Nothing is safe from superbugs — including the global economy

Stephen King
Taking precautions: with fears growing that the coronavirus will spread from China, a health official checks a woman's temperature on the underground in Beijing: Getty Images

Our fear of superbugs is based on a history that has too often revealed the innate vulnerability of our species. Wuhan, China’s seventh most populous city, may be more than 5,000 miles away but, when it comes to the historic spread of viruses, it might as well be just around the corner (in my case, that’s no idle claim, given that I was in China this month).

A century ago, the world succumbed to the Spanish flu, so named because, towards the end of the Great War, neutral Spain avoided the various reporting restrictions imposed on the belligerents. With the suppression of flu reports from nations involved in the fighting, the public naturally thought the killer influenza hailed from the Iberian Peninsula. Even if, to this day, we cannot be sure about the flu’s true origins, we now know that it was no more Spanish than it was English, French or German.

In the latter stages of the Great War, the virus quickly spread through army camps and military hospitals in which hygiene had typically gone missing in action. Soldiers often lived side by side with chickens and pigs — hardly the best conditions for preventing the spread of a particularly nasty pathogen.

It’s now estimated that between 50 million and 100 million people died as a result of the Spanish flu. It proved to be a far bigger cause of death than the war itself. In the history of killer diseases, it’s up there with the Black Death (although, proportionately, the Black Death, a bacterial infection, was considerably worse). Unlike the Black Death, however, the Spanish flu struck people living decidedly modern lives: the Ford Model T was trundling up and down the streets of Manhattan, the electricity revolution was in full swing and Charlie Chaplin’s little tramp was all the rage. Although the West was richer than ever, Mother Nature’s killer virus was still able to rampage its way across the world.

Stephen King (Alamy Stock Photo)

Modernity does not provide immunity from pathogens. Indeed, to the extent that cities are better connected to each other than before, particularly via air, we’re all living in the equivalent of a giant Petri dish. The late-Fifties Asian flu caused around two million deaths. A decade later, the Hong Kong flu led to a million dead. Over a more extended period of time, around 30 million have lost their lives to Aids, a disease that first originated in the Congo.

In 2003, Severe Acute Respiratory Syndrome (Sars), a coronavirus, seemed to offer yet another substantial threat. Thankfully the eventual outcome was not as bad as feared, partly because of draconian restrictions on travel. Economically, however, Sars was enormously disruptive. In China, retail sales growth halved at the beginning of 2003, hotel bookings collapsed and restaurants emptied out. The Hong Kong economy temporarily contracted. Meanwhile, airline passengers stopped flying both within Asia and between Asia and the rest of the world.

Tragically, dozens of lives have already been lost thanks to the new coronavirus hailing from Wuhan (or, more specifically, one of Wuhan’s live animal markets). President Xi has described the situation as “grave”. And, in a bid to contain the virus, many millions are now trapped in Hubei province.

Wuhan, Hubei’s capital, is similar in size to London yet, unlike here, no one is going in and no one is getting out. Imagine that those living or working in London suddenly found themselves trapped indefinitely within the M25. That, in effect, is Wuhan’s fate. Like London, however, Wuhan is a city that normally enjoys major connections with the rest of the world. There are typically a dozen flights a day to Shanghai, 10 to Beijing and departures to (and arrivals from) Hong Kong, Taipei, Bali, Phuket, Istanbul, Moscow, Sydney and London. It’s no wonder, then, that health authorities in other countries are jittery. Beijing might have shut the stable door but evidence suggests the coronavirus may already have bolted.

This, in turn, suggests that we’re in for a period of necessary economic disruption. Our commercial ecosystems are complex, geographically diverse and, when nasty viruses turn up, incredibly fragile. Containing a virus is likely to be successful only if the free movement of people (and, hence, goods) is restricted — one reason why Wuhan is living under siege conditions.

Imagine if those living or working in London were trapped there indefinitely. That is Wuhan’s fate now

Restricting movement is, economically, the equivalent of a company losing the services of an important supplier. Following the 2011 nuclear disaster in Fukushima, global car manufacturers discovered, to their discomfort, how dependent they were on the 40 per cent of the world’s microcontrollers manufactured by Renesas Electronics at a plant so close to Fukushima that it had to shut down. Containing the spread of a virus could be the equivalent of many thousands of such “shutdowns”, in which the connections that have kept the world economy ticking over are temporarily severed.

The eventual impact on economic activity will depend on how infectious and lethal the Wuhan coronavirus proves to be. As we cannot easily know the answers at this stage, it’s reasonable to conclude that uncertainty, the great unquantifiable constraint on economic activity, is also likely to play a role.

The irony is that, to date, the biggest constraint on economic activity is not caused by Mother Nature but, instead, by our fellow humans. The coronavirus may end up reducing economic and financial connections still further but the process was under way long before Wuhan hit the headlines.

With the exception of major downswings, world trade typically expands every year. Last year, as Sino-US trade tensions increased and other countries embraced protectionist policies, world trade contracted. The coronavirus may make things worse. So far, however, our economic woes are mostly self-inflicted, not the work of Mother Nature.

Stephen King (@kingeconomist) is HSBC’s senior economic adviser and author of Grave New World (Yale)