Coronavirus: China hugely dominates the global pharmaceutical supply chain, a worry when it comes to COVID-19 vaccine

Beijing has shown it can inflict economic pain on those who challenge it, but it could also cripple the COVID-19 recovery if it doesn’t get its way.

China has demonstrated in recent weeks that it has the frightening ability to inflict economic and political damage on those who challenge it.

A war of words between Beijing and the United States and Australia shows no signs of easing, and the consequences have been deep and swift.

But costly trade ramifications are just the beginning of what China could inflict on those it perceives as troublesome.

It could just cripple the world’s ability to recover from the coronavirus if it wants to.

China has a weapon in its arsenal that has been described as a “national security risk” and if the West doesn’t back down, it might be tempted to use it.

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Soldiers of the People's Liberation Army's Honour Guard Battalion stand at attention in front of photo of China's president Xi Jinping. Picture: Getty Images

A WORRYING DOMINANCE

Every corner of the globe has been hit by COVID-19, with the pandemic unleashing health, economic and political crises just about everywhere.

While some countries – like Australia and New Zealand – have been successful in flattening the curve, many others haven’t, like the United States and United Kingdom, which are in the midst of devastating emergencies.

But every nation knows that the only hope of returning to normal life and beginning the long road to recovery lies in medicine.

Developing a vaccine is what will bring the coronavirus nightmare to an end and pharmaceutical companies are working with scientists to crack the cure code.

But that’s where China’s dominance becomes a worry.

Rory Horner, a senior lecturer at the Global Development Institute at the University of Manchester, said the world’s biggest pharma companies are American and European, but their crucial supply chains are anything but.

“The pharmaceutical manufacturing supply chain involves two main stages,” Mr Horner explained in an article for The Conversation.

“The first is the production of active pharmaceutical ingredients (APIs). These are the key parts of a drug which produce an effect. The second stage is a physical process known as formulations production.”

China is the largest producer of APIs in the world and that’s led to increasing fears of “over-reliance on particular sources of supply, especially China, for APIs”, he said.

“Such concern has been particularly prominent in the US. Last year a representative of the Defence Health Agency argued that ‘the national security risks of increased Chinese dominance of the global API market cannot be overstated’.”

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The world is racing to develop a COVID-19 vaccine – but manufacturing and deploying it will rely heavily on China. Picture: Getty Images

India, which plays a significant role in the second component of the pharma manufacturing supply chain, the formulations production, relies heavily on China for its part, he said.

“India also gets most of its APIs from China – an issue of concern for its government, which has had a task force investigating this issue.”

Concern about China’s dominance has existed for some time, long before the coronavirus pandemic.

It was the focus of the book China Rx, released in 2018, which said: “The centralisation of the global supply for essential ingredients for drugs in China makes it vulnerable to interruption, whether by mistake or design.”

It also theorised that “if a global public health crisis occurs, China will likely keep its domestically produced medicines at home and stockpile them to ensure access” for its citizens.

China’s dominance in the pharma supply chain means it will be necessary to involve it in manufacturing any treatment of vaccine for COVID-19, Mr Horner said.

“Having China and India involved as manufacturing partners for any treatment or vaccine will be vital given their unparalleled ability to produce in high volumes and cost effective economies of scale.”

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China has been flexing its might in recent months in response to criticism of its handling of the COVID-19 crisis. Picture: Getty Images

At the World Health Assembly earlier this month, President Xi Jinping spoke about a COVID-19 vaccine development and deployment in China when available.

He said it would be: “Made a global public good, which will be China’s contribution to ensuring vaccine accessibility and affordability in developing countries.”

‘WOLF WARRIORS’ READY TO FIGHT

Xi’s declaration that China would make a COVID-19 vaccine accessible is encouraging, but the recent erosion of relations between Beijing and major plays in the West is not.

It was under his stewardship after all that China took a harder line with the rest of the world, replacing polite diplomacy with an iron fist.

When he became general secretary of the Communist Party in 2012, Xi set out a clear goal of building a new golden era.

China had already built significant influence around the world, no doubt.

Countless countries relied on it for trade and economic stability, and it had slowly spread its tentacles into strategic regions through foreign aid.

But Xi wanted to rapidly expand that, signalling the beginning of a more forceful assertion of China’s goals, both at home and in the rest of the world.

China dominates the global pharmaceutical supply chain – something that was a cause for concern long before the coronavirus pandemic.

On the global front, Xi’s plan created what expert Rowan Callick from Griffith University described as “wolf warriors” in virtually every single country on the planet.

The term comes from an ultra-patriotic Chinese film released in 2017 called Wolf Warrior 2, with a slogan taken from the Han Dynasty: “Whoever offends China will be punished, no matter how far they are.”

“Xi ordered massive new resources for diplomacy, doubling the foreign ministry budget from 2013-18, and since then raising it by double digits annually,” Mr Callick wrote for The Conversation.

“Top diplomat Yang Jiechi was also promoted to the Politburo and a new Central Foreign Affairs Commission was established, underlining Xi’s determination to elevate a more assertive foreign policy as a national priority.”

And diplomats scattered around the world became those ‘wolf warriors’ to prosecute China’s case.

Last year, at a party to celebrate the 70th anniversary of China’s Foreign Ministry, Minister Wang Yi urged the country’s envoys to adopt a “fighting spirit” in the face of international challenges, Mr Callick said.

You don’t need to look hard to see that they have certainly adopted the mantra.

They aren’t afraid to react strongly when challenged, as China’s Ambassador to Canberra showed recently when he seemed to threaten a boycott of Australian products.

“The Foreign Ministry told Reuters this year, citing a Mao Zedong slogan, ‘We will not attack unless we are attacked. But if we are attacked, we will certainly counter-attack’,” Mr Callick said.

“This may even come at a cost to China economically. But politics – and especially the push for rejuvenation – is upstream of all else in Xi’s ‘New Era’.”