COVID-19 fight: what it takes to get the genie back in the bottle

According to the major Chinese news outlet, Xinhua, the number of new confirmed cases of #COVID-19 pneumonia outside Hubei has been dropping for 16 consecutive days. Only 45 new cases are confirmed outside of Hubei province, the center of disease outbreak as of February 19th, 2020. This is opposed to 890 cases registered daily exactly 16 days ago. The hope is that the epidemic has plateaued and will start to ease in the following weeks.

Let’s review some key points in a fight that encompasses many areas, from compulsory social distancing to the development of effective treatment, and to an economic stimulus to protect the country from the social and economic fallout. 

 Quarantine measures

From the early days of #COVID-19 outbreak, the main weapon against the widespread proliferation of the virus in and outside of Hubei province has been quarantine. According to the continuously reiterated position voiced by the chief government medical advisor, Dr Zhong Nanshan, appointed to manage a coordinated response against #COVID-19, infected individuals will show signs of the disease within 14 days. Although 14 days proved to be just an approximation, as in some rare cases #COVID-19 can emerge as late as in 18-24 days, the 14-day self-quarantine rule has become a dominant strategy to fight the virus across the whole country. The Chinese population took unprecedented social-distancing measures. Not only were 56 million people locked down in their dwellings in Hubei province, but similar measures were also taken in other regions far away from Hubei. Local authorities throughout counties and townships in various provinces imposed strict rules on movement within their limited territorial communities. Roads and walkways being controlled or blocked off by high shields, with only people with local household registration allowed to enter.

In larger cities with a substantial temporary residents’ population, obligatory quarantine for outside returnees has been introduced. The scale and scope of quarantine is truly unimaginable to most Western observers, as in the movement and social activities of hundreds of millions of people remain restricted. Both the Chinese populace and the government have demonstrated exemplary order in its efforts to wipe the virus out within the shortest possible timeframe.

 Economic measures

Fighting #COVID-19 by imposing wide-spread quarantines comes with the price. Businesses in all areas have been disrupted. Admittedly, China's economic structure has changed significantly compared with 2002-2003, when the country was hit by SARS – it has arguably became more vulnerable as of 2020.

As an example, the contribution of the consumer service industry to economic national growth has rapidly increased from 35.4% in 2003 to 57.8% at the end of 2019. The service sector is therefore extremely susceptible to crisis – it is comparatively less resilient and self-sustainable in the shadow of prolonged downtime. Small and medium-sized enterprises (SMEs) across all sectors are also under great strain. One highly-cited study on economic endurance of SMEs, conducted by Tsinghua and Pekin University, found out that 34% of the 995 SMEs being surveyed admitted their financial reserves could only sustain operations for one month if they had no revenue at all. The number of bankruptcies would rise to 67.1% if no revenue occurred in two months and more than 85% of the SMEs would die by the end of the third month without revenues. The other potential victims of the epidemic are rising Chinese unicorns, such as #Luckin Coffee, a local Chinese challenger of Starbucks, or #NIO, one of China's top EV startups. As these companies are still burning through cash, their endurance appears to be very limited.

 In turn, wide-spread cash flow problems in the real economy has inflated the bad loans bubble of the financial sector, which is already suffocating in a huge non-performing loans crisis – China disposed USD 289b of bad loans in 2019. Stock markets predisposed to panics is another tender point. On the first trading day after the Chinese New Year holidays, China stocks suffered steep declines of nearly 8 percent.

 The government took action to support both the stock market, financial sector and the real economy. As early as the beginning of February, the Central Bank (the People's Bank of China) had already injected more than USD 173b in the markets by purchasing short-term bonds and providing liquidity to the financial system. In its latest announcement, the Central Bank vows to let off higher levels of non-performing loans among national banking institutions as part of its efforts to support firms hit by the #COVID-19 epidemic. As a result, according to China Daily, the Chinese banking system has already provided RMB 537b/USD 77b in credit support to the companies affected by the #COVID-19 outbreak. The government uses fiscal measures to support the business by temporary reduction or complete exemption of social insurance contributions. Local governments in different regions have their own tax relief policies, including deferred tax payments and tax exemptions. Great efforts are made to return migrant workers back to their permanent places of employment. In various regions, local governments offer transport subsidies to the enterprises to bring back migrant workers in the amount of RMB 300-1000 (USD 40-140) per person.

The government is determined to minimize the negative effect of #COVID-19 to the national economy. As a recognition of these efforts, stocks market recovered all their initial losses of the beginning of February.

Development of effective treatment

China has more than 100 running or pending clinical trials for potential drug candidates against #COVID-19. This number includes some novel pharmaceutical products, well-established western drugs and traditional Chinese medicines. Today, many hopes are anchored on anti-Ebola #Remdesivir by the US Gilead. The full-range trial for #Remdesivir has been set out and has a target completion date of the end of April – with the drug to receive market approval as early as in May 2020. The best candidates also include anti-malaria #Chloroquine, which demonstrated good results in killing #COVID-19 in cell culture. As of February 17, a total of 128 cases of #COVID-19 pneumonia were treated with chloroquine phosphate by 10 designated medical institutions in Guangdong Province. Of these, 93 cases of these have already tested negative for the virus but remain under observation and 26 cases have been discharged. #Chloroquine’s advantage lies in its abundant availability with many manufacturers in China, including Shanghai Pharma, Zhongsheng Pharma, Jinghua Pharmaceutical and some others. Serum therapy is another potential treatment of #COVID-19 — a recently initiated 300-people controlled trial will test serum from COVID-19 survivors. The underlying principle of serum therapy is that antibodies produced by an immunized person can effectively help a newly-infected person to fight off the virus.

Future outlook

As we can see, coping with the #COVID-19 outbreak requires enormous efforts on many levels through managing multiple variables. We still don’t know whether China has successfully developed a formula to keep all these variables under full control. However, the promising statistics on #COVID-19 incidence rate give us hope that all the efforts and sacrifices were not in vain. With enough luck, it is starting to look like China should be able to get the situation under full control in March 2020.