The disease of authoritarianism

Don’t judge a book by its cover…

A monkey in silk is a monkey no less…

You can’t put lipstick on a pig…

A plethora of well-known sayings and bits of wisdom have trained us not to trust appearances. That’s because what you see, isn’t always what you get.

For the Communist Party of China (CPC), however, perception is everything. For the CPC, the perception of security, stability and prosperity are more important than the reality.

That is why the story of the party’s handling of the coronavirus outbreak is so interesting.

It’s one of the classic ironies of communism and hard-left socialism. They start out as idealists, working for the greater good and the welfare of the majority. It’s all about the people, the workers, improving their lot.

But in the end, they end up holding on to power by whatever means necessary, while corruption and decay grow in their territories, subverting media, controlling truth and knowledge.

In China, the CPC preferred to detain and intimidate doctors and medical researchers rather than helping them to prepare to respond to the outbreak.

To stop them telling people about the coronavirus, rather than to equip them to save people from it.

That’s why, on 30 December, the Wuhan Health Commission issued an order to hospitals and clinics strictly prohibiting the release of any information about treatment of this new disease. At that point, the government was still denying any cases of human-to-human interaction, though they knew that wasn’t the case.

On 11 January, Chinese scientists confirmed that a new strain of flu, coronavirus, was responsible for the outbreak in Wuhan, and the CPC informed the World Health Organisation with all haste. For its people though, a longer wait was in order.

In Wuhan it was a big week in politics, with some large-scale annual meetings taking place for party officials.

And up until 17 January, the Wuhan tourist authority continued to promote the Spring Festival, encouraging millions to travel to the city for its celebrations.

It was only nine days later, when Xi Jinping issued his official instructions on dealing with the outbreak, that reality finally caught up with the people of Wuhan.

Seven days of annual meetings in the city had seen no mention of the virus. Moreover, information had been deliberately quashed until then, which is how new cases for the virus went from 0 every day to 136 all of a sudden.

Within 72 hours, the city had been quarantined.

China has in some corners been praised for its rapid response to the crisis – look at that 1,000 bed hospital that it built in seven days! Look how decisive it was in quarantining Wuhan! Wow, isn’t China capable of such amazing things! Look at all those diggers in one photo!

But that covers a murkier truth, that China’s first response was to quash any spread of information, and to pretend that everything was okay.

Only because its first response was so misguided and detrimental to countering the virus, has it been forced into a wildly opposite and massive overreaction.

It is in a hole of its own making, and the extreme quarantining of whole cities is not “swift and bold action” but a panicked, ill-prepared, face-saving move to try and cover for its past mistakes.

The gating of Wuhan, where the virus is thought to have originated, is not some epic display of China’s incredible power.

There was no plan. It was botched and fudged from the start, and hasn’t been followed up with any meaningful action to help the city’s residents.

It was announced at 2am but carried out at 10am. That gave a huge window to prompt residents to get out of there. That allowed roughly 1 million potential sufferers or carriers of the virus to spread across China in a flash, and nothing has been done to trace, help or quarantine them.

In the city itself, shortages are growing, food and medicine prices spiked and continued rising as shrinking supply met rapidly increasing demand. Most supermarkets were cleaned out by lunchtime on 23 January, the day of the quarantine.

A local journalist writes this,

The entire city is silent. The traffic lanes, usually jammed with vehicles, are empty. All public places are now inaccessible. No one is associating or organizing get togethers. There is no sense of community. No public life. We are all atomized individuals, living in isolation in our own homes, passing the time watching the television, or glued to our mobiles.

In this dead silence, fear spreads. Senior government officials are certainly living in fear. And just how afraid are they? After announcing the closure of the city, they failed to present contingency plans of any kind; and they have failed since to offer up any plans for future action.

When a local journalist wrote online “Wuhan must immediately change out its commanders”, it went briefly viral before his post was expunged, while his paper disowned him and wrote a letter of apology to the CPC Committee. In China, even in these times, loyalty comes before reality.

Another journalist, investigating the fish market where the virus originated, was beaten up by four security guards. Journalists cannot get anything out of doctors, and are blocked from meeting any sources.

The Chinese Centre for Disease Control and Prevention has issued an order saying that: “[Medical personnel] must not, under any condition, accept media interviews, and must not leak information about the outbreak to the outside. No one can accept interviews, even if journalists promise anonymity and agree to protect their sources.”

So while the scientists did a remarkable job at discovering, isolating and combatting the new strain of coronavirus very quickly (a couple of weeks in December), politics immediately took over. This meant that preventative measures were stifled by a desire to say “this can’t be talked about, nor that, we must maintain stability”.

The avoidance of opposition and protest comes before anything else, even the suffering of its citizens.

All this leads us back to the original point.

For the CPC, appearances matter more than reality.

It was more important to put makeup on the patient than to try and administer his wounds.

