Foreign ministers Association of Southeast Asian Nations (ASEAN) and China discussed the outbreak of the Coronavirus Disease 2019 (COVID-19) at the special meeting in Vientienne, Laos, on Thursday (02/20) - Photo by ASEAN Secretariat Office

JAKARTA (TheInsiderStories) – Foreign ministers Association of Southeast Asian Nations (ASEAN) and China discussed the outbreak of the Coronavirus Disease 2019 (COVID-19) at the special meeting in Vientienne, Laos, on Thursday (02/20). The officials meet in order to prevent and eradicate the epidemic in the region.

“The COVID-19 outbreak has become a global challenge that knows no national borders, we have no choice but to collaborate,” said Indonesia’ foreign minister, Retno Marsudi in an official statement released today.

She conveyed three important steps to enhance the collaboration in the region. First, close coordination between the countries to control and minimize the impact of the COVID-19 outbreak. Indonesia proposed a hotline communication between the two parties to exchange the latest information on the epidemic.

Secondly, the ASEAN – China mechanism in dealing with endemic crises such as COVID-19 must be strengthened. Indonesia proposed the establishment of the ASEAN – China Ad-Hoc Health Ministers Joint Task Force.

Marsudi emphasized that the task force could focus on cooperation to exchange information and data, especially the handling of the COVID-19 outbreak, a meeting of expert teams and to encourage joint research and production for virus and vaccine detection. And third, strengthening communication strategies is a must.

In recent days, the Chinese central government has signalled confidence in containing the ongoing coronavirus outbreak. On Feb. 17, premier Li Keqiang, said “the likelihood of wider outbreak has been avoided”.

While, President Xi Jinping’ public and personal take-up of leadership in containment efforts, in addition to the high-profile replacement of senior party leaders in Hubei and Wuhan, indicates that the central government is confident with the coronavirus’ spread being under control within government estimates.

Currently, Chinese scientists forecast that new cases will peak in late February, with the outbreak ‘over’, likely referring to a stable period of no new cases, by April 2020. The central government has continuously emphasized the importance of work resumption to minimize the impact on economic growth, with the most recent Politburo Standing Committee meeting highlighting the need to “balance epidemic control with 2020’s social-economic development targets”.

This gives local governments, especially in localities without severe outbreaks, political incentive to accelerate the resumption of business activities, particularly manufacturing where on-site work in production lines is essential, as soon as possible. Local governments are likely to aim for near-full resumption after April 2020 on the condition that they are sure that infections are under control.

A key indicator, besides a continuous decline of daily new cases outside Hubei, will be the government allowing foreign experts, especially United States Centers for Disease Control and Prevention personnel, to enter China and help with crisis response.

Conversely, if the “Two Sessions” annual policy meeting of the National People’s Congress and the Chinese People’s Political Consultative Conference, currently delayed to an unspecified date, is significantly pushed back to beyond April or May, it will indicate that the central government remains cautious about local governments’ containment effectiveness and will suggest that full work resumption nationwide will be unlikely.

IHS Markit rated, localities in mainland China with low infection statistics or those that are relatively more confident in keeping the outbreak under control will probably allow businesses to return to normal rapidly, possibly within Q1 2020. There would be a strong political incentive for local governments to resume business activities, assuming that they have contained the outbreak.

However, the lifting of all travel restrictions and full resumption of normal operations are unlikely unless there are no new cases nationwide for at least two weeks – the most recent estimated disease incubation period.

IHS Markit expects the impact on global GDP will be limited, resulting in a 0.1 percent reduction in global GDP growth in 2020. China’ annual growth rate will be reduced by 0.4 percentage point, to 5.4 percent in 2020.

However, if the Chinese authorities fail to contain the major outbreak in Hubei province and confinement measures outside Hubei resume for three weeks and are lifted progressive thereafter, the resulting economic impact will be concentrated in the first half of 2020, with a reduction of global real GDP of 0.8 percentage point in first quarter and 0.5 percentage point in the second quarter.

In this scenario, the coronavirus and resulting measures will reduce global real GDP by 0.4 percentage point in 2020.

By Linda Silaen, Email: linda.silaen@theinsiderstories.com