Fighting the Coronavirus Pandemic, East Asian Responses - China: Lockdowns, Digital Tools and Mobilization of Industry

The certification process for supplies is also simplified, allowing companies to either purchase new production lines or divert their existing production line to join the mass production of medical equipment. In less than one month (Feb. 1 – Feb. 29), China has multiplied its production capacity of masks by 5.5 times, from the initial 20 million per day to 110 million per day. The number will continue to increase, expected to reach 200 million per day. To put it in perspective, in 2019, China’s total production output was 5 billion pieces (13,7 million per day). The same trend is observed with production capacity of medical protective clothing, which increases from an initial 8700 sets per day on January 28, to 852,000 sets per day on March 12. 

For tests, the first nucleic acid kit passes legal inspection on January 24. Two days later, the National Medical Product Administration creates a speedy approval channel for medical devices. Four nucleic acid test kit products are approved on the same day. Two types of test kit are used in China: nucleic acid test kit and antibody test kit. By March 27, a total of 22 coronavirus test kit products are approved. As of March 11, production capacity of nucleic acid test kits is 2.6 million kits per day (up from 773 000 on February 1) , while production of antibody test kits is 1 million per day. The nucleic acid test is the most commonly used detection method of coronavirus, as antibodies take time to develop and are not detected in the early stage of infection. However, the accuracy of nucleic acid tests varies and some of them seem to be on the lower end of the variation. Front-line doctors call for using CT scans instead of the test kit, since in their experience the test kits often fail to identify patients even when the infection is already obvious. 

The Social Credit System, which is now referred to as the “master key 万能钥匙” solution of problems by reward and punishment, is also applied to coronavirus prevention and control policies. The scope of punitive measures and their implementation vary greatly, depending on local authorities and there is no national standard. But they often sanction the concealment of health and contact history, the refusal of medical isolation and observation, violation of mask-wearing requirement, or flouting prohibition of gatherings, including at home. There are cases of legal authorities temporarily lifting social credit related restrictions to allow for companies operating in critical sectors but under judiciary investigation to resume production. For instance, the Guangzhou Court unfreezes the bank account of a manufacturer of infrared thermal imagers so that it can resume production.

Reducing the risk of exposure and spread through data usage

The usage of big data is the other key to COVID-19 crisis management. Since January 20, local authorities are requested to report on daily basis development related to the virus, and the National NHC publishes a daily report on confirmed cases since January 21. A list of hospitals with a flu section that is qualified to treat coronavirus is also communicated on local authorities’ websites. Official data has become the source of major COVID-19 update websites and applications. But some tech companies go much further. For instance, Baidu visually pins on the map the location of coronavirus patients (without disclosing their names or personal details), as well as where they have been, allowing users to avoid areas with risk of infection. The platform also provides visibility over the availability of beds at hospitals. 

China Electronics Technology Group Corporations (CETC) releases a “close contact detector” platform based on the data provided by the NHC, Ministry of Transport, China Railway, Civil Aviation Administration, etc. to identify individuals that have been in close contact with someone infected. The platform has been integrated into existing popular applications such as Alipay, Wechat, and QQ. To facilitate enquiries, users can access the platform by scanning a QR code, and sign up with a mobile number, providing their names and national identification number. Each mobile number account can inquire about a maximum of three people. The platform is also used by authorities, companies, schools, public spaces and residential areas. As has been widely reported, social control of the local community has played a significant role in enforcing quarantine rules and other guidance. 

These measures are part of a general attempt to divert movement flows, decrease the number of crowded places, and minimize social contacts as much as possible. At hospitals, automated machines are installed for medicine and disinfectors. To avoid overcrowding hospitals with false-positive visits, online medical service platforms are made available. Public hospitals and private companies start providing free online consultations, lowering the risk of cross-infection which has considerably aggravated the situation in Wuhan and other cities in Hubei. 

In sum, the government is able to have an overview of the situation thanks to the data and analysis provided by both local authorities and companies. At the same time, individuals are offered a means to access their own status using various platforms. The horizontal combination of data allows authorities to easily identify individuals at risk (for instance, who traveled to a high-risk zone or who has been in close contact with someone infected) and conduct screening of this targeted group. These use of data for monitoring purposes follows the the prevention and control plan published by the NHC, which emphasizes the importance of “discovering, reporting, isolating and treating in advance ( 早发现、早报告、早诊断、早隔离、早治疗)”.

