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China has taken an early lead in developing vaccines against COVID-19. For many developing countries, these are the only way out of the crisis.    © Illustration by Michael Tsang
The Big Story

Red Pill? Behind China's COVID-19 vaccine diplomacy

Southeast Asia bargains with Beijing for lifesaving drugs

CK TAN and ERWIDA MAULIA, Nikkei staff writers | China

SHANGHAI/BANDUNG, Indonesia -- Starting at noon on select days, green hospital curtains go up on the windows and doors of a Puskesmas -- a spare, government-run medical clinic that resembles a large shed -- in the heart of the city of Bandung in Indonesia. One by one, people begin to arrive, almost furtively ushered into the interior by officers. They emerge hours later with a single plaster on their arm.

The Puskesmas is offering what may be the only way out of the deadly COVID-19 pandemic that has gripped Indonesia now suffering around 100 deaths per day. Behind the green curtains, a team of researchers from the local Padjadjaran University and Indonesian state-owned vaccine maker Bio Farma inject volunteers with a new vaccine made by Sinovac Biotech, a Chinese company.

For Rizky Sugih, a lanky 30-year-old vegetable seller, the decision to participate in the trial was easy. "Praying is not enough. We must take action, and this is my action [taking part in] the vaccine trial," he said as he emerged from the clinic on Oct. 16.

"I have a baby at home. I'm afraid my family will catch [the virus]."

Sugih said he did not think twice when his friend told him about the trials -- and especially after the West Java governor announced that he, too, was volunteering.

"The leader is taking part, the organizations are reputable, so why not? I can't help with money, but I have time and flexibility," Sugih said.

Indonesia is not alone. Other developing countries, grappling with spiraling COVID-19 cases, have entered into similar bargains to trial vaccines from China and produce them locally. Others are seeking to negotiate priority access to Chinese vaccines.

"Praying is not enough." Rizky Sugih walks outside a government-run clinic in Bandung, Indonesia, where he was going to get his first shot of Sinovac experimental vaccine. (Photo by Dimas Ardian)

For Indonesia, which has been ravaged by the virus, vaccines are seen as the only way out. The Bandung clinical trial, with 1,600 volunteers, started in August and is scheduled to run until May. But the government can barely wait that long. Jakarta has had to build a new cemetery for COVID deaths, while President Joko Widodo had urged vaccines to be procured and distributed as early as this year before only recently relenting to health experts' warnings against rushing an experimental vaccine.

According to the government, Sinovac will dispatch 3 million finished doses of coronavirus vaccine and enough vaccine bulk -- the liquid eventually divided into vials -- for Bio Farma to locally manufacture 15 million doses by the end of December. Sinovac also has agreed to supply 125 million doses next year.

Officials in Jakarta said two doses of vaccine will probably be needed for each person in order to make it effective, and therefore the government is targeting 540 million doses of vaccines by 2022. The government estimates a total of 37 trillion rupiah (around $2.5 billion) for vaccine procurement spending through 2022.

A worker performs a quality check at Chinese vaccine maker Sinovac Biotech, during a media tour in Beijing in September. China's President Xi Jinping describes Chinese made vaccines as a "global public good."   © Reuters

While Indonesia leaders are trying to procure other vaccines as well, it is clear they will rely mostly on China, which has several advantages in the vaccine race. First, it is a leader in producing the first generation of COVID-19 vaccines, accounting for four of 10 vaccine candidates currently in Phase 3 clinical trials -- the last step in the approval process before public distribution (see chart).

Sinovac and two other Chinese companies, Sinopharm and CanSino Biologics, are doing Phase 3 trials in at least 15 countries (see map). Nasdaq-listed Sinovac, based on a leafy campus in Beijing, is carrying out Phase 3 trials in Bangladesh, Brazil, and Turkey, in addition to the trial in Indonesia.

