Wuhan Coronavirus: Economic & Geopolitical Consequences

As the Wuhan coronavirus continues to evolve and spread the same can be said about the economic and geopolitical implications brought on by the virus. The world is still in a very early stage of the game with regards to the spread and containment of Wuhan coronavirus. The World Health Organization’s labeling of the virus as a ‘global health emergency’ underscores the gravity of the current situation. Aside from the obvious medical ramifications, the world is beginning to see the effect of the virus in other areas.

Economically, the first effect of the Wuhan coronavirus is already being felt in markets and economies worldwide.  has arrived following the world economy’s worst year in a decade. Asian markets closed the week with mounting losses, especially the Hang Seng, Hong Kong’s main stock index. On Friday, Wall Street joined in with the Dow losing 600 points. China’s economy has already been suffering from a downturn in the last year and the Wuhan coronavirus is expected to limit growth even more. How much damage it does to the world’s second largest economy depends greatly on the length of the present crisis. Experts anticipate it will last at least into the summer which will greatly affect China’s tourism industry. Other nations in Southeast Asia will be dealing with similar economic consequences.

The geopolitical ramifications of the Wuhan coronavirus are taking shape right now. Anti-Chinese sentiment is growing as stringent travel bans and restrictions are being proposed in nations around the world. In a growing number of cases, bans and restrictions of varying degrees are being put into practice. In Beijing, the Chinese government has reacted unfavorably to these actions and understandably so. But it went too far when China’s acting ambassador to Israel compared the travel bans to the treatment of Jews in the Holocaust. Not exactly the best way to gin up global sympathy to what the Chinese people are enduring at the moment.

The geopolitical aspects of the Wuhan coronavirus crisis will be talked about more this week. For now, the Super Bowl is set to begin shortly and I hope everyone enjoys the game.

US/ASEAN Naval Exercise Underway

The inaugural ASEAN-US Maritime Exercise, (AUMX) is underway in Southeast Asian waters this week. The exercise marks the first time that the US and navies from Association of Southeast Asian Nations (ASEAN) member-states have formally worked together. AUMX is taking place on a large area of sea, from the Gulf of Thailand to the Gulf of Tonkin, and south to Singapore. Parts of the exercise are taking place in the South China Sea and this fact could likely worsen the simmering tensions in the region. US and ASEAN officials have stressed that the exercise is not directed at China. No matter if this is the case or not, China will likely regard AUMX as a message being sent its way.

The timing and locations of the exercise has raised some eyebrows. Vietnam and China are currently locked in a standoff over repeated intrusions by Chinese vessels at the energy-rich Vanguard Bank. The Philippines has also been complaining about Chinese intimidation tactics in Manila’s claimed sea areas. More significant, perhaps, are reports that Cambodia has given China an exclusive access agreement to its naval base at Ream on the Gulf of Thailand. If true, Chinese a naval facility could significantly affect the balance of power in the area. Thailand, Vietnam, and India are watching developments closely.