As some cities are now gradually resuming work and other activities, new tools of control and monitoring are introduced. Both Tencent and Alibaba have developed their own “Health Code (健康码)” System, which provides users with a QR and color (red, yellow or green) code to prove their eligibility of “free movement”. Another example is the “Itinerary Card (行程卡)” that can be used as a proof of “clean” travel history. Mobile users can obtain their travel history of the past 14 days (domestic and abroad), based on the data gathered by the telecommunication companies. Mobile users are coded red if they have been to Hubei, yellow if they have been to 58 listed foreign countries (constantly updated) and the remaining countries are green. The “Itinerary Card” is valid nationwide. 

The massive usage of data (such as the collection, storage, and future whereabouts) to tackle the crisis has sparked privacy concerns. In most cases, the developed platform is government-backed and the legality of usage is supported by official government statements. In other cases, the company claims that data are either anonymized to show a general trend or unassociated with a specific identity. There is strong collaboration between the private and public sector in the control and prevention of the virus.

Closing down and supplying the world

As China flattens the coronavirus curve, a third phase begins. On March 17, 41 medical rescue teams dispatched to Hubei Province, the first epicenter of the outbreak, start their home journey, signaling a certain degree of return to normalcy. What follows is the lifting of travel restriction of Hubei starting from March 25, with Wuhan as the only exception, which ended its lockdown on April 8 while keeping various control and preventive measures in place. On March 19, China reports zero new local cases for the first time since the outbreak. The “zero new local cases” has continued for two more days, broken by the one confirmed case on March 22, but the daily number remains low. On March 28, China reports 45 new confirmed cases, among them, 44 imported. However, the fight against the coronavirus continues. In Wuhan, all medical personnel (over 4000) dispatched by the People’s Liberation Army since January 24 are ordered to remain on the ground until  “the complete victory of the battle”. 

On March 23, Li Keqiang urges officials not to hide cases in order to keep the reported number low, and requests everyone not to let their guard down as the fight against coronavirus is a long-term fight. During a meeting three days later, he also stresses the need of paying attention to asymptomatic carriers. According to a team of Chinese researchers published by Science, 86 % of cases in Hubei before January 23 went undetected, and only complete lockdown has reduced the transmission rate. Overall, as of April 9, China has reported nearly 81,90782,000 cases and 3336 deaths, of which 3216 in Wuhan and other cities in Hubei. Both figures are debated and there are serious doubts whether China’s statistics of cases and deaths are reliable. 

China decides on February 7 to stop including asymptomatic patients in confirmed cases. Classified Chinese government data disclosed by the South China Morning Post estimate that one-third of coronavirus cases may be asymptomatic. Asymptomatic carriers, also known as “silent carriers”, can still transmit the virus to others, and with the resumption of normal life in China, preventive and control measures must remain in place to avoid the resurgence of cases. With the growing public fears over spread caused by asymptomatic patients, China decides to report asymptomatic cases starting from April 1. 

As days go by, the compulsory quarantine requirement has placed Beijing under huge pressure to handle the increasing number of travelers at their designated accommodation. To relieve the pressure, starting from March 23, all international flights to Beijing are diverted to 12 cities. Upon landing in one of the cities, the traveler is only allowed to continue its journey if the required conditions are met. On March 26, China’s Ministry of Foreign Affairs announces a temporary entry suspension for foreign nationals holding valid Chinese visas or residence permits, effective from March 28. From March 29, each Chinese airline is only allowed to keep one route to each foreign country, while each foreign airline is only allowed to operate one route to China. A maximum of one flight per week and per route is set. 

