Will the coronavirus lead to the Great Sino-American De-coupling?

A FEW months before the 2008 financial crisis, renowned financial adviser Nassim Taleb published The Black Swan: The Impact of the Highly Improbable. The book became an international sensation after a highly improbable event happened. And that was the financial crisis which led the collapse of some of the major global financial intuitions.

Mr Taleb employed the term "black swan" to describe high-profile, hard-to-predict, and rare events. These are outliers that are beyond the realm of normal expectations in history, science, finance and technology. They come out of the blue, and end up having huge and transformative consequences.

Which begs the question: Should we describe the Covid-19 outbreak as a case of a black swan? After all, no one had expected it or predicted that it would happen, coming as it did out the blue.

And some experts have warned that the continuing spread of the coronavirus beyond the borders of China could have enormous effect. This would not only be on the health of perhaps hundreds of thousands of people worldwide but could also change our current social and economic paradigms.

It is probably too early to make grand predictions about whether the coronavirus would spread rapidly and turn into a global pandemic that governments and international organisations will not be able to control.

On Tuesday, the US Centers for Disease Control and Prevention announced the "inevitable" spread of the coronavirus within the United States. The warning about a growing threat from the virus to America's "everyday life" has already sent shock waves in the financial markets and raised fears of an economic recession coming on the eve of a critical American presidential election.

But on another level, one could argue that the outbreak of the coronavirus and its possible effects may be seen not so much as a black swan event but more as a development that seems to have accelerated the process of de-globalisation. This has been going on for quite a while, so in this context, it hastens the so-called decoupling of the Chinese and the American economies.

In a way, much of the criticism directed against the growing integration of national economies into supranational structures has rested on the kinds of fears that now underlie some of the response to the virus outbreak that ignite xenophobia and encourage people to isolate themselves in their own national cocoon. Such criticism includes the opening of national borders to the free flow of products, finance, and people; and in particular, of the incorporation of China into the global economy.

Indeed, if you are a nationalist firebrand arguing that trade with China and other emerging economies has devastated American manufacturing - and also that immigration from Mexico and Central America has brought into the country more criminals and rapists; and that all Muslim migrants are potential terrorists - the outbreak of Covid-19 in Wuhan, China can help you make the case for protecting the national borders from devastating foreign threats that are not unlike a dangerous virus.

So it was not surprising that conspiracy theorists on the political right have been using social media to spread unsubstantiated reports that Covid-19 was manufactured in a biological weapons factory in Wuhan.

Conservative call-radio broadcaster, Rush Limbaugh - who was the recipient of the US Medal of Freedom during President Donald Trump's recent State of the Union address - told his audiences that China has "weaponised" the virus as part of a strategy aimed at the US leader, and in response to the trade war he has launched against the Chinese.

These accusations seem especially ludicrous if one takes into consideration that the Covid-19 outbreak epidemic in China has already had devastating effects on that country's economy - and as well as on the economies of other countries impacted by the virus.

Indeed, factories in China have closed down, and multinational corporations such as Apple have shifted their production elsewhere. This comes as American companies' supply chains have been shattered, and they are now being forced to move them closer to home. All of that may sound like a dream come true for your American China basher and/or average anti-globalisation activist on the political right or the political left. Hey, the Chinese are not only stealing our jobs; they are also making us sick!

Discussing the impact of the coronavirus outbreak during a TV interview last month, US Commerce Secretary Wilbur Ross predicted that it would lead to economic decoupling between the United States and China. And that, he told Fox Business News, would hurt China economically while its impact on the US economy would be minimal. "I think that it will help to accelerate the return of jobs to North America - some to the US, some to Mexico," he said.

From that perspective, the shutting down of Chinese firms as a result of the virus epidemic may be good news for American economic nationalists. This is much in the same way that the spread of the virus to Italy and other parts of Europe - which is forcing governments to close their borders to tourism and commerce - should cheer up nationalists and those who promote xenophobia and racism. And those who have been fighting against the integrating and liberalising power of the European Union (EU) while calling for tougher controls over immigration, tourism and trade can take a break.

But in reality, as opposed to the nationalist fantasies, the only way to contain the spread of the coronavirus and ensure that this will be effective is through cooperation between national governments and the empowerment of international organisations such as the World Health Organization (WHO). This involves allowing medical experts - whether they are Americans, Chinese or Europeans - to monitor the spread of the virus and to develop vaccines to help fight it.

Also, consider and realise the nightmare scenarios that could result from a failure to contain the spread of the virus. This includes a severe curtailment of air travel and international tourism; the collapse of global commerce; the closing down of factories around the world and growing unemployment; giving rise to tension between nations. That should help convince people that with all the challenges that globalisation seems to have posed, without it life on planet earth would be - to quote Thomas Hobbes - "solitary, poor, nasty, brutish and short".