As Russia and Britain lead the way in deploying Covid19 vaccines through their territories, the world awaits with anguish for the turn to initiate the battle against the most deadly virus to confront humanity since the Spanish Flu that killed 50M people between 1918-1920. So called emerging markets are the most concerned. Their fragile institutions failed to protect citizens against the disease as an inordinate proportion of them works in the informal sector. They also failed to protect their purchasing power as social security programs a rathe slimly financed. They also botched delivery of education services given that the internet penetration rate for the region is 59%. This leaves a sizable number of citizens out in the cold. For these nations thus the faster a vaccine is deployed the better they will do in terms of securing economic recovery; getting children back to school and rebuilding their health systems.
Two international actors understand this logics and are therefore putting pressure in their countries to unleash a forceful vaccine diplomacy. These guys are XI Ji Ping, the President of China and Admiral Craig S. Faller, the head of the US Southern Command. Both are urging their bureaucracies to prioritize emerging markets demands. And while motivations differ both players understand the world much better than many world leaders who are only aiming at resolving the health threat inside their territory while leaving resolution elsewhere to each nation . But unfortunately for those who hold this thinking, consequences of such policies going forward are serious.
Indeed first because as the world supply chain is rebuilt competitivity will be achieved by those that can involve emerging markets in the manufacturing effort as early as possible and at the lowest cost. In a post Covid19 world this entails the securing of emerging markets participation early on. But how can these nations effectively establish in their territories manufacturing links when they have to implement social distancing, mask wearing, gel cleaning and continuing disinfecting practices.
Mr Xi thus sees a great opportunity in devoting part of Chinas spare capacity to the production of vaccines to distribute in emerging markets. This will not only secure a great good will for China but also market penetration to preserve the supply of strategic inputs to its growing electronics industry while building demand for its products. Assuming China spends about US 50B in its vaccine diplomacy and that one would apply the trade multiplier it would almost certainly receive US$150 back in supply security and exports. The business could thus not be better.
And one of course wonder whether anyone in the Biden transition team of the Trump White House has given any thought to this bargain deal that could contribute to the US economic reactivation? But I guess they have more pressing issues to think about.