At the onset, I would like to make clear that the purpose of this post is not to join the ongoing debate over the origins of the COVID-19 virus (I do highly recommend you read Nicholas Wade’s much-commented article in the Bulletin of the Atomic Scientists, The origin of COVID: Did people or nature open Pandora’s box at Wuhan?, which perfectly crystalizes the debate). Rather, I merely seek to contemplate what the real-world consequences would be if we reach a point where the “lab leak” theory is widely accepted as the most likely explanation. To be clear, this point has not been reached, and may never be.
I am writing this now because, in the last week, the Wall Street Journal has come out with influential articles on how scientists increasingly believe COVID-19 originated in a Wuhan lab or, at minimum, that further study on this is warranted. See The Wuhan Lab Leak Question: A Disused Chinese Mine Takes Center Stage and Intelligence on Sick Staff at Wuhan Lab Fuels Debate on Covid-19 Origin.
It goes without saying that a finding that COVID originated in a Chinese lab would be accompanied by a great deal of anger worldwide. We have already seen what happened during the early days of the pandemic, when the Chinese authorities were criticized for their lack of transparency regarding the virus, and for their perceived failure to do more to contain its spread.
The outcry over a lab leak would exceed what we saw earlier by many orders of magnitude. It is true that initial criticism of China over its handling of COVID carried with it an undertone of suspicion regarding the role of the Wuhan labs, but imagine what the national mood would be like if all those folks not inclined to be critical of China suddenly had good reason to be.
Of course, even then, there would be captains of industry calling for “engagement,” but in general it would be a wakeup call like no other as to the threat that an increasingly powerful China poses to the rest of the world. In addition to the inherent damage that would be caused by a credible lab leak explanation, in all likelihood China’s responses would be denialist and arrogant in character, fueling the flames.
In such a climate, companies doing business in China could find themselves in very difficult situations. Take the issue of tariffs. With President Biden’s ascension to power, it was expected that his administration would do something to provide some form of tariff relief — but we have not seen any moves in that direction. Needless to say, the prospects of tariff relief would be even less if the lab leak explanation took hold. In fact, we could expect would be new actions against Chinese imports.
Beyond tariffs, China’s reputation would take a strong hit, with direct implications for trade and investment. Existing concerns over product safety, for example, could be greatly heightened, as would general hostility toward Chinese-made products. Shareholders and other stakeholders would likely look very differently at the prospect of Chinese involvement in their companies.
Again, the point here is not to suggest anything regarding the plausibility of the lab leak theory. Maybe it’s true, maybe it’s not, or maybe elements of it are true. But any company doing business in or with China would be wise to contemplate, at least for a few minutes during their next board meeting, the likely consequences if the theory is found to be true — or if enough people outside of China believe it to be true, to the point that it becomes conventional wisdom. No doubt for some the initial reaction to such a finding would be “so what,” but can they count on their consumers and shareholders feeling the same way?
Between the legitimate scientific questions, China’s full-court obfuscation of any search for answers, and possible timidity on the part of the U.S. and other governments when it comes to addressing the issue, there is only a small chance that we will get to the point where it can be affirmed that COVID originated in a Wuhan lab without eliciting serious reservations. But if that unlikely scenario comes to pass, the consequences would surely reverberate in ways that would impact just about any company with China exposure.
Forewarned is forearmed.