A second advantage for China is that it has a natural edge in scaling up the manufacturing of the vaccines, according to experts. This is partly because of its huge manufacturing capacity, and partly because Chinese companies are mainly focused on "tried and tested technologies," according to an analyst at Airfinity, a London-based science information and analytics company.

The analyst noted that three out of four of the lead Chinese candidates in Phase 3 trials are inactivated virus vaccines, which is a vaccine technology that has been used for quite some time. "Our data and forecast models indicate this will make it easier for them to scale up manufacturing vs. other newer technologies," Airfinity said, referring to RNA vaccines from Pfizer and Moderna which require refrigeration at very low temperatures.

China's third advantage is that it has largely contained the virus within its borders, meaning it is not in desperate need of the vaccines for its own population. In an address to the United Nations General Assembly on Sept. 22, Chinese President Xi Jinping reiterated China's promise to make Chinese-made vaccines "a global public good" and prioritize the developing world. 

A health care worker checks a vaccine trial volunteer at the Faculty of Medicine at Padjadjaran University in Bandung, Indonesia. Chinese-supplied vaccines offer Beijing a chance to repair its image.   © Reuters

For Beijing, this presents a golden opportunity -- both to create goodwill in a region of Asia that it has historically seen as a sphere of influence, as well as erase memories of its role in spawning the pandemic. COVID-19 emerged in the city of Wuhan partly due to a cover-up by local bureaucrats.

"Beijing will very likely use the vaccine for strategic purposes, including to improve [its] reputation which has suffered worldwide as a result of the pandemic," said Adam Ni, director of the China Policy Centre in Canberra, Australia.

China announced on Oct. 9 it would join COVAX, a global initiative backed by the World Health Organization with the aim of distributing COVID-19 vaccines equally. The U.S., by contrast, which also has four companies testing vaccines in Phase 3 clinical trials, has so far ruled out joining COVAX, and President Donald Trump has made clear Washington's priority will be vaccinating Americans first.

But given the lack of alternatives, China's vaccines are increasingly seen in Southeast Asia not just as salvation, but also as once-in-a-generation geopolitical leverage that China may well be tempted to take advantage of. Many countries awaiting vaccine doses, like Indonesia, the Philippines and Malaysia, are anxious to avoid antagonizing Beijing. And this is something the latter is keenly aware of.

Aleksius Jemadu, professor of international politics at Indonesia's Pelita Harapan University, said the vaccine partnership was a chance for China to woo traditionally neutral countries like Indonesia into a tighter embrace. "China is very enthusiastic about this vaccine partnership with Indonesia because, unlike partnerships in other [sectors], it is uncommonly binding." he told Nikkei Asia.

"Indonesia is the largest country in Southeast Asia. A partnership with Indonesia is important for China over the long term because it is competing against the U.S., and the U.S. is asking its allies in Asia -- and also Indonesia -- to ... join its campaign to isolate China ... and to hold China responsible for the COVID [pandemic]."

Jemadu cited U.S. Secretary of State Mike Pompeo's visit to Jakarta in late October, during which Pompeo said "we welcome the example Indonesia has set with decisive action to safeguard its maritime sovereignty" around the disputed waters north of the Natuna Islands. Pompeo also called China's alleged human rights abuse of Uighur Muslims in Xinjiang autonomous region the "gravest threat to the future of religious freedom" in an address to a Muslim organization in Jakarta.

However, the U.S. can currently offer little more than bluster, while a partnership with China can be counted in vaccine doses. "The reality is that there is a desperate demand for COVID-19 vaccines, and China is one of the forerunners in developing the vaccine. What it tells us is the increasing strong science and technology foundation of the Chinese state, and Beijing's ability to leverage it for international influence," added Ni.

Demands and doses

This was apparent in September, when Chinese and Indonesian coast guard vessels were locked in a tense two-day standoff in the North Natuna Sea -- which Indonesia claims to be inside its exclusive economic zone, and which also crosses over China's self-proclaimed "nine-dash line" claim to most of the South China Sea. The standoff only ended after Indonesian Foreign Minister Retno Marsudi summoned the Chinese ambassador to Jakarta.

