Cold War rivals fought disease together. Why not China and the US in the face of the coronavirus crisis?

The world’s two largest economies, China and the United States, need to set aside national rivalries in the midst of the global Covid-19 pandemic, a situation that already has the International Monetary Fund anticipating the “the worst economic fallout since the Great Depression”.

Beijing and Washington need to work together, but will they?

The Great Depression of the 1930s should be a cautionary example of what happens when countries fail to cooperate. It was exacerbated by countries seeking to gain national advantages by imposing tariffs on imports, such as the US’ Smoot-Hawley Tariff Act of 1930, which prompted retaliatory measures by other nations. International cooperation proved illusory.

Of course, it’s unrealistic to expect strategic rivalries to disappear during a pandemic, but such issues can be parked. Even at the height of the Cold War, the Soviet Union and the US realised it was in their economic and public health interests to work together to develop a polio vaccine in the 1950s and to eradicate smallpox in the 1960s and 1970s.

On the issue of combating Covid-19 itself, Tedros Adhanom Ghebreyesus, director general of the World Health Organisation, has already made known his view that China and the US must “come together and fight this dangerous enemy … When there are cracks at national level and global level that’s when the virus succeeds.”

But China-US cooperation is also needed in the economic sphere. There is an argument that having been the first economy to be stricken by coronavirus, China will also be the first to recover, but Chinese economic prospects will be brighter still if the world economy returns to a firmer footing.

With data released last Friday showing factory gate prices falling at a faster pace in March, it’s clear that the pandemic continues to hamper Chinese manufacturers.

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The continuing spread of the coronavirus across the world and the associated damage to global economic activity, caused by lockdowns and virus containment efforts, are not going to help the situation.

Yet at a point when China and the US should be working together for the common good, differences of opinion are re-emerging between them. Pandemic or no pandemic, the strategic and economic rivalries between China and the US continue and are still playing out.

It’s no secret that China and the US have had substantive differences over issues of intellectual property protection.

It’s therefore no surprise that last month, US support was instrumental in the nomination of Singapore’s Daren Tang Heng Shim for the next director general of the United Nations’ World Intellectual Property Organisation (Wipo). Tang was nominated over China’s Wang Binying, a current Wipo deputy director general.

In the technology space, citing security concerns, Washington remains determined to stop Huawei Technologies, a global leader in next-generation wireless networks, from dominating 5G roll-outs worldwide.

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Such is the level of US antipathy towards the Chinese company, Washington is arguably risking economic self-harm.

“By 2021, the number of [5G] base stations in China will comfortably exceed the rest of the world combined,” wrote Rory Green, an economist at TS Lombard, an independent investment research provider, on April 9. China will also have “the biggest number of 5G-enabled devices and the largest coverage area”.

Green added: “It will take Europe and the US one to three years to approach the 2020 level of [China], ensuring Chinese firms enjoy a first-mover advantage.”

Elsewhere, the activities of China Telecom (Americas) Corp are coming under scrutiny, although the Chinese state-owned group has been operating with a US licence since 2007. Some branches of the US government are now urging the Federal Communications Commission to revoke that licence on national security grounds.

In addition, US regulators have allowed firms such as Google to operate a portion of the newly-laid Pacific Light Cable Network System between the US and Taiwan, yet they have blocked the opening of a direct cable connection between the US and Hong Kong, again on national security grounds.

It certainly seems odd that Washington is making such moves, at a time when China and the US need to be working together.

“This crisis knows no boundaries. Everybody hurts,” said Kristalina Georgieva, the managing director of the IMF, last week. Everyone needs to “act together, to protect lives and livelihoods”.

China and the United States should set aside their economic rivalries. Beijing and Washington need to cooperate to mitigate the economic consequences of a pandemic that is oblivious to national borders.

Neal Kimberley is a commentator on macroeconomics and financial markets