By Dexter Roberts
• Avian Flu: Execs Think the Unthinkable
• Prevent a Pandemic, Make a Profit
• This Time, Beijing Gets Transparent
• Avian Flu's Wake-Up Call to Business
• How Companies Can Get Prepared
As the bird flu crisis afflicting China worsens, Beijing has leaped into action. Even as China announced its tenth and eleventh outbreaks of avian flu on Nov. 15, Chinese scientists said they would soon begin testing a possible vaccine against human infections. Health authorities have quarantined thousands of people, set up flu inspection sites in every province, culled millions of chickens, and declared their intention to vaccinate every bird in China's poultry industry.
Meanwhile, after initially stalling, Beijing has allowed a six-member World Health Organization team to join Chinese health authorities in investigating whether three people had caught bird flu in Hunan province -- including a 12-year-old girl and a 24-year-old woman farmer who both have died. On Nov. 16 Beijing confirmed that at least one of those two had the virus; the third, a boy, has recovered from it. Most surprising, the government has unfettered the media to report openly on the brewing crisis.
CREDIBLITY ON THE LINE.
What is motivating the mass mobilization? Beijing's top leaders are well aware that a bird flu pandemic presents a huge economic threat to China and the world. Bird flu could end up costing the global economy as much as $800 billion, says the World Bank, but Asia and particularly China and Hong Kong would take the brunt.
Indeed, the Asian Development Bank predicts that a pandemic would reduce gross domestic product growth in Asia by as much as 6.5 percentage points, meaning almost zero growth for the region. In Hong Kong and China, consumption could plunge 17.3%, or $34.4 billion. China is facing a "very serious situation," warned Premier Wen Jiabao on Nov. 8 during his tour of hard-hit Heishan county in northeastern China.
And clearly the leadership recognizes that bird flu poses more than just an economic threat. As worries of a global pandemic grow, China's international credibility is again on the line, much as it was during the SARS epidemic two-plus years ago. Already tensions with the U.S. are high over everything from the value of China's currency to the trade imbalance. So this time China is twice as anxious to demonstrate that it's a responsible up-and-coming power, particularly because President George W. Bush will visit Beijing on Nov. 19-21.
"Bird flu has suddenly become a global concern," says Shi Yinhong, a professor of international relations at Beijing's People's University. "It's clear that how Beijing controls it will affect their international image."
An even more crucial consideration for China's top leaders is how their handling of the crisis plays at home. President Hu Jintao and Premier Wen must keep the epidemic under control or risk seriously damaging their domestic reputations as populists. During SARS, an initial coverup and hundreds of deaths left the popular standing of the top leadership in tatters. Hu and Wen had to change tack, firing the Health Minister and the Beijing mayor. While that unusual move won them back support, a national disaster this time would not be so easily forgiven, and might require bigger heads to roll.
Making the situation more volatile is that China's most vulnerable population, the rural poor, are likely to be affected first. Fifty million households that work in the poultry industry have been hit as culling programs are carried out in six afflicted provinces or autonomous regions. While Beijing has promised compensation to those who lose birds, it's not certain this pledge can be met if the virus spreads nationwide. "Bird flu is the first real test of Hu and Wen's pledge to put poor people first," says Andy Rothman, Shanghai-based economist at CLSA Asia-Pacific Markets.
The enormity of the task appears to be behind Beijing's about-face on media coverage. Chinese reporters who initially were denied access to flu-stricken regions now are free to report openly, says Hu Shuli, editor of the muckraking financial weekly Caijing. That's because Beijing now realizes the press can help mobilize national awareness about the disease and make it difficult for local authorities to attempt cover-ups of any new outbreaks. "We have been playing a very active role in reporting this," says Hu. "This time the government seems to appreciate the role of the media."
The jury is out on whether the central government can keep China from becoming a launching pad for a world epidemic -- the leadership's worst nightmare. Yet for now Beijing is winning public approval. "The government has been more transparent, has acted earlier, and is proving more effective compared with SARS," says Li Xudong, a PhD student at Beijing University. That's just what China's nervous leaders want to hear.
Dexter Roberts is BusinessWeek's Beijing bureau chief