Guest Blogger

Guest Blogger

Regional Intelligence Analyst

15/05/2020

15/05/2020

Scepticism surrounding China's COVID-19 Official Figures and the Impact

The reliability of China’s coronavirus numbers is under question once again given the staggering amount of urns being distributed out in Wuhan. According to official Chinese government data, 50,006 people were infected with the COVID-19 virus in Wuhan with 2,535 dying from the disease. However, Chinese investigative outlet reported that when mortuaries opened back up this week in the Hubei capital, people had to wait in line for as long as five hours to receive the remains of their loved ones lost during the epidemic.

Several photographs showing a truck loaded with 2,500 urns arriving at the Hankou Mortuary. The driver said that he had delivered the same amount to the mortuary the day before. Another shows stacks of urns inside the mortuary. There were seven stacks with 500 urns in each stack, adding up to 3,500 urns. Taken together with the new shipment, the number of urns on hand at the mortuary looks to be more than double Wuhan’s death toll.

Urns are reportedly being distributed at a rate of 500 a day at the mortuary until the Tomb Sweeping Day holiday, which falls on April 4 this year. Wuhan has seven other mortuaries. If they are all sticking to the same schedule, this adds up to more than 40,000 urns being distributed in the city over the next 10 days. When some made calls to the funeral homes to check on the number of urns waiting to be collected, the mortuaries said that they either did not have that data or were not authorized to disclose it.

As the outbreak was ongoing, many view China’s official numbers with skepticism amid multiple revisions to how cases were counted, accusing Chinese authorities of attempting to downplay the already extreme severity of the epidemic. An example of this from China’s history and reluctance or ignorance shows a contrast to other regions around the globe as an example, Hong Kong’s quick reaction and killing of more than 1 million chickens in 1997, showed China’s failure to find and report cases of the severe acute respiratory syndrome (SARS) in 2003. Hong Kong’s fast reflexes preempted a dangerous epidemic; China’s slow response to SARS spread and prolonged the deadly disease.

Considering what has happened in other countries around the world, in retrospect, China’s numbers now look even more suspect. The United States at 100,000+ has recently surpassed China in the number of reported coronavirus cases while both Italy and Spain have reported more deaths.

A heatmap showing the concentration of coronavirus-related incidents across the globe
A heatmap showing the concentration of coronavirus-related incidents across the globe. Source: Intelligence Fusion 2.0.

 

For its part, China has touted its aggressive quarantine measures, community action, and medical resources to explain how it managed to weather the coronavirus storm. Life is now starting to return to normal in the country, but normal as in back to work and the economy.

Many scientists in the past had assumed correctly that China would be the epicenter of a pandemic, a possibility that would have far-reaching economic consequences. That prospect, whilst then was uncertain, brought into focus the country’s rural areas, where more or less than 60% of China’s 1.3 billion of the population live.

Most of Chinas rural population are farmers whose livelihood depends on poultry and other species that are farmed and reared for sale within the large Chinese government-sanctioned markets as well as within the controversial wet markets (of which the wet markets are worth millions of dollars to the Chinese economy) and who live in regions with rudimentary public health services that also have extremely limited health surveillance monitoring. Many family members of these communities often work in industries in nearby urban centers, and more than an estimated 70 million young people from these households provide low-cost labor in urban jobs market staying in city dormitories/tight housing complexes most of the time but travelling home for holidays and during the harvest periods.

Mobile subgroups like this one are potential vectors of viral transmission. The spread of any contagious virus would reduce their mobility and create labor shortages in urban industries: the manufacturing exports “workshop” (employing young women), the construction industry (employing young men), and tourism and hospitality (which depend on both). Migrants remit around 40% of their earnings to their families, so domestic consumption would decline as their incomes shrank. The urban population would if educated avoid travel, crowds, and shopping, further reducing consumption, as occurred with the far less infectious severe acute respiratory syndrome (SARS) as an example.

Another example would be the avian flu cases, while small in number, have had a high mortality rate (53% since 2003). Because so many of the infected died as a result, one serious long-term concern about a pandemic is demographic. Gardenvariety seasonal influenza is disproportionately dangerous to people with underlying illnesses or with relatively weak immune systems, many of whom are in there fifties and beyond. However, because the avian flu can cause immune system hyperactivity, it was also especially lethal in those with the strongest immune systems. Thus, unlike seasonal influenza, the avian flu killed some of the most productive members of the workforce.

Map showing the COVID-19 related incidents across China since January 2020
Map highlighting the COVID-19 related incidents across China reported on Intelligence Fusion's platform in 2020. Source: Intelligence Fusion 2.0.

 

This outcome would compound the already apparent impact of China’s 1979 one-child-per-family policy, which has reduced the size of the cohort entering the labor force. The workforce shrank even faster, putting pressure on China’s inadequate social safety net and on the low real wages that sustain China’s workshops.

90% of China’s exports are manufactured; an estimated quarter of these head to the U.S. market, that would account for a fifth of U.S. imports. Disease in the manufacturing workshop will depress China’s performance as the world’s third largest exporter because of the potential harm to its main customers (the United States, the European Union, and Japan) and to its East Asian suppliers, which provide almost half of China’s imports. Different industries and types of businesses feel the impact differently. As we are seeing now with the COVID-19 pandemic across the globe.

About 45% of China’s exports are telecom and office equipment, textiles, apparel, or auto parts; most of these items are produced by large foreign-invested enterprises in coastal areas. Such enterprises had been initially assessed by business that they would fare reasonably well because governments and employers would act quickly to contain disease outbreaks and locate alternative labor, but those estimates from business and scientific modeling have proven otherwise. With the problems arising among local parts suppliers and those who produce the other half of China’s manufactured exports, the effect is such that China will commence manufacturing earlier rather than later to push the economy in a concerted effort to be ahead of the curve with other competitors across the globe.

These producers are domestically owned small businesses, operating with thin margins supplying the parts for the country’s export platforms including the myriad of other consumer goods, such as leather, plastics, furniture, toys, sports equipment, food that supply as an example giant retailers like Wal-Mart.

Logistical and employment problems, both from quarantines and with this current pandemic, have rippled through international markets to consumers and retailers in the form of lower availability, sales, and employment and the high possibility of increased pricing further down the line as the rest of the world's economy emerges from the COVID-19 pandemic.

While devastating, the 1918–1919 flu, which killed up to 50 million people, occurred at a time when events diffused more slowly in some parts of the world. Now that China is so integrated into the world economy, the current pandemic has had an immediate global impact.

 

Written by Darren White, Risk Management Consultant

31st March 2020

 

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