Chinaworker.info – Coronavirus and capitalism: a deadly mix

Capitalist governments everywhere exacerbate the crisis and damage public health systems

Vincent Kolo, chinaworker.info

The new coronavirus that causes covid-19 disease continues to spread rapidly, with 90,000 confirmed cases and more than 3,000 deaths. The epidemic is now progressing faster outside China than inside the country, according to official announcements from Chinese regimes. The daily increase in infections in South Korea has exceeded those in China. The largest U.S. military base overseas, Camp Humphreys, outside of Seoul, is among the institutions locked in because of the epidemic.

The Japanese government has ordered all schools closed for at least the next month, affecting 13 million students. In Italy, with more than 1,700 cases, eleven cities in the north are placed in Chinese quarantine.

Around the world, closings and cancellations are the new norm, including the two holiest Islamic shrines in Saudi Arabia and China, the National People's Congress, which was originally scheduled to open this week . Xi Jinping assures that the richest parliament in the world is not exposed to the danger of infection, even if his regime is doing everything to restart the economy and bring workers back into the economy. factory of the world.

Another dictatorship, Iran, presides over one of the most alarming outbreaks, with nearly 1,000 cases officially reported. This figure is widely dismissed as unrealistic. The chairman of the Tehran city council said that there could be between 10,000 and 15,000 infected people in the country. Even the country's deputy health minister, under dramatic circumstances, tested positive for the new coronavirus after giving a press conference during which he was visibly ill.

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The epidemic is still classified only as an epidemic rather than a pandemic by the World Health Organization. This reluctance and the general treatment of the emergency by the WHO have provoked much debate. Covid-19 already meets two of the three criteria for a pandemic identified by the United States Centers for Disease Control and Prevention (CDC), in that it spreads between people and can lead to death. The third criterion is that it has spread around the world. Strangely, and perhaps reflecting political pressure and the desire to avoid panic, WHO balks at the latter point despite the fact that more than 60 countries have now reported infections.

Infected exchanges

After being in complete denial during the first six weeks of the epidemic, despite glaring evidence that China, the world's second largest economy, was stalled, the penny finally fell for Wall Street and the markets global scholarship recipients. In fact, it's about seven trillion dollars half that amount on the New York Stock Exchange which was wiped out last week. Major global stock markets, including New York, lost 10-12% in one week, the worst performance since the 2008 financial crisis and the fastest correction on record.

It’s panic with historic proportions; with shortsighted capitalist politicians such as Trump, incredulous about what is going on as the market collapse and the global recession become serious possibilities.

The hopeful story of 2020 announcing a modest rebound in global growth is now in shambles, notes Eswar Prasad, former head of the IMF's China division in the New York Times (March 1). Europe stagnated and the Japanese economy contracted in the last quarter of 2019, even as China and India lost momentum. So this year has already been a difficult start. Now the coronavirus has put the global economy in survival mode. The spread of the virus is affecting travel, trade and supply chains around the world.

Trump in particular has placed his hopes (for a continuous bull market resulting in re-election in November) on Xi Jinping and Chinese dictators, unprecedented and draconian measures, including the world's largest quarantine, to stop the spread of the viral epidemic. This did not happen.

Two weeks ago, Trump told a gathering of state governors: I had a long talk with President Xi for the people in this room two nights ago, and he feels very confident. He feels very confident. And he feels that, again, as I mentioned, in April or during the month of April, heat, in general, kills this kind of virus. So it would be a good thing. But were in great shape in our country.

This kind of blindness and wishful thinking rightly led the Chinese authorities to a whole series of mistakes in December and January, which allowed the epidemic to become established in China.

The biggest bubble

Wall Street has delayed the realization of the potential destruction that the epidemic can cause is only part of the story. The current financial chaos was long overdue, and could have happened anyway, without the Covid-19 trigger. This is because the stock markets, especially in the United States, represent the largest financial bubble ever seen. It’s even bigger than the US housing bubble in 2006. With the epidemic and the collapse of economic activity in China expected to spread around the world, speculators now fear let the judgment not be near.

In the coming days, central banks, especially the US Federal Reserve, will be massively focusing on seeing if they can pull a rabbit from the hat by freeing up more stock market well-being, by injecting more credit into the financial system to reflect the bubble. However, given the unprecedented loose currency policies of central banks over the past decade, there is concern that their toolbox will be empty.

The Trump administration is winning out on further tax cuts, and even lowering some of its Chinese tariffs in order to calm the turmoil of the capitalists. The President resumed his campaign to pressure the Fed to further lower interest rates, demanding that the United States do better than Japan and Europe: we should have interest rates the lowest. Fed Chairman Jerome Powell said he was preparing to intervene to calm the stock market.

Many economists are skeptical. While seemingly endless cycles of QE monetary printing have, by and large, managed to avoid an outright recession in the past decade (at the cost of inflating the current bubble in the stock markets), this time might be different. The epidemic continues to spread, closing the savings in its path. The rate cuts will not motivate buyers to venture into the midst of an epidemic or to reconnect broken global supply chains.

Repeat errors

Trump's advisers even describe the epidemic as a hoax by the Democrats to sabotage his hopes for re-election. The president accused sections of the media of doing everything possible to scare people. The complacency of the US government is illustrated by remarks by Commerce Secretary Wilbur Ross who predicted that the epidemic in China will help accelerate the return of jobs to North America.

In this way, the response of the American administrations to the crisis consists in repeating in a somewhat different form all the errors of the autocratic leaders of China, who have ignored the evidence, wasted precious weeks, ill-informed and lied to society and defamed anyone who tried to speak out.

