China’s economy is suffocating following the outbreak of the Novel Coronavirus which has forced the WHO to declare the deadly virus a global health emergency.
The Shanghai Composite index closed 8 per cent lower last week, its biggest daily drop for more than four years.
The Hubei Province where the outbreak started is on total lockdown with the death toll surpassing1,367 dead and about 59, 805 infection as of February 13, 2020, and still counting. Schools are closed. Many businesses have temporarily closed their locations, and employees who can are working from home.
While the Chinese government and the WHO are racing against time to salvage the situation, it appears it’s not everyone who is worried. In fact, some countries are profiting from this disease. For instance, Ghana’s currency has made a strong recovery against the dollar following the outbreak. This is because traders who hitherto would have gone to China for trade have had to hold on.
But the US appears to be the biggest winner. US President, Donald Trump is reported to have said that Coronavirus will have a “very good ending” for the US.
Since Donald Trump came to office, the trade war between China and the US has heightened. On May 15, 2019, Donald Trump signed an executive order banning US companies from doing business with Huawei claiming that the company could pose a risk to national security.
Apart from increasing tariffs on Chinese goods, the US went further to accuse the Chinese company, Huawei, of espionage and unfair trade practices.
The claims against Huawei could be legit. This is because the founder of the company, Zen Zhengfei has openly declared that he supports Xi Jinping’s Communist regime.
But beyond this fear, the US rift with China could be about the latter’s chance of launching 5G technology before the US.
You may wonder what this fuss about 5 G technology is.
Well, 5G will usher the world to a new dispensation than has ever happened before. With 5G, one can download a 2-hour movie in just 3.6 seconds, unlike the current 4G which takes 6 minutes to download a 2-hour movie. Yes, that’s how fast the 5G service is expected to be!
When the US won the race for the 4G service, it added USD 100 billion to its GDP. But 5G is projected to create 3 million jobs and add up to USD500 billion to the GDP of whoever gets the nod (either US or China).
Apart from that, 5G means enhanced surveillance, better GPS, a faster internet connection, etc.
Already, China is testing its 5G technology and has announced that it will launch it by the end of 2020 while the US, Japan, South Korea, EU, etc are projecting to finish it by 2025.
If China succeeds in launching 5G this year, it can give it to up to 57 countries which will enhance China’s economic outlook and put it on a pedestal of overtaking the US as an economic powerhouse.
This is what the US wants to prevent. The rift between these two powerhouses appears to be technological warfare pivoted on the US’s fear to lose the 5G bid to China.
As the coronavirus continues to ravage like wildfire with its complex economic repercussions on the Chinese economy, it’s paving opportunity for the US to buy time and catch-up with their arch-rivals or possibly launch the 5G before China does.