Right before the pandemic, though, in January, a similar standoff in the same location spurred President Jokowi to immediately travel to inspect waters off the Natuna Islands. Such trips have become a routine way to assert Indonesia's claim there following increased encounters with Chinese ships in the past few years.

A Chinese Coast Guard ship is seen from an Indonesian Naval ship during a tense encounter north of the Natuna Islands, Indonesia, on Jan. 11. China and Indonesia assert rival claims to this area of the South China Sea.    © Reuters

But in September, after the similarly tense encounter happened again and apart from the foreign ministry's repeated protests, there was no such reaction from Jokowi.

Jemadu said China's vaccine diplomacy might be softening Indonesia's stance in regards to the overlapping claims north of Natuna. "Indonesia would not want to sacrifice its partnerships with China by commenting about the South China Sea" he said. "Indonesia would be more cautious when issuing statements on the South China Sea, and also when taking actions. It would not want to corner China with its statements," Jemadu said.

Gurjit Singh, former Indian ambassador to Indonesia and to the 10 member Association of Southeast Asian Nations, said COVID-19 has fundamentally changed the balance of power in Southeast Asia. "If any country has an opportunity to get the vaccine, they will take it," he said.

Countries such as Indonesia and Malaysia "are not worried about the strategic costs of procuring the vaccine from China," said Singh. "The essential difference is countries like India and Japan and the U.S. are seeing this in power terms. ASEAN is viewing this in terms of functional collaboration. China has adopted a power approach to ASEAN and they don't know how to deal with it," he said.

While the pandemic has seen China try to win hearts and minds, it has also unleashed something darker: an apparent urge to take advantage of neighbors' relative weakness with an unprecedented campaign of bullying and arm-twisting. June saw Beijing promulgating a new security law in Hong Kong, as well as fighting a border skirmish with India high in the Himalaya Mountains, in which at least 20 Indian soldiers were killed. In October alone, China sent warplanes into Taiwanese airspace at least 25 out of a total of 31 days that month, setting a new record for frequency this year, according to Taiwanese press reports. In the East China Sea, Chinese military ships and aircraft have stepped up challenges in air space and sea lanes around the Senkaku Islands, controlled by Japan. In the South China Sea, the number of challenges to neighbors' claims has similarly risen.

In Malaysia, Chinese vaccines also seem to have become entangled with maritime disputes. Last month, for example, Chinese Foreign Minister Wang Yi promised Malaysia priority access to Chinese vaccines. And then, he discreetly asked for the release of 60 Chinese fishermen detained for trespassing into Malaysian waters just days before his visit, according to a Malaysian official requesting anonymity. Malaysia said they would consider the request.

The Philippines is another country facing both a runaway COVID-19 caseload and a China that has grown more assertive toward Philippine claims in the South China Sea. The Philippine foreign ministry earlier this year protested after a Chinese navy ship switched on its fire control system at a Philippine Navy vessel operating in its own waters.

More recently, Manila also filed a diplomatic protest against the Chinese Coast Guard's confiscation of Filipino fishermen's equipment in the disputed Scarborough Shoal, as well as Beijing's "continuing illicit issuances of radio challenges" to Philippine aircraft patrolling over disputed waters.

However, Philippine President Rodrigo Duterte has avoided openly criticizing China, amid negotiations over vaccines. With the Philippines suffering from the second-highest number of COVID-19 infections in Southeast Asia, Duterte has pinned his hopes on vaccines, which he described as "the only salvation available to humankind" during the pandemic.

During his annual congressional address in July, Duterte told lawmakers he "made a plea" to Chinese President Xi for access to vaccines. In same speech, he also declared that Beijing was already "in possession" of the disputed South China Sea, something he had no sway over. The following day, Beijing pledged to make the Philippines a priority for the vaccine.

