CCP Virus Pandemic Magnifying Impact of Trade War on China

Pressures of worst economic slowdown in 50 years driving China’s aggressive foreign-policy rhetoric
March 17, 2020 Updated: March 20, 2020
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Commentary

If China’s latest pronouncements are any indication, the pandemic caused by the CCP virus, commonly known as the novel coronavirus, is raising tensions between the United States and China to dangerous levels.

With the effects of the trade war in China being magnified by the spread of the virus and other events, a new tone is present in Beijing’s rhetoric.

Like much of the world, of course, China is in very turbulent economic waters, with widespread business bankruptcies and unemployment a real possibility. That’s very bad news for the Chinese Communist Party (CCP), whose sole claim on power is economic performance.

It Began With Trump

President Donald Trump’s objective in launching the trade war with China was to reverse the flow of U.S. manufacturers’ relocation to China, and bringing their manufacturing jobs back to the United States. Ultimately, Trump’s trade policies were intended to reroute established global supplies chains out of China altogether.

The thinking was that as the trade war progressed, the loss of economic activity would exert significant pressure on the Chinese economy. By extension, it would undercut the CCP’s legitimacy as the sole ruling authority in China. Rising levels of internal dissent would, hopefully, weaken the Chinese regime’s grip on the country and perhaps inhibit its expansionist appetites.

Going From Bad to Worse

Trump’s steep tariffs against China did indeed inflict a sharp decline in economic activity in 2019. By some estimates, it cost China $53 billion in lost trade revenues in 2019 alone. And the losses in Hong Kong due to the ongoing protests only added to the decline. Retail sales plunged 24.3 percent year over year, and GDP fell by 1.3 percent over the year.

Then, add to all that the 2019 African swine fever epidemic and the corn-devouring armyworms that ravaged China’s grain harvest—2019 was an extremely challenging year in China. The CCP leadership appeared just slightly less omniscient than it did the year before.

But all of those economic blows, individually and combined, pale in comparison to what the COVID-19 epidemic did to China’s economy in January and February of 2020. Estimates put the cost of the epidemic at $144 billion to China’s economy in just the seven days of the Lunar New Year holiday alone. That’s not counting the continuing stream of businesses fleeing China like refugees trying to escape an advancing army. For the foreseeable future, China will see more businesses leave than stay.

But if the economic damage from the CCP virus epidemic was crushing—and it was and continues to be—the decline in global demand due to the COVID-19 pandemic could well be cataclysmic for China’s already depleted economy.

According to China’s National Bureau of Statistics (NBS), industrial productivity fell by 13.5 percent year over year, with fixed-asset investment declining by 25 percent. Retail sales, a bellwether for consumer demand, cratered by 25 percent in January and February, and there’s little reason to expect it to recover any time soon.

Current estimates, which are, let’s keep in mind, only educated guesses, suggest that the global economy will grow around 2.4 percent in 2020, compared to 3.7 percent in 2018, down more than a third. China will suffer an inordinate share of that pain, as its manufacturing base goes into meltdown.

China’s GDP will contract by 6 percent or more in the first quarter compared to 2019, and likely more as the year goes on. Data from the NBS on March 16 indicates that factory production in China fell at the fastest rate in 30 years, and that the pandemic may well cut China’s growth by 50 percent in the first quarter.

Food Inflation Means an Angry Nation

Meanwhile, food inflation is another growing concern for the CCP, accounting for one-third of Chinese consumers’ income. Pork prices have more than doubled over the past year, and vegetable prices have gone up 17 percent.

Falling incomes because of a contracting economy will make the effects of price increases and shortages that much worse. Going forward, hunger, civil unrest and pressure on the CCP leadership will likely head skyward.

Cooperation or Adversarial Competition?

Given that context, China’s attempt to place blame for the pandemic with the United States, while concurrently calling for cooperation belies its more competitive rather than cooperative positioning on the world stage with America. Its belligerent rhetoric, which is typically reserved for its domestic audience, may be Beijing placing the footing for more overt adversarial competition with the United States for markets, resources, and influence around the world.

In fact, influence—and what is often called “soft power”—is a big part of Beijing’s long game of replacing the United States as the global hegemon. But given the challenges that China faces this year and beyond—or in spite of them—the CCP won’t let established rules and norms stand in the way of China’s path of ascendance that, as the world’s most populous country, is its right.

And why not? They never have before.

That’s why Beijing’s rhetorical posture should command our attention. Economically, the CCP leadership finds itself backed into a shrinking corner with no immediate or simple resolution. Conditions in China will get worse—and likely get much worse—before they get better. That augurs for further domestic oppression by the Party and civil resistance by the oppressed.

A Belligerent Tone and Message

Beijing is playing a dangerous and callous game not only with their own people, but with the world as well. Yes, nations compete with one another for power, and governments aren’t manned by angels. But typically, only illegitimate ones like the CCP treat their own with as much disdain, or more, than the outside world.

Their refusal to allow the U.S. Center for Disease Control and Prevention (CDC) into Wuhan to study the virus, for instance, evinces the pointed question of, “Why not let us help you help your people?”

Furthermore, the destruction of the virus data, or manipulation of it, which denied the rest of the world the opportunity to study the CCP virus for two months or more before being subjected to it themselves, undoubtedly cost thousands of lives. Such blatant disregard only confirms the worst about Beijing’s motivations.

In that context, the pathology of the message from China’s foreign ministry is a tonal blend of victimhood, self-absolution, and some strain of righteous vengeance, especially toward the United States. It gives one the sense that they may be foreshadowing another chapter or two to come that will be built upon the rhetorical foundation that they’re laying today.

The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.

James Gorrie is a writer and speaker based in Southern California. He is the author of “The China Crisis.”

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.