Top Updates: ASX Defy Pessimism, Country’s efforts on Flattening the COVID curve

The coronavirus pandemic has brought to the fore many of the shortcomings in the British healthcare system. In the most recent case, it has been found that many of the ventilator systems that were imported into the country are not performing up to the mark and that they could cause death. The problem though, could not have been highlighted during normal times, but now that the country is in a healthcare emergency and ventilator are a necessary requirement to save lives, this issue is getting prominence. It is not that the United Kingdom is not capable of manufacturing good quality ventilators, but the benefits of international trade that the country has enjoyed over past many years has created massive structural gaps in many of the sectors, and this instance of faulty ventilators which were imported from China, is just a manifestation of that. The United Kingdom is currently the fourth most severely impacted country in the world by the coronavirus pandemic with nearly a 171,000 people being infected so far out of which at least 26,500 have already succumbed to it. The entire country is in lockdown, and the NHS is currently working tirelessly to contain the spread of the infection and save as many lives as possible from those infected.

China is a major trading partner of the United Kingdom. In order to be internationally competitive, the United Kingdom started to import commodities which are expensive to produce in the country but can be imported cheaply from there, and the production capacity that got freed up in the country was utilised to produce high value-added products. This idea, while seems good from an economic point of view, created massive structural deficiencies in the country. There were several industry types and manufacturing sectors which started to diminish in their size, capacity and technological capabilities in the process. Even the skill sets of the local workmen started to wither away due to many of their services being entirely imported from foreign countries. In short, the British economy, while it became more competitive in international trade also became dependent on its many of the critical sectors whereby rendering itself vulnerable.

Chinese goods world over are not known for their quality, but the country sure knows how to produce and sell goods at low prices and that too in huge quantities. In these times, when the entire world is swamped in fear of the coronavirus pandemic, critical healthcare equipment has been in short supply in almost every country. Taking advantage of the situation, Chinese companies have been sending their equipment to several such needy countries. However, the experience with this equipment with almost all of them have been similar as is being witnessed in the United Kingdom. There have been instances when the Chinese supplied millions of testing kits have been returned because they have been giving very varying results in the detection of the virus in suspected cases. The risk in using these faulty kits is that if any infected case goes undetected, then they pose the hazard of infecting many other people, whereby making the very purpose of detection and prevention faltered. Till now there is no such word in the United Kingdom of either usage of Chinese testing kits or finding any of the faulty kits, and given the experience with the ventilator equipment it could very well be in the country’s interest to avoid the testing kits as well.

The British dependency on Chinese goods has increased in the past couple of years. Till 31^st January 2020, the country was a part of the European Union and traded largely with other European Union member countries who helped it maintain its competitive edge, but with the pullout of the country from the Union, the situation drastically changed. The supply lines that had been established between trading partners within the European Union over more than forty years was suddenly broken, so in their desperation to find alternatives British businesses started to scope outside and by sheer luck or highly competitive pricing landed in the lap of China. However, this association with China has not been working to the advantage of the British business who have time and again been suffering because of quality control and delivery schedule issues.

Since the time pandemic has broken in the world, the losses attributable to British companies due to their association with China has been massive. Right from the loss of production in the United Kingdom, to loss in direct revenues attributable to companies who operate in China, to the general merchandise traders who source a major part of their inventory from that country all have been severely affected due to the stoppage of goods from that country. Given the way the pandemic situation is panning out, it is very difficult to predict when will the supply situation in China is going to improve.

This case of faulty imported healthcare equipment should be seen as a wakeup call for the country. The present Prime minister Boris Johnson has been an advocate of reskilling and bringing back skilled jobs to the country. Prime minister Johnson has also been a big advocate of the United Kingdom separating away from the European Union, and he has more often than once said that increasing the skillset in the country, investing in the technological development and bringing back manufacturing activities to the country that had once migrated is the way forward to bring greater prosperity to the country. The current example of faulty ventilator equipment emphasizes on that sentiment.

There are several medical equipment manufacturers in the United Kingdom who are capable of manufacturing and supplying this critical equipment to the health care providers in the country. The two drawbacks that may be faced would be that of price, as British manufactured equipment may be more expensive than Chinese imported ones and the second one would be that they may not be able to supply in adequate quantities as is being required right now, due to the manufacturing capacity constraints.

The incident highlights the essence of self-reliance, and also a relook at the trading dynamics of the country where over-dependence on a single source of supply may not be an advantage of the country. Meanwhile, the whole country is waiting, holding its breath for the pandemic to be contained, the lockdown to be relaxed and for them to be able to come out of their houses and go about their businesses.