It’s reminiscent of when large parts of East Berlin’s budget went on glamourous architecture overlooking the wall (ie, the only thing West Berliners could see), while millions suffered and struggled across the city and East Germany.

The pretence of prosperity was more important than creating prosperity.

It’s true in North Korea, it was true in Russia, there are signs of it in China too.

Of course, China has witnessed a few decades of incredible growth, and has lifted more people out of extreme poverty than anyone at any point in history. Its achievements have improved the lives of hundreds of millions of people and it is important to remember that even as we criticise it.

So its achievements are remarkable but the country seems to be coming under strain nonetheless.

GDP growth is slowing and this new virus outbreak certainly won’t help.

In Hong Kong we are seeing reality meeting appearances, and the clash is unpleasant for all to see.

In Xinjiang, which my esteemed colleagues have written about brilliantly here, the extent of the human rights atrocities being committed against Muslim minority Chinese citizens beggars belief. Everyone who has looked into it in any depth doesn’t hesitate to compare what’s happening there to what happened to the Jews in Germany in the Second World War. If you haven’t read that piece, I cannot advocate it strongly enough, it’s vital to be aware of what’s happening and to spread the word where possible.

The coronavirus and the CPC’s response to it is now the fourth major warning sign that all is not well in China.

Growth is slowing, the West is waking up to its authoritarian hold on its people, and soon the wave of protest at the terrors in Xinjiang will add to the cascade of anti-China rhetoric. Add in a viral epidemic shuttering borders and even entire cities, and we have a potent recipe for trouble in China.

What form will it take? Who knows, but options include a separation of China from the world economy as a protest by the West at its actions.

Or if China’s economy or stockmarkets collapse, they would easily pull the rest of the world down with them.

While I don’t expect the coronavirus to be as bad as the Spanish flu or the plagues of the Middle Ages (as I explained in yesterday’s article), It will definitely get bad even if it’s not devastating, and if word gets out that the government knew about it for weeks and just did nothing, but actively blocked helpful information about treatment and prevention getting out, this will of course add to the feelings of resentment held by the Chinese people.

The coronavirus highlights that the CPC’s response to failure is inept. It cannot actually handle failure, as its bargain to the people is reduced freedom for healthier and wealthier lives.

But with Hong Kong, Xinjiang and slowing growth starting to stick out as major failures by the CPC, its ineptitude at handling failure will be a key factor to watch in the coming months and years.

They key point was made by my good friend and colleague, Boaz Shoshan, in the office yesterday.

Because the CPC is authoritarian, violent and intent on maintain the visage of serenity, why would anyone provide information that they don’t want to release?

Why would anyone, even the people reporting facts from the lowest level – data on patient numbers, etc – give data to the party which makes it seem far worse than the party wants to portray?

All you are doing is singling out that you have dangerous information, information that the CPC will go quite far to stop you releasing. Much easier, and safer on an individual level to just say “yep, all clear at this end”, and get on with your day.

That’s how the problem becomes self-perpetuating. That’s why authoritarianism is eventually doomed to fail, because the feedback loops of failure and learning are absent.

Problems build, and cracks are merely papered over.

Here’s what Russell Napier, a leading investment thinker, had to say on the matter:

Your analyst is no epidemiologist and is not about to opine on the likely spread and danger of the most recent strain of the corona virus. The subject at hand, however, is how an authoritarian regime is dealing with such a virus and what it tells us about China, its information flows, and its ability to allocate resources. Authoritarian systems are not good at passing information regarding problems up the chain of command to those with the power to deal with those problems.

As John F. Kennedy once remarked, ‘Victory has a thousand fathers, but defeat is an orphan. While good news speeds on the wings of eagles, bad news crawls at the pace of the reluctant traveller“.

China cannot communicate failure to its people.

That leads it to cover up failures rather than dealing with them.

Like treating a dying man with painkillers, this does little to improve the situation.

You can’t put a plaster on a brain tumour.

But that is China’s response, and with so many problems starting to build up there, expect to read more articles like this one in the coming years.

Careful out there,

Kit Winder
Investment Research Analyst, Southbank Investment Research

Category: Genetics and Biotechnology

From time to time we may tell you about regulated products issued by Southbank Investment Research Limited. With these products your capital is at risk. You can lose some or all of your investment, so never risk more than you can afford to lose. Seek independent advice if you are unsure of the suitability of any investment. Southbank Investment Research Limited is authorised and regulated by the Financial Conduct Authority. FCA No 706697. https://register.fca.org.uk/.

© 2020 Southbank Investment Research Ltd. Registered in England and Wales No 9539630. VAT No GB629 7287 94.
Registered Office: 2nd Floor, Crowne House, 56-58 Southwark Street, London, SE1 1UN.

Terms and conditions | Privacy Policy | Cookie Policy | FAQ | Contact Us | Top ↑