Joaquin Monfort | October 22, 2020
In this update, we focus in on the country where it all started - China, and the impressive way in which it has managed to limit the virus’ spread and turn around its economy, as well as the link between levels of Covid news about the U.S. elections and candidates’ winning chances.
Go To Coronavirus News Monitor
China had the highest number of cases at the start of the pandemic but it has since shown remarkable success in combating the spread of the virus and is now ranked 54th for total cases, with 87,415, placing it under even Switzerland.
The country’s overall News Sentiment Index is also relatively high, recently retouching its 3-month peak, further reflecting the positive news about the county’s handling of the epidemic and recent upbeat economic releases.
After a disastrous Q1, GDP rebounded strongly in Q2 and consolidated its recovery in Q3, with growth coming in at a still relatively solid 2.7%, albeit just below expectations. In addition, an incredible 8.0% growth rate is now estimated for 2021, according to the IMF.
Investors can independently assess Chinese GDP using models based on RavenPack news sentiment data, according to research .
Sentiment models have provided more accurate and timely forecasts of future Chinese GDP than standard methods using higher-frequency macro-economic indicators.
Critics have argued that the Chinese economic rebound is predominantly ‘production led’ and consumption remains subdued, but part of the reason for that is that China exports have remained relatively sturdy because it is a major manufacturer of much of the biotech being used to combat the virus - protective clothing, face masks, test kits, for example.
Cash-strapped citizens of western countries are also now more likely to buy Chinese because they are usually competitively priced, further helping exports.
Chinese government aid has been predominantly aimed at revving up production rather than in the form of handouts to individual citizens.
One fear, however, is that as lockdown measures resume in other countries, Chinese exports will eventually suffer.
Taken in the round, and when compared with the rest of the world, however, the Chinese recovery still looks nothing short of miraculous.
This begs the question, how did China manage to bring the Coronavirus under control so quickly enabling such a swift return to business as usual?
China already has experience in combatting respiratory diseases after fighting the SARS-Covid-2 epidemic which broke out in Southern China in the early 2000s, so it is battle-hardened.
It has a pre-existing infrastructure, or “centralized epidemic response system”, and a higher preparedness amongst the population, according to a recent article in the Lancet, a leading medical journal.
“Most Chinese adults remember SARS-CoV and the high mortality rate that was associated with it,” says Talha Burki, in The Lancet.
The speed of China’s response was also key. Within weeks it had locked down the whole of the Wuhan province and tested 9 million adults - an unprecedented achievement.
China was also easily able to ramp up production of protective clothing, face masks, and test kits, as it was already the leading manufacturer of these items.
The prevailing influence of Confucianism with its emphasis on social duty, coupled with years of totalitarianism meant a more compliant population ready and willing to accept privations and curtailments for the sake of the greater good.
“In China, you have a combination of a population that takes respiratory infections seriously and is willing to adopt non-pharmaceutical interventions, with a government that can put bigger constraints on individual freedoms than would be considered acceptable in most Western countries”, says Gregory Poland, Director of the Vaccine Research Group at the Mayo Clinic (Rochester, Minnesota, USA).
The Chinese used novel new technology surveillance measures, with drones patrolling and rebuking citizens for not wearing masks or following other preventative guidelines.
The setting up of so-called Fangcang hospitals in large public venues such as stadiums and exhibition halls further curtailed the virus’ spread.
Fangcang’s were used as holding bays for patients with mild-medium symptoms, with those who became more severe moved to hospitals. This was unlike other countries where non-severe patients were told to self-isolate at home, increasing the risk of the virus spreading to other family members.
Finally, the Chinese population may have a natural inbuilt immunity to respiratory illnesses from increased historical exposure.
One trending topic on our monitor that has surged of late is news referencing Covid alongside “Elections”.
This is not surprising given the close proximity of the U.S. presidential election on November 3 and the controversy surrounding how the disease will impact voting mechanics.
Coronavirus has been a contentious topic during the election campaign, with Biden advocating a tougher response and Trump defending his more liberal approach.
RavenPack has developed a dedicated media monitor for the elections which also enables deeper analysis using a charting and comparison tool.
Comparing the share of the news about Covid for each candidate with their winning chances throws up some interesting relationships which seem to echo themes widely believed to have impacted candidate approval ratings.
In the chart above, the periods during which the spread of the percentage share of Coronavirus news about each candidate widens seem to coincide with periods when Trump’s winning chances declined more steeply.
It is debatable whether this is nothing more than a coincidence, but assuming it is not, one reason for this could be that Trump simply does not come off very well when the two politicians diverge in their opinions, or when he attracts more media exposure due to specific Covid-related incidents.
One such incident, for example, was in late April when Trump made his ‘injecting bleach’ gaffe. This is highlighted on the chart above and was something that brought into question his capacity and clearly hurt his election chances.
A different dynamic seems to be at work when overall COVID-19 news (for both Biden and Trump) increases as a percentage of total news as happened during the steep rise in October.
During this period Trump’s winning chances actually improved, and - again whilst by no means scientific - one possible explanation could be that this was because of COVID-19’s expected suppressing effect on Democrat voter turnout.
Have a great day, and we’ll be back soon with more updates
Best Regards - Team RavenPack
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