Given the massive production capacity increase of medical equipment and their global shortage, China is now receiving requests from other countries hit by the virus crisis. However, mask producers are still struggling to meet domestic demand, as they only fulfill 70%-80% of it. Now that work and schools are restarting, the demand will further increase. The shortfall is also acknowledged by Li Xingqian, Director of the Foreign Trade Department of the Ministry of Commerce. With the increasing demands and orders from overseas, it remains interesting to see how China plans to fulfill them. On the other hand, the export of medical protective clothing is encouraged as its supply has exceeded the demand since the end of February. The export is facilitated by other policies. For instance, China’s Civil Aviation Administration increases its international air freight capacity and opens a “green channel” for approval of charter flights, in order to ensure shipment of medical equipment. China is using its unequalled capacity to shift production towards required personal protective equipment and other medical supplies to provide these abroad, along with a political line about its superiority against democracies. China starts having bilateral trade agreements with countries having medical equipment shortage. On March 29, a first delivery of 5,5 million masks to France, and on the same day, the US also receives a government-led airlift from China (12 million gloves, 130,000 N95 masks, 1.7 million surgical masks, 50,000 gowns, 130,000 hand sanitizer units, and 36,000 thermometers). China reports to have exported 3.86 billion face masks between March 1 and April 6. However, the quality and reliability of medical equipment exported are being questioned. For instance, both Spain and Slovakia found test kits received from China unsatisfactory. Facing backlash, China’s Ministry of Commerce, General Administration of Customs and the National Medical Product Administration jointly issue “Notice on the Orderly Conducting of Medical Materials Export” on March 31. All listed medical equipment must obtain domestic “Registration Certificate for Medical Device” before being exported, while this was previously not a requirement - and exporters were able to play with different certification processes to obtain licences

China has also used its WHO membership and influence to regain some control of the narrative regarding the outbreak, and is launching a major bilateral public diplomacy in countries where the epidemic has shifted - chiefly, Europe and America, but also Africa. 

Economic consequence and policies 

The epidemic arrives in a context where there was already much public and quasi-public debt (circa 2,5 GDP), a trend toward slower growth, an impact of the US tariffs on exports to the US. The government was constrained by these financial risks; it had reduced infrastructure investment and adopted; over the past two years a stop-and-go attitude towards more stimulus, especially with the local real estate bubble.

The impact of the epidemic is unprecedented since the 1960s. Official figures for January-February reflect a very steep decline : -13,5 % YoY for industrial production, - 13 % for services, - 20,5 % for retail consumer sales, - 24,5 % for fixed investment, - 9,6 % for foreign trade, - 9,9 % for fiscal revenue (and -21,4 % for February alone). By mid-March, external forecasts are in the 2-4 % GDP growth for the year 2020.

Resumption in operations starts quickly but without full results so far., since resuming some production does not mean reaching full capacity. Steel and similar industries never stopped, but have even larger stockpiles than usual. 97% of SOEs, often with employees at hand and a command structure, report to have resumed production. High-tech foreign firms, less dependent on SMEs and on migrant labor, are ahead by late March. This is not the case for SMEs so far, with only a work resumption rate of 71,7%. Energy usage, traffic statistics indicate an uptick but not yet a return to normalcy. For example, the use of cars in large cities has increased, but not subway rides; intercity traffic is still slow on March 26 (22 out of 51 trains from Beijing to Shanghai, similar cuts on flights in spite of heavy discounts).

The government’s economic response remains on the conservative side. Central allocation to virus responses reached CH¥ 116.9 billion (US$ 16.7 billion) on March 13. There are reduced social contributions, discount loans: CH¥ 500 billion (US$ 71.4 billion) on February 15 at a “discount” rate of 2,5% to 4,5% followed by a special quota of CH¥ 350 billion (US$ 50 billion) lending quota to policy banks. This should be viewed in comparison to an overall CH¥ 36 trillion (US$ 5138 billion) previously loaned to SMEs, however. Export subsidies are put in place in mid-March. Infrastructure spending (which dropped in Jan.-Feb) is meant to increase, but from a low base in 2019, and will not by far reach 2008 levels. “Helicopter money” e.g. cash disbursements to individuals have not happened (although large companies and platforms are instituting large sale vouchers), nor has there been so far an across-the-board interest rate cut by the central bank. However, it has announced on March 30 an interest cut from 2.4% to 2.2% on a reverse purchase agreement for banks.

Much touted international aid by China has so far focused on delivery (or sale) of medical equipment. Xi Jinping’s speech at the March 26 G20 summit calls for “coordination” and for “cutting tariffs, removing barriers, and facilitating the unfettered flow of trade”. In other words, a call to the United States to drop the trade conflict. But he only announces on China’s part “a proactive fiscal policy and a prudent monetary policy”. 

Copyright : STR / AFP