Duterte said in a televised meeting with cabinet officials in mid-September: "The one good thing about China is you do not have to beg, you do not have to plead. ... One thing wrong about the Western countries, it's all profit, profit, profit."

Sinovac and another Chinese vaccine maker, China National Pharmaceutical Group, or Sinopharm, are in talks with authorities in Manila for clinical trials and vaccine supply in the Philippines. On Oct. 30, Philippine Food and Drug Administration Director-General Eric Domingo told reporters that Sinovac had cleared hurdles for initial evaluations to progress to clinical trials. A decision on whether it could proceed to clinical trial could be made in two weeks, he said.

Evan Laksmana, senior international relations researcher at the Jakarta-based Center for Strategic and International Studies, said what is at stake is not so much a short-term quid pro quo with Beijing, but a long-term dependency. "I think COVID has made that point [of dependence on China] even clearer -- that it's not just [in] economics and trade, but also the medical supply chain."

"India, Japan and Australia have started to think more seriously about how to decouple from China. But I don't think that's a realistic option for most in Southeast Asia," he added.

China has long seen Southeast Asia as its strategic backyard, whose continued docility is essential for control of the South China Sea, the strategic maritime region through which 80% of world's energy exports pass every year.

China's nine-dash line claim encompasses most of the sea. Beijing also depends economically on the ASEAN countries, which this year became China's largest trading partner in the wake of the U.S.-China trade war. At a forthcoming ASEAN summit in Vietnam in November, China and ASEAN leaders are expected to sign the Regional Comprehensive Economic Partnership, an Asiawide free trade agreement that will open Southeast Asia up to Chinese exports and is hoped to further deepen trade and investment links.

While most ASEAN nations welcome RCEP, vaccines are yet another inducement to get them to the table.

"I think China will be careful in trying to draw such a link between extending COVID-19 vaccine and expecting the Southeast Asian countries to behave in a certain manner at least publicly," said Lye Liang Fook, Senior Fellow at ISEAS Yusof Ishak Institute in Singapore. "Showing that it is a reliable and good friend of Southeast Asia is a key motivation for China at this juncture."

China, according to state news outlet Xinhua in an editorial on Oct. 11 "will not turn COVID-19 vaccines into any kind of geopolitical weapon or diplomatic tool."

Bitter medicine

However, it is clear that for countries that antagonize China, there are consequences.

This was the case with an aborted trial by CanSino Biologics, a Hong Kong and Shanghai-listed Chinese company that became the first vaccine maker in the world to rush out a Phase 1 trial in March. It is codeveloping its vaccine candidate alongside the Beijing Institute of Biotechnology, which is part of the Academy of Military Medical Sciences.

CanSino's vaccine was approved for use by the military in June, and is in Phase 2 and 3 clinical trials in Brazil, Chile, Russia and Saudi Arabia. In September the Beijing Institute of Biotechnology's chief scientist, Major General Chen Wei, was given "the people's hero" award by President Xi Jinping, celebrating the government's "decisive victory" over the virus.

In May, CanSino signed an agreement with its longstanding partner, the National Research Council of Canada (the "Can" in CanSino) for Phase 1 clinical trials there. The CanSino vaccine relies on Canadian technology: "The new COVID-19 vaccine is produced using HEK293 cell lines that were designed and developed at the NRC," the council said in a May press release. As part of the agreement, the vaccine would have been produced domestically at a facility in Montreal. But the doses destined for Canada were never released by Chinese customs. In light of the delay and the fact that CanSino had since progressed to advanced trials, the NRC has ditched the collaboration.

"This specific opportunity is over and the NRC is focusing its team and facilities on other COVID-19 priorities," the NRC said in a statement in August. Canada is not in desperate need of the Chinese vaccines, but the incident does illustrate how angering Beijing can have consequences.

The backstory is that bilateral relations with Canada have soured. In 2018 Canada detained Meng Wanzhou, Huawei Technologies' chief financial officer, who faces possible extradition to the U.S. Beijing later arrested Canadian citizens Michael Kovrig and Michael Spavor on allegedly breaching China's national security.

