharmaceuticals, especially concerning clinical trials, are likely, as are measures boosting digital public health services that incorporate data security measures.
economic cost
Disrupting production, investment and trade, 2019-nCoV is stifling demand across the economy. Some 45 percent of businesses, according to a survey by The Paper, are expecting major losses. China’s business environment will also take a hit.
Depending on how long containment takes, the impact may well be large but short-lived: production normally ramps up in Q2, after the Q1 Spring Festival holiday. Financial regulators have instructed banks and other agencies to give preferential loans to affected firms, and localities are providing support through rent reduction and deferred social insurance payments.
Also expect to see e-commerce platforms taking advantage of the stalling economy to raise their profiles. This is particularly in relation to emerging technologies, data management, and monitoring of compliance with regulations, such as the new bans on wild animal sales.
disruption in supply chains
Online orders of groceries and household goods, to say nothing of medical supplies, have boomed, and delivery facilities urgently require expansion. Leading e-commerce firms such as JD are deploying automated warehouses and drones to minimise person-to-person contact.
Manufacturing will for the rest of February mostly remain shut down. Many cross-border e-commerce vendors are understocked. The Ministry of Commerce is calling on industry associations to bridge gaps between business and the state (another classic disconnect), as well as provide legal assistance to firms in need. Given an adequate supply of protective equipment, the state, suggests Lu Ting 陆挺 Nomura China, could in a prolonged epidemic prioritise resuming production in specific industrial zones.
A ‘green channel’ has been opened for fresh ag products, as food logistics have stalled. Emergency notices guarantee delivery of ag inputs for the upcoming spring planting. While online orders of foodstuffs are booming as the outbreak keeps people at home, catering has been hard hit. Impacts have been felt by catering suppliers around the world (not least of meat and seafood).
As long as the epidemic threatens to spread, stricter quarantine periods can be expected for export goods: the virus can survive on smooth surfaces for five days. Many countries may also issue short-term trading bans.
technological innovation
Internet-based education, healthcare, work platforms and entertainment services stand to scoop up the dividends, driven both by market demand and government endorsement; though lack of know-how and insufficient bandwidth slows adaptation. Big data and AI companies are working with authorities to test their technologies.
Public and governance services are doubling down on digitalisation. Techno-optimists see the crisis catalysing a new era of data-driven policymaking as telecoms, industry, public security and healthcare data are further integrated.
A downside however is that cyber and data security risks will also rise. Hubei residents have been harassed, their personal information leaked online, thanks to local officials.
a world of pain
Even if the epidemic is contained sooner rather than later, the economy will suffer as a result of lost activity, regardless of financial and policy support. Similarly, even if final victory in the ‘war’ against the coronavirus is won, there will be visible embarrassment in official circles and a palpable hit to the Party’s reputation among citizens.
The global costs are harder to read. Among China’s major partners, there are those whose interests, like Beijing’s, lie in ‘telling the China story well’. Reluctant to portray China as a failure, they even include the Trump administration, whose ‘phase 1’ trade deal is vital ammunition in US elections later this year.
But interests opposed, or at best neutral, to Beijing’s are on the move. Most foreign analysis will seek a middle course, eschewing condemnation at this point (while imposing quarantine). They should however pay attention to the growing mood of truth-telling and whistle-blowing in China’s policy community. As with SARS and other crises, including melamine and the Wenzhou high speed rail crash, this is a moment when the searchlight of enquiry illuminates the scenery in unexpected ways.