COVID Competition

Strategic Vision vol. 10, no. 51 (December, 2021)

Vaccine nationalism complicates efforts to foster Asia Pacific cooperation

Man-Jung Mignonne Chan

Rwandan President Paul Kagame listens to Xi Jinping during the China-Africa Summit on Covid-19.

photo: Paul Kagame

The Asia-Pacific Region is facing an era of challenges. These challenges include the need to maximize the Regional Comprehensive Economic Partnership (RCEP) agreement, US President Joe Biden’s approach to the Indo-Pacific strategy, and the economic slowdown due to the ongoing responses to the COVID-19 epidemic. The vaccine supply chain is also taking a drastic turn, from vaccine nationalism to competing vaccine diplomacy. Most Asian countries are reluctant to take sides amidst increasing Sino-US competition. The prospects for a post-COVID-19 future in Asia will rest on a well-coordinated health policy and economic policy, within and across borders. The intriguing geopolitics and geoeconomics is evident in the case of desperately needed vaccines and should serve as a catalyst for further collaborative efforts. In the upcoming post-COVID era, US-China collaboration in engaging the Asia-Pacific region would benefit all. Any great power competition should be put in perspective, and conflict resolution conducted in good faith will serve the region well in the years ahead.

The RCEP signed on 15 November 15, 2020 is a significant commitment by the 15 Asian members. Even without India, it will forge continuous economic integration, and will welcome India when ready. RECP is considered a major catalyst for economic recovery in the post-COVID 19 era.

RCEP is significant for a number of reasons. First, it symbolizes the signatories’ commitment to deepening regional integration. The People’s Republic of China (PRC), Japan, and South Korea stand to benefit the most from increased exports. The increase in Chinese exports will account for nearly 50 percent of the total export growth of all RCEP members, and it will help offset the economic blow dealt to China by the administration of former US President Donald Trump by reducing China’s export reliance on the United States. Third, it is a high-standard agreement which aspires to fulfill Global Value Chain guidelines. The Investment chapter applies a negative-list approach and allows a mere 40 percent local content requirement for services, and it will serve as catalyst for domestic regulatory reform.

Unprecedented challenges

The supply chain disruption that followed the COVID-19 responses presents unprecedented challenges. Whereas countries with closed-border policies will face a slower recovery and experience more social discontent, inadequate health policies will fail to contain the spread of the virus, and thereby stem the devastating casualties. Governments are facing the dilemma of continuous lockdowns, which bring economic downturns, stagnant tax revenues, and the need to subsidize severely hurt sectors. There have been many calls for coordinated health and economic policies, particularly in the area of international cooperation, not only for fair and equitable distribution of medical supplies, equipment, and distribution of vaccines, but also for quicker global economic recovery by gradually lifting restrictions on international travel and trade flows. Closed economies will face a slower recovery and a future of lower incomes. International economic cooperation will be vital to managing the crisis and to supporting recovery through trade, stabilizing markets, faster reopening of business supply chains, and a lowering of investment costs.

In the beginning of the COVID outbreak, there was a sentiment of vaccine nationalism, wherein governments signed agreements with pharmaceutical manufacturers to supply their own populations with vaccines ahead of them becoming available for other countries. Wealthy countries such as Britain, the United States, Japan, and the European bloc had procured several million doses of the most promising vaccines. At the height of vaccine nationalism, the United States, the European Union, and India initially all placed embargoes or administrative impediments on the export of vaccines and put global access to critical vaccine inputs at risk. In August 2020, Tedros Adhanom Ghebreyesus, director general of the World Health Organization (WHO), stated, “Whilst there is a wish amongst leaders to protect their own people first, the response to this pandemic has to be collective.”

Residents of Kaoshiung, Taiwan, receive vaccinations against Covid-19.

photo: Xuan Shi-cheng

The alternative is a global vaccine program, and this is what the WHO aims to do through COVID-19 Vaccines Global Access (COVAX), a global facility set up in April 2020 to speed up the development of medicines to treat COVID-19, and make them available everywhere. Vaccine nationalism has been gradually reduced with sufficient vaccine manufacturing. Many countries have donated vaccines following China’s spotlighted vaccine donation, also known as “vaccine diplomacy.”

