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COMMENTARY: Coronavirus outbreak tests China’s president Xi Jinping

A volunteer keeps guard near the barricades to a residential area in Wuhan in central China's Hubei province.
A volunteer keeps guard near the barricades to a residential area in Wuhan in central China's Hubei province. Chinatopix via AP

Xi Jinping is surely having the worst 2020 of any major international leader to date.

Much of this can be put down to the knock-on effects of the COVID-19 outbreak in the city of Wuhan and Xi’s belated attempts to show he was in charge after an awkward start during which he was almost invisible and his regime rounded up people who dared even mention that there was a problem.

The response to the coronavirus has already caused political problems in Japan, Italy and Iran over whether enough was done soon enough.

Now come the knock-on effects. As energy prices collapse, it will be especially harmful to resource-based economies such as Russia and Saudi Arabia and particularly Venezuela, which is already flat on its back economically and politically.

READ MORE: Oil prices, jobs slashed as global coronavirus spread continues

As has already been foreshadowed by remarks by Finance Minister Bill Morneau, there will be consequences for Canada, too. Like Morneau, Alberta Premier Jason Kenny had nothing to do with the virus, but he may end up paying dearly for the crisis because of the havoc it will cause to the province’s already badly stressed economy.

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But the leader who is arguably in the trickiest situation at the moment is China’s Xi. He and his dictatorship have been whacked by accusations at home and abroad that his Communist government had for weeks suppressed evidence of the gravity of the COVID-19 outbreak in the city of Wuhan from its people and the world and had arrested those who tried to speak the truth. And that this makes China partially responsible for a virus that has already infected more than 100,000 people.

On Friday, Xi was hit with the double whammy that Taiwan’s largest China-friendly party — the venerable Kuomintang — had given up its longstanding policy of agreeing with the mainland on a One China stance. This follows by a couple of months a vote in Taiwan that strongly backed a government that strongly repudiates reunification China.

Taiwan president wins landslide victory in stinging rebuke to China
Taiwan president wins landslide victory in stinging rebuke to China

Xi’s vow to reclaim Taiwan peacefully or, if necessary, by force is central to his plan to stay in power until his death. That, and continued economic growth which is now seriously threatened, at least in the short-term by the coronavirus, are what Xi has staked his reputation on.

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China’s draconian security apparatus will provide the eyes and muscle to see Xi through these different storms, but at a serious cost to trust in him and the supremacy of the Communist Party. The epidemic, the serious economic fallout, the effect this is already having on China’s fantastic economic growth, and Taiwan’s doubling down on its rejections of China, have badly tarnished the cult of personality that Xi and his lackeys have encouraged to spring up around him.

What is at stake in his claim that as leader of the Communist Party, he is all-knowing and unerring and therefore deserves his absolute powers.

READ MORE: China sees cautious return to work after weeks of disruption due to COVID-19

Using official levers of power and other means, and helped as well as harmed by a frantic domestic social media rumour mill, China has been trying to bolster Emperor Xi’s flagging reputation.

In that spirit, Beijing’s newish ambassador to Canada, Cong Peiwu, brazenly boasted last week at a conference put on the Canadian Defence Associations Institute that Xi’s heroic leadership on the coronavirus file was being applauded internationally. Except for the large, loyal turnout from the Chinese embassy, the audience collectively rolled their eyes and tried to suppress its laughter.

Driven by a collapse in demand from China, which is the world’s largest importer of fossil fuels, the benchmark price of Brent crude has dropped by 23 per cent so far this year. That decline is the steepest on record, according to a report by CNN, which quotes the IHS Markit research firm as saying it is “an unprecedented stoppage” in global economic activity.

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One of the many ways to look at it is that China, the world’s biggest consumer of fossil fuels, has cut oil imports from the Middle East by about 25 per cent.

The economic impact of the coronavirus, explained
The economic impact of the coronavirus, explained

Comrade Xi is not the only strongman whose leadership will be seriously tested by COVID-19. Vladimir Putin’s government, which gets more than half its revenues from the energy sector, was already wobbling before the virus began its damning world tour.

Despite Saudi Arabia’s staggering energy wealth, the economy presided over by King Salman and his son Crown Prince Mohammed bin Salman, has been unable to keep up with its exploding population or a still growing flood of fracked oil from the U.S. An additional complication is that the Crown Prince sees conspiracies everywhere and has a habit of arresting his relatives.

The other Persian Gulf sheikdoms, which all get as much as 90 per cent of their revenues from oil and gas, are in the same straightjacket.

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For Iran, which has far more people to try to keep happy than its Arab neighbours, energy creates between 66 and 80 per cent of the revenues, depending upon which survey is to be believed.

READ MORE: Coronavirus — Canadians urged to avoid travel to Iran as Trudeau warns against ‘knee-jerk’ reactions

With the exception of coal, Canada exports very little energy resources to China. Even so, according to statistics published by Natural Resources Canada, the energy sector represents 11.1 per cent of GDP and $230 billion in direct revenues in 2018 and a good chunk of that money comes from Alberta.

Cut those revenues by roughly a quarter and it becomes clear that the Trudeau government, which has confounded conventional economic wisdom by increasing debt during good times, is in a tight spot. So is Alberta and especially provinces such as Newfoundland and Labrador and Ontario.

China, Russia, Iran and the Gulf states don’t really produce budgets in the way that the West does. But the arithmetic of the dictators will be the same as the leaders of the democracies as all of them try to save their jobs. The reckoning will come when the world factors in not only the effects of COVID-19 on people and the health services they depend upon but rising global unemployment caused by sharply lower demand in just about every economic sector from sports, cinema, transportation, hotels, restaurants, shops and agriculture to economic engines such as banking, stock markets and high tech and low tech manufacturing.

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Only a few weeks into this rapidly growing international medical emergency, the economic signs, forecasts and emergency rate cuts everywhere are brutally stark. Xi has been the first to get caught in this vice. Many other leaders will find themselves in a bind soon enough. In the democracies, at least, the economic fallout may cause quite a few governments to fail.

Matthew Fisher is an international affairs columnist and foreign correspondent who has worked abroad for 35 years. You can follow him on Twitter at @mfisheroverseas