Compare the urgency with which Trump and other capitalist politicians rush to the bedside on Wall Street, promising to do everything in their power, with the way the same politicians reacted to it. public health emergency. Public hospital systems around the world have been devastated by cuts and neoliberal shock therapies. Almost 30 million adult Americans do not have medical insurance due to the high cost and a University of Chicago survey in 2018 showed that 44% of sick or injured people did not go to a doctor.

Wage drop

As the coronavirus epidemic spreads, so does a wave of corporate cutbacks, pay cuts and forced unpaid leave. Most workers in China have lost their wages during the unprecedented foreclosure of the past six weeks. Migrants (from poorer regions of China) who make up the vast majority of workers in construction, manufacturing and many service sectors, in most cases do not have contracts for work, pensions, unemployment or medical insurance. These workers are the most affected by the epidemic in China, without access to hospital care in many cases, due to the high cost or hukou (internal passport).

But many American workers are also faced with the reality of not being paid under possible quarantine restrictions. According to the Center for American Progress, 73 percent of part-time workers in the United States are not even entitled to a day of paid sick leave. The Guardian (February 28) reports that during the 2009 H1N1 swine flu epidemic, about a third of American workers did not take time off work despite their illness, which resulted in up to To seven million additional infections. The same newspaper reported the case of a Miami resident who went for a coronavirus test in January after returning from a trip to China. He was charged $ 3,270 for testing!

Obviously, the American working class is very poorly protected if the Covid-19 epidemic were to set in, which many experts, including at the CDC, believe is a matter of when rather than whether . Trump's policies further weakened these defenses, reducing the CDC's funding by 16% and the Department of Health and Human Services budget by almost 10% in his latest budget proposal. Trump has cut a post on his National Security Council to oversee responses to pandemics. Trump also proposed a $ 3 billion cut in global health programs, including a 53% cut in funding for the WHO.

China is collapsing

From China, where it originated, the epidemic has caused a historic economic and political crisis. The collapse in production in the past six weeks has been much worse than what the Chinese dictatorship had expected and it seems less and less likely to be followed by a V-shaped rebound. Official and unofficial reports published recently confirm a very deep collapse, not only in the manufacturing sector, but also and even more serious in services and construction. Services account for more than half of China's GDP.

It now seems inevitable that GDP growth will be dragged into negative territory for the current quarter and possibly the following quarter, depending on the trajectory of the epidemics. ANZ forecasts a contraction of 2% of GDP in the first quarter of China, while PIMCO, a hedge fund, forecasts a decline of 6%. This goes beyond the collapse of the global financial crisis of 2008. A quarterly contraction would be the first time since the cultural revolution of the 1960s.

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Across China, workers are blocked and trapped by travel and quarantine restrictions, in addition to those who stay at home for fear of catching the disease in a country where medical debts have plunged many households in poverty. Xi Jinping has gone from fighting the epidemic to urging a national resumption of full production and normal living in all regions except Hubei and Wuhan, 39; epicenter of the epidemic. But the summons met with mixed results, with dictatorship and China's multi-layered state machine inflicting more damage.

The patchwork of conflicting rules that emerged from the fight against (the coronavirus epidemic) has produced hundreds of fiefdoms, making it virtually impossible to move goods or people across China, has exclaimed a spokesperson for the European Union Chamber of Commerce in China.

While state-controlled media report that more than 90% of state-owned enterprises have resumed production, many believe that the actual figure is much lower, with most enterprises only reaching one partial recovery. According to ANZ, the Chinese economy was operating at 20% of its capacity, with around 50% of workers returning to their posts last week.

Orwellian state

This crisis has dealt a fatal blow to the personal image of Xi Jinpings, said Wu Qiang, a Beijing-based commentator. For a long time to come, the public will continue to doubt him, and this doubt is irreparable, he told the New York Times.

While the battle against Covid-19 is far from over in China, sensing the very real danger to its government, the CCP regime is further strengthening its repressive armory and the capabilities of the Orwellian surveillance state. The latter, which not only did not warn the company of the new coronavirus, but actually suppressed the warnings, is further strengthened today in the name of the fight against the coronavirus. Technology, including new smartphone apps, Big Data and AI, is used as a tool for social and political control, with foreign democratic governments watching closely and seeking to copy at least some of the Chinese methods.

A self-assessment phone application designed by a subsidiary of Alibaba is applied in 200 cities. Every citizen should diagnose themselves, enter any suspicious symptoms, recent travel history and other information, which results in a red, yellow or green QR code. Only those with green QR codes are allowed to drive or move outside; everyone must show their QR code when requested by the police.

In this way, the Xis regime begins to export some of the techno-authoritarian characteristics of its regime to Xinjiang, where one million Uighur Muslims are held in prison camps, to the rest of China. It is a development that socialists have long warned of.

Likewise, governments around the world may well seek to exploit the coronavirus epidemic to strengthen the police and other authoritarian elements with the aim of alleviating mass anger. Already in France, Italy and Switzerland, new bans and restrictions are in force against demonstrations and demonstrations.

Why socialists are fighting

Socialists and the ISA represent massive investment in public health systems and immediate emergency measures to prepare society to face the threat of a pandemic. These must be subject to total democratic control and public scrutiny which we cannot trust capitalist politicians, whether in democratic or authoritarian states.

In many countries, there are shortages of basic medical supplies such as gowns, gloves and appropriate face masks. New public entities must be created under democratic control to speed up the production of these supplies and lifesaving equipment such as ventilators. The disastrous market funding cuts to hospitals must be reversed by a mass struggle waged by unions and workers' political organizations. The international trade union movement and the left must rise to this challenge. The coronavirus shows us that the world is not safe in the hands of capitalism and its politicians.