by TYLER COWEN / pic by BLOOMBERG
CRITICS of US President Donald Trump’s trade war with China stress that it has led to higher consumer prices, costly bailouts for American farmers and mutual hard feelings. All these points are right as far as they go, but they don’t go far enough.
The biggest cost of the trade war — measured in lives lost, lingering business uncertainty and a longer economic downturn — is the lack of cooperation between the US and China on vaccines and other biomedical advances.
Consider the US position. Since it’s impossible to know which vaccines for Covid-19 will be safest and most effective until the clinical trials are further along and other studies have been made, the federal government has made advance purchases of seven vaccines. By pre-purchasing a portfolio of vaccines, the US can ensure that when the time comes to ramp up production, the companies will be ready.
The current portfolio is multinational, including investments in Pfizer Inc, Sanofi SA, AstraZeneca plc and Johnson & Johnson. Ideally, there should be at least one Chinese vaccine included, but there is not.
Obviously, given the rhetoric of the current administration, using a Chinese vaccine would be politically difficult. You can’t call it “the Chinese virus” and then tell Americans they ought to take a Chinese vaccine. So, the Trump administration has made no serious effort to make a vaccine-sharing deal with China.
Early in the process, some US observers went so far as to sneer at the Chinese vaccine efforts. But to date, they have been impressive. China has made the fastest progress of any nation, and it has several vaccine contenders, with four products now in Stage 3 trials.
While final results are not in, data from Brazil indicated that the Sinovac vaccine is likely safe. The United Arab Emirates also is in the middle of testing the BBIBP-CorV vaccine in a Phase 3 trial, with results expected soon, just as China itself is actively testing the products.
One recent paper in the medical journal The Lancet indicated a result of “promising” and also sufficiently safe. The matter is hardly settled, but at the very least, the Chinese vaccines are not dropping out of contention. China is already administering those vaccines to its military and to some employees of state-owned enterprises.
The US typically would be more cautious. But China, with its extensive information-gathering capabilities, is effectively conducting its Stage 3 trial in public, and at an accelerated pace. Whether or not you agree with that policy, Americans in principle can benefit because it is China taking all the risk and generating the information.
Another advantage of the Chinese vaccines is that they are designed for quick production and rapid scalability. That could be helpful even if in purely biomedical terms they are not the most potent products.
In all fairness, there is no guarantee that the US would have been able to strike a vaccine deal with China even if Trump were not president and there were no trade war.
Still, the Chinese have been very active making advance sales of their vaccines abroad, often attempting to extract geopolitical concessions as well. China also just signed up for Covax, the vaccine-sharing multilateral arrangement. The US still has not joined.
The US should not offer international concessions in return for a claim to Chinese vaccines. But it is quite possible China would be open to a cash deal. China could also obtain the rights to buy some US vaccines, thus reducing risk on both sides, as a kind of mutual insurance contract.
It would probably qualify as a humbling propaganda defeat if America turned out to need a Chinese vaccine. But eating a little crow would be a small price to pay for a useful vaccine, given the immense damage wrought by Covid-19.
At a faster pace than most people would have thought possible, China has become a major player in the biomedical sciences.
Trade with China isn’t just about iPhones, soybeans and plastic toys at Walmart. These days, it is also a matter of life and death. Maybe few Americans knew that when the trade war started. But one of the very virtues of trade is that it creates valuable opportunities that are hard to foresee. — Bloomberg
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.