Having surpassed the 2002-03 SARS virus and taken more than 800 lives already, besides threatening international capital markets once again after a brief false breather, the coronavirus has brought the world to an inflexion point that will determine much about the future. The foremost concern no doubt stems from the failure so far to find a cure. Full marks to the Chinese for their efforts, especially erecting a state of the art hospital in a matter of days, but so long as an antidote evades authorities people will keep dying and the disease will keep spreading.
Then there is the financial angle. China has long been the factory of the world. And logistical paralysis in much of the Middle Kingdom has fed into a manufacturing slowdown, which is affecting trade linkages across the world. Chine imports heavily from all sorts of countries, and exports even more to practically everywhere. Now, because of the virus and quarantine, traders, manufacturers and retailers are feeling the pinch in all continents. All this is taking a very heavy toll on the Chinese economy which, even before the mysterious outbreak, had slowed down to the weakest growth in more than three decades because of the tariff war with the US. It is only natural, then, for the Belt and Road Initiative (BRI) to also feel the pressure. Incidentally, Wuhan has a central place in the Initiative with manufacturing and transit responsibilities. Now who knows when, or even if, it will be back to normal again?
Plus, there is the matter of the Chinese economy being able to sustain heavy, billion-dollar BRI investments in the immediate future. Beijing’s plan to resurrect the fabled Silk Route in a modern setting is nothing short of revolutionary, but it is still pretty much in its infancy, and will require considerable investment before it takes of properly. But China’s economy is now drained and fatigued. So Beijing will have to decide about BRI’s fate as well.
And that, of course, brings us to CPEC, the only silver lining on the dark cloud that is Pakistan’s economy. If BRI suffers, so will CPEC, and there’s precious little we can do about it. Truly this coronavirus is proving to be the Black Swan event that could knock the global economy, which was already looking for an excuse to slip back into recession, completely off the rails. And Pakistan, considering what could happen to CPEC, is also worrying.
