Commentary on Political Economy

Friday 16 July 2021

 U.S. taxpayers are funding China’s vaccine profiteering

It’s bad enough that Beijing is now forcing the U.N.-linked organization in charge of distributing vaccines to the world’s poor to pay for China’s subpar shots. The worst part is that U.S. taxpayers, by generously donating U.S. money and vaccines, are effectively financing Beijing’s scheme.

Beijing has been exploiting the pandem- ic to advance its political and financial interests since covid-19 emerged in late 2019 in China. The latest and perhaps most egregious example came this week, when Covax, the World Health Organization- backed initiative, announced its new plan to purchase up to 550 million doses of China’s Sinovac and Sinopharm vaccines, with expected costs in the billions.

This deal struck both U.S. lawmakers and some senior members of the Biden administration as scandalous, for several obvious reasons. Not only have the Chi- nese-made vaccines been shown to be less effective, but China has also contributed no money to the Covax program and has donated zero shots from its national stock- pile. By contrast, the United States is Covax’s largest donor, having pledged $4 billion, and has begun distributing 55 million donated shots and promised to donate 500 million more, no charge.

During Wednesday’s Senate Foreign Re- lations Committee hearing, ranking Re- publican James E. Risch (Idaho) called the Covax contract “appalling.” He asked Sa- mantha Power, the head of the U.S. Agency for International Development, to com- ment on “the irony that China has contrib- uted nothing to Covax and yet now stands to profit from it, when indeed, they started this whole mess in the first place.”

Power agreed, saying: “It is appalling that Beijing chose to make a profit on those vaccines rather than to contribute finan- cially to Covax or to donate its state-owned vaccines to Covax to reach people in their hour of desperate need.”

Power did express sympathy for the bind that Covax is in. Hundreds of millions of doses promised to the organization are delayed. India cut its pledged contribution to deal with a domestic surge. U.S. and European shots are on the way, but not quickly enough for suffering countries battling the raging pandemic. Though most countries would prefer non-Chinese vaccines, Covax might be forgiven for turning to Beijing, Power said. Still, she said, “that’s no excuse for what China did” in charging Covax for the shots.

A senior U.S. official told me that it’s not actually the U.S.-donated money that Gavi, the parent organization of Covax, is using to pay the Chinese companies. “Gavi will not use funds attributable to U.S. contribu- tions to support the Sinopharm and Sino- vac procurement,” the official said. But that claim is specious, because money is fungi- ble. Dividing the accounts on paper is meaningless. The United States is funding Covax, and Covax is paying China.

“The United States is deeply disappoint- ed that the [People’s Republic of China] has provided no financial support to Covax for vaccinations in low and middle-income countries, and has chosen to sell its vaccines to Covax rather than contribute to Covax financially,” a senior administration official told me. Translation: Biden officials know it’s bad, but there’s nothing they can do about it now.

Rather than expressing disappointment after the fact, the Biden administration should have used its influence at Covax (if it has any) to have found a better solution. It’s not just about the money. The Chinese shots are proving so ineffective that several countries are seeing surges due to the false comfort they provided. The Covax-China deal could actually make the pandemic harder to control in the long run.

If the Biden administration can’t stop Covax from using U.S. dollars to pay China for bad vaccines, it should follow the advice of Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.), who said the United States should rebalance distribution of its surplus shots more toward bilateral agreements and less through international organizations be- holden to Beijing.

That way, instead of allowing China to profit from the world’s suffering, the United States could be countering China’s vaccine diplomacy, which includes Bei- jing’s bribing and coercing of countries in our hemisphere. Working with countries on a bilateral basis would be “a force multiplier in terms of our diplomacy and our interests,” Menendez said, “in addition to doing to the right thing on vaccines.”

President Biden is trying to convince Americans that U.S. involvement in multi- lateral organizations is the best way to preserve a world order that stands as a bulwark against rising authoritarianism. That requires using U.S. influence and leadership to push for these organizations to reform over the long term and making sure they don’t send American money to our adversaries right now. Otherwise, populist calls to defund these organiza- tions will grow louder, and indeed more credible.

Let this sad saga be a reminder to all of the mendacity of Xi Jinping’s claims that China supports and even seeks to lead a U.N.-centered international system based on the rule of law. China is using the pandemic to undermine that system, ex- ploit international organizations and fill its own coffers. Beijing will spare no opportunity to abuse its power during a crisis.

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