Coronavirus Is a Bigger Risk to the Rest of the World Now Than It Is to China

New cases of coronavirus in China were running at 5,000 a day only a couple of weeks ago. The count of new cases is down to fewer than 100 a day, if you believe China’s numbers. I don’t, but the World Health Organization’s declaration this week that the epidemic had peaked in China probably is accurate.

Just look at the world’s stock markets. China’s equity indices barely fluttered during the past couple of days while the U.S. and Europe lost 3%-4%. The threat of an epidemic in Italy appears to have pushed markets over the edge.

Here’s a chart published on Wednesday by the research department at JP Morgan:

China’s surveillance state knows where you are at all times (by tracking your phone and facial recognition with ubiquitous cameras), and whether you bought an aspirin five minutes ago. It can quarantine individuals, cities and provinces and track down reluctant patients who don’t want to go into quarantine. These are repugnant capabilities, but useful during an epidemic.

Italy is another story. So, for that matter, is Iran, where the deputy health minister announced that he is infected with COVID-19, amid rumors that thousands are ill. Iran doesn’t have enough test kits to find out. I doubt Italy does, either. COVID-19 has been detected in 30 countries, most of them far less equipped to respond than China.

I don’t take rumors seriously that the virus was hatched in a Chinese government weapons lab, or that China is burning a thousand bodies a day. But we do know that COVID-19 has a long latency period, and that there are asymptomatic carriers spreading it. This could get very nasty in countries with poor public health systems, or in some U.S. cities where public health is substandard.

President Trump has asked for $1.5 billion in emergency funding for virus prevention measures. That’s a good first step, but we need to be prepared for worse.

Europe is at serious risk. Deutsche Bank on Wednesday featured an epidemiologist in a conference call for clients, who warned that COVID-19 is likely to spread across Europe. He added that there likely will be an outbreak in the U.S. Europe can’t impose the kind of controls the Chinese have employed, so the virus is harder to contain. Europe probably will cut some transport connections including intra-European flights. European stocks are down almost 6% in the past two sessions, significantly worse than U.S. markets.