COVID-19 Maybe the New Bone of Contention Amid the US China Trade Feud

  • Jun 22, 2020 AEST
  • Team Kalkine
COVID-19 Maybe the New Bone of Contention Amid the US China Trade Feud


  • Rumours around resurgence of second wave of coronavirus in Beijing surfaces, as authorities shut down PepsiCo's food processing facility to stop food production and distribution for containing the virus as several workers tested positive for COVID-19.  
  • China suspends poultry imports, on temporary basis from a US farm where workers tested positive for COVID-19, just a day after President Donald Trump blamed China responsible for the recent US economic troubles coming up as a result of the virus.
  • Lockdown and social restrictions eases across the globe as countries prepare to reopen and economic activities pace picks up.


Over the past six months, as 2019 Novel Coronavirus (COVID-19) turned into a pandemic taking the whole world by a wave of shock and uncertainty, various conspiracy theories have been brewing around its origin such as its prediction in a novel, (which is perhaps the scariest one and did come true). The virus causing biggest humanitarian crisis, COVID-19, and it being a bio-warfare weapon, speculations around its origin in the sea-food market, was substantiated by the World Health Organization (WHO) and Chinese Health authorities, and several other theories.

According to the popular belief, the virus seemed to have developed in a vet market of the Chinese city of Wuhan in November 2019, and the fact that the Chinese government did try to suppress the attempts of whistle-blowers, ascertains the popular proverb, there’s no smoke without fire.

Covid-19 second wave to escalate the US-China Conflict?

After having recorded a significant death toll globally, as multiple countries have begun to lift social distancing and lockdown restrictions to reopen their economies, and bring people back to work, it is being reported that a second wave of virus may be breaking out in Beijing with a few number of cases recorded of late.

Recently, China has reportedly suspended the imports of poultry, on temporary basis, from a US farm where workers were reportedly infected with COVID-19, just following the day when President Donald Trump held China responsible for recent US economic troubles, quoting that China had “sent them the plague.” In fact, operations at PepsiCo's food processing factory in Beijing have also been shut down as authorities put a halt on food production and distribution to contain the new wave of virus as several workers apparently tested positive for COVID-19.

Do Read: Suspicions of the Second wave of coronavirus rise in China

The spread of the virus came in just when the United States and China were already struggling with reaching a mutually beneficial trade deal. The US-China trade conflict had already taken a toll on the global exports market since 2018.

Around end of May 2020, amid all the ongoing tensions between China and the US due to apparent mismanagement of COVID-19 by China, as perceived by the majority globally, President Donald Trump threatened to quit the WHO and discard the special status given to Hong Kong via imposition of various new controls. This further built on the prolonged trade conflict between the two countries and the US also announced revaluation of the accounting practices of Chinese companies listed on the US.

China and the US have probably recorded the highest number of deaths caused by COVID-19, which has also largely impacted their respective economic health. On top of that, due to prolonged trade conflict between two of the greatest economic superpowers in the world, their global competitiveness has also been adversely impacted with no foreseeable resolution in sight.

With over 82,926 confirmed cases and death toll reaching 4,633 (as recorded in May 2020), China did survive a withering blow from the virus and recorded steep decline in its economic output. However, the Central Bank announced only modest policies to cope with the crisis considering the country’s strong economic resilience and great potential.

Both China and the US slipped down on their world competitive ranking for 2020 in the Institute for Management Development’s (IMD) survey. This is because the ease of doing business and trade has not been smooth. Singapore, however, remained the topmost competitive economy for the second year in a row.

Nevertheless, the loosening of lockdowns and falling coronavirus cases in the US has encouraged modest uptick in economic activity, and thereby, instilling some sense of hope and optimism around eventual economic recovery. Recently, US President Donald Trump announced his plans for a ~US$ 1 trillion of infrastructure funding to uplift the world’s biggest economy and support development of roads, tunnels, bridges, and even 5G wireless infrastructure and rural broadband. Reportedly, this new funding would perhaps be a component of phase four of the US financial aid for COVID-19, with no official statement been made, as of yet.

World Response to COVID-19 and Economic Recovery

It is no doubt that virus is a powerful foe and market recovery is going to take time, however, government intervention has been a key element in avoiding a market failure, and maintain a more equitable distribution of resources in trying times like these. To cope with this unpredictable and unprecedented situation, policymakers in all major economies have been working without a playbook given the unconventional nature of the problem.

The Purchasing Managers Index for May 2020 has indicated that the global economy is declining at a slower pace than it did in April 2020, but social distancing continues to pressure the service sector and consumers are still cautious to move around due to the virus, causing subdued recovery in tourism and other hard-hit industries. 

Countries like New Zealand and Australia have been proactive in containing the virus and have already begun to reopen their economies, kickstarting into their journey of recovery on the back of the extensive government financial stimulus packages been released over the past three months. Australia recorded less than 100 coronavirus deaths with over 7000 confirmed cases and no single case recorded in the last few weeks. With a sharp focus on avoiding a second wave of infections, the country is only gradually relaxing lockdown and social distancing measures to send people back to work and get the businesses operating again.

Good Read: Charting Out Australia’s Path to Recovery, Are There Any Bright Spots?

Currently, the transition to reopening economies is a major challenge for countries and even though people are eager to restart their normal lives, the situation requires regular monitoring by public health officials and companies must temporarily leave behind their competitive interests.




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