| Yesterday, China officially resumed working following a state Imposed shutdown to contain the spread of coronavirus. Normalcy is yet to return; many technology companies advised employees to work from home. The outbreak has already had an adverse impact on the global economy. For perspective, there have been comparisons with the SARS outbreak 13 years ago which affected China's economy for a short period. But this comparison is misleading. China today is the second largest economy in the world, contributing about 16% of the global GDP. It's also more deeply integrated. |
| IMF believes the total economic impact will depend on the behaviour of the virus itself. Till date, a little over 900 deaths have been recorded and Chinese authorities have said there are over 40,000 confirmed cases of coronavirus. The economic disruptions thus far have shown up in two ways. One, the adverse impact on demand from both the Chinese consumer and outbound tourist. Separately, the movement restrictions within China have affected retail industry, including global brands. |
| The more important impact has been on the supply chains, particularly the auto and technology industries. Hubei province, the epidemic's epicentre, is an important geography for supply chains. But the ripple effect of the virus has been such that even coastal zones such as Shenzhen have witnessed shutdowns. India, of course, will be affected by these developments. But one aspect which has been brought into stark focus is the impact on India's pharmaceutical industry. Over the last couple of decades, import dependence on China for active pharmaceutical ingredients, which are the building blocks of medicines, has increased. |
| According to Niti Aayog, about 84% of APIs for drugs manufactured in India are imported. The coronavirus fallout shows that India can ill afford this situation, pun fully intended. Medicines are of strategic importance and there is a strong case for government to follow through on Niti Aayog's suggestion to promote industrial clusters for APIs. After all, China has many disputes with India and is known to apply maximum pressure when a dispute blows up. Being in a position where China could potentially hold India's pharma industry hostage won't do. While the endeavour should be to integrate into global value chains for most products, in the case of strategically important ones its necessary to preserve existing manufacturing competencies through smart policy. That's something New Delhi must look into. |
A) Because the two viruses are of different strains
B) Because SARS outbreak was nearly 13 years ago
C) Because China today is the second largest economy in the world
D) Because medical science is much more developed today.
Correct Answer: C
Solution :
(c) For perspective, there have been comparisons with the SARS outbreak 13 years ago which affected Chinas economy for a short period. But this comparison is misleading. China today is the second largest economy in the world, contributing about 16% of the global GDP. Its also more deeply integrated
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