China has so far scored high in vaccine diplomacy, with PRC President Xi Jinping having pledged to provide Chinese vaccines as a global public good. This stands in contrast to the vaccine nationalism approach still largely employed by America and the European Union. Chinese companies stand ready to make licensing deals for vaccine production in foreign countries. For instance, Sinovac’s CoronaVac has made Indonesia a regional hub via its state pharmaceutical company BioFarma. The United Arab Emirates also built up its native vaccine production capacity by conducting phase III clinical trials for SinoPharm.

Leveraging vaccine donations

The government of Taiwan has criticized the PRC for leveraging vaccine donations to pressure many of the nation’s diplomatic allies—especially those in Latin America, such as Honduras and Paraguay— into switching their allegiance, as Taiwan itself faces a vaccine shortage. Given the incompatible perceptions on their prior established consensus across the Taiwan Strait, Taiwan’s participation in the WHO and Taiwan’s acquisition of vaccines have encountered some hurdles, to say the least. Taiwan has also banned China-manufactured vaccines, blocked vaccines from abroad intended to be imported by charity foundations or by local governments in the name of protecting the domestic vaccines. This generated discontent against the central government.

India provides a donation of Covid-19 vaccines to the Seychelles.

photo: Salifa Magnon

This discontent has eased off slightly since the announcement of a donation of 750,000 vaccine doses from the United States, and 1.24 million from Japan. The PRC had permitted Taiwan to participate in the World Health Assembly (WHA) while Ma Ying-jeou was president of the Republic of China (ROC), but when ROC President Tsai Ing-wen was elected in 2016, Beijing used its influence to put an end to this participation. This put Taiwan on the front lines of global criticism of China on a variety of issues, such as the origin of the COVID-19 virus, Beijing’s initial mishandling if it, and PRC control over the leadership of the WHO. Unfortunately, these criticisms will not resolve the issues. Negotiation in good faith seems more appropriate for dispute resolution in this case.

Instead of disavowing vaccine nationalism at their June 2021 summit, G7 leaders engaged in matching the influence of China and Russia in Asia and Africa. Biden signed onto COVAX, which Trump had earlier rebuked, and is keen to make the best out of multilateralism.

The Quadrilateral Security Dialogue (the Quad), composed of Australia, India, Japan, and the United States, is embedded in the Indo-Pacific strategy. At the Quad summit in March 2021, the United States pledged to produce at least one billion doses for the Indo-Pacific region by 2022. Obviously, this is a move to balance China’s vaccine diplomacy.

The vaccine supply chain in Southeast Asia has encountered major challenges, including capacity shortcomings, insufficient logistics for vaccine acquisition, safe and effective storage, and equal distribution. Cambodia has been battling an aggressive COVID outbreak. Cambodia’s Prime Minister Hun Sen on May 20 this year, speaking online at Nikkei’s Future of Asia conference, stated, “If I don’t rely on China, who will I rely on? If I don’t ask China, who am I to ask?” Hun Sen defended his close relationship with China, pointing to Beijing’s substantial financial support. New Zealand’s Minister for Trade and Export Growth also expressed his country’s aim to build on business with its No. 1 partner, China, while reserving the right to address concerns of human rights later, at the appropriate time and place.

“China remains the top investor in many Asian countries, and is still charting out various alternatives to diversify supply chains.”

Despite the disruptions caused by the US–China trade and technology wars, and the Biden administration’s diplomatic anti-China campaigns around the globe, David Dollar of the Brookings Institution points out that “US trade data shows only a small decline in imports from China (3.6 percent), Americans clearly still want Chinese electronic products, medical equipment and protective gear.” However, China’s direct investment in advanced economies (the United States, the European Union, and Australia among them) is taking a big hit where tightened security screening and investment restrictions cut investment inflows by more than 50 percent between 2016 and 2019. Nevertheless, China remains the top investor in many Asian countries, and is still charting out various alternatives to diversify supply chains. China is maximizing on its legitimate right to elevate its own national development in ways that will work contrary to US expectations. Be it “wolf warrior diplomacy” or “vaccine diplomacy,” leaders in Beijing will no doubt continue to take their own approach to national development. This is taking place even as the Asia-Pacific, and the world, continue to face dramatic challenges from COVID-19, and so the most essential mission will be for them to remain open to forging healthy competitive and collaborative relationships.

Dr. Man-Jung Mignonne Chan is currently Chief Strategy Officer of Healthy Asia Inc. & Senior Advisor to Chinese Taipei APEC Study Center. She can be reached for comment at d7155@tier.org.tw