Other Asian countries are engaging in their own vaccine diplomacy, in an apparent effort to build goodwill, defeat the virus, and -- possibly -- counter Chinese influence. Japan has vowed to give away flu drug Avigan free of charge to treat COVID-19. Made by Fujifilm Holdings' subsidiary Fujifilm Toyama Chemical, the drug had been found to be effective against COVID-19 in a Chinese clinical trial back in April.

India, too, had promised Bangladesh vaccine supplies from the Serum Institute of India, a move seen as countering China's influence over Dhaka. It came after China's Sinovac signed a deal to run a Phase 3 clinical trial for its CoronaVac vaccine in Bangladesh.

Diplomatic immunity

In Indonesia, concerns have been mounting over the safety of coronavirus vaccines following the death of an AstraZeneca experimental vaccine volunteer in Brazil in October, and after Brazilian President Jair Bolsonaro rejected his health minister's plan to procure Sinovac vaccine, saying, "The Brazilian people will not be anyone's guinea pig."

China has faced questions about ethics due to its almost exclusive reliance on foreign testing for its vaccines. The main reason for this, analysts say, is that vaccines cannot be trialed in China due to the country's success in containing the virus. Typically, a Phase 3 trial, in which some portion of the volunteers are given a placebo, requires around 150 participants to get infected for the vaccine candidate to be judged on its effectiveness, experts said. Today, China has virtually no cases, so testing vaccines within its borders is nearly impossible.

"The Chinese have managed to maintain a low COVID-19 infection rate which means Phase 3 trials of their candidates have to be held abroad in countries with higher infection rates," said the analyst at Airfinity.

People walking in Beijing during National Day celebrations, Oct 2. Due to extreme early measures, China has largely controlled COVID-19 within its borders.    © Reuters

Addressing safety concerns in Indonesia, Padjadjaran University medical professor Cissy Rachiana Sudjana Prawira-Kartasasmita said the fact that the Sinovac vaccine had passed early-stage clinical trials and advanced to Phase 3 means it is safe for humans.

"Otherwise, the clinical trials would have been halted earlier -- it wouldn't have advanced. We can say it is safe -- the report from Phase 1 says it is safe, and it continued with Phase 2, which was reported to be safe, too," Kartasasmita told a press briefing on Oct. 30.

An interim report of the ongoing clinical trial in Bandung is only scheduled to be published in November, after which the trial's "primary endpoint" -- when the vaccine can be judged effective -- will be clearer. Rodman Tarigan, Padjadjaran University spokesman for the trials, said there have been no reports of unwanted side effects from volunteers so far.

Buskers stand in front of an image of President Joko Widodo, part of a mask awareness campaign, in Bandung, Indonesia. (Photo by Dimas Ardian)

Given the drama over vaccines, medical professionals all stress that the first generation of vaccines will likely not be the magic bullet that cures COVID-19. In fact, the question of whether any of the front-running vaccines even confer immunity remains unresolved.

In September, medical journal "The Lancet" carried an article by Malik Peiris and Gabriel Leung citing evidence that many of the vaccines may prevent people from getting sick, but not prevent transmission of the disease. They also said the protection offered by vaccines may last less than a year.

"The notion that COVID-19-vaccine-induced population immunity will allow a return to pre-COVID-19 'normalcy' might be based on illusory assumptions," the article said.

For developing countries, including those in Southeast Asia, this may increase dependence on Chinese vaccines. Countries may require many more doses -- administered annually or biannually -- than previously thought, to keep their populations safe.

That may yet create a longer-term dependence on Beijing, which many countries are increasingly inclined to contemplate, given what is at stake.

Additional reporting by Francesca Regalado in Tokyo, Prem Kumar in Malaysia, Nikki Sun in Hong Kong, Ismi Damayanti in Jakarta and Cliff Venzon in Manila.

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