How Covid-19 vaccines can shape China and India’s global influence

SINGAPORE – With mass vaccination campaigns against Covid-19 underway globally, there is an emerging gap between rich and poor nations in their abilities to secure enough shots to immunize their people.

Wealthy nations have been accused of hoarding vaccines, mostly from Pfizer–BioNTech and Moderna. That has created room for India, China, and to an extent Russia, to develop, produce and supply vaccines to the developing world. Experts say those efforts can potentially bolster those countries’ influence and deepen their ties with other nations.

“While it serves their foreign policy objectives, it serves their … commercial interest to expand the market share of their vaccine products,” Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations, told CNBC by phone.

“In the meantime, it also helps mitigate the vast disparities in terms of the vaccine access between the wealthy nations and the poor nations,” he added.

World Health Organization Director-General Tedros Adhanom Ghebreyesus said last week that drugmakers prioritized regulatory approval in rich countries where the profits are highest, rather than submitting full dossiers to expedite a global vaccine distribution initiative supported by the WHO.

“The world is on the brink of a catastrophic moral failure – and the price of this failure will be paid with lives and livelihoods in the world’s poorest countries,” Tedros said.

India has already sent 1 million Covid-19 vaccine doses to Nepal, 2 million to Bangladesh, 150,000 to Bhutan, 100,000 to Maldives and 1.5 million to Myanmar, per media reports. It has also sent 2 million doses to Brazil.

India approved two vaccines for emergency use – one developed by AstraZeneca and Oxford University, which is being produced locally by the Serum Institute of India, and the other, named Covaxin, was developed domestically.

Vaccine diplomacy can be an effective use of soft power that can help New Delhi win friends and generate goodwill, according to Akhil Bery, South Asia analyst at political risk consultancy Eurasia Group.

“India’s generosity with its neighbors can help to mend ties, whether it be with Bangladesh (which was strained due to the Citizenship Amendment Act), or with Sri Lanka, where the Rajapaksas are known to have a pro-China tilt,” Bery told CNBC by email. The Rajapaksas are a prominent political family in Sri Lanka – both the country’s president and prime minister are part of the family.

“Even if the doses aren’t that many, it’s still significant enough to alleviate pressure on healthcare systems, allowing for resources to be allocated elsewhere,” Bery added.

With the virus mostly under control at home, China’s strategy includes striking deals with emerging economies to conduct clinical trials for a vaccine developed by Chinese firm Sinovac and helping to build vaccine production facilities in some of those countries. Beijing is also giving priority access to its vaccines in places like Southeast Asia, which is of strategic importance to China. In other places, the country is offering loans to fund vaccine procurement.

Eurasia Group’s China researcher, Allison Sherlock, told CNBC that the benefits for China are limited to reinforcing economic and political ties in its existing sphere of influence in regions including Southeast Asia. There, Beijing “is especially hoping that the vaccine will help repair relationships strained by tensions over the South China Sea, including with Indonesia, the Philippines, and Vietnam.”

“India wants to burnish its credentials as a responsible global stakeholder while China would like to improve its reputation which got tarnished in the early stages of the Covid-19 pandemic,” said Harsh Pant, head of the strategic studies program at the Observer Research Foundation in New Delhi.

“Both would be hoping that their outreach would give them some political goodwill and influence as well,” he told CNBC by email.

The coronavirus was first reported in the Chinese city of Wuhan in 2019 and Beijing has faced criticism over its early handling of the pandemic.

Given the nature of Sino-Indian ties, experts said it was inevitable that New Delhi and Beijing’s efforts in providing vaccines to other countries would be viewed through a competitive lens. Both India and China have downplayed the notion of vaccine diplomacy, describing the jabs as a necessary public good to tackle the global pandemic.

India, which kicked off its domestic immunization campaign this month, is not producing or using Covid vaccines as a kind of diplomacy, former Indian ambassador Rajiv Bhatia told CNBC. “It is very much first a national effort,” he said.

“Vaccines are primarily to help the country’s people but India has not forgotten its global responsibility,” Bhatia said. He explained that India’s efforts would help enhance the international prestige of the country’s scientists and products. The shots “will have positive impact beyond insulating people from this disease. It will add to the national pride and confidence.”

Chinese foreign ministry spokesperson Zhao Lijian on Monday responded to questions about India’s plans to send vaccines to its neighbors and said, “This issue can afford no place for malign competition, let alone the so-called ‘rivalry’. We hope and welcome that more doses of safe and effective vaccines will be manufactured at a faster pace by more countries.”

Beijing has stepped up domestic efforts to immunize key groups of people ahead of the Lunar New Year next month, when many are expected to travel around the country. Reuters reported that China approved three vaccines for emergency use but only one for the general public, while a fourth is being used by the military.

CFR’s Huang said he sensed a shift in China’s strategy in which Beijing is starting to prioritize domestic needs more, but is still following through on promises. He explained that China is likely to rely more on countries that have signed partnership agreements to produce its vaccines and use that to support other nations. China may also “provide financial assistance so that (other countries) can buy the vaccines from other sources,” Huang added.

One of the challenges vaccines developed locally in India and China face is their effectiveness in combating the disease.

India’s Covaxin is still undergoing clinical trials. At the time it received emergency approval from the drug regulator, it did not have extensive phase three trial data to determine its efficacy or safety. The rushed move was criticized by scientists.

Sinovac’s CoronaVac was found to be only 50.4% effective in clinical trials carried out in Brazil but has yielded different results elsewhere, raising concern and criticism over data transparency.

“An argument can be made if you have a vaccine whose efficacy rate is as low as 50%, you need more people to get vaccinated in order to achieve herd immunity,” CFR’s Huang said.

He added that India and China, both of which have large populations, will have to grapple with fulfilling domestic needs while maintaining international obligations and demand.

“That is going to further complicate issue in their efforts to play a leadership role by reducing the vaccine access gap,” he said.

Eurasia Group’s Bery said that one advantage India has is that the Serum Institute is one of the world’s largest vaccine manufacturers and that the country supplies more than 50% of the world’s vaccines.

“It will take time, but as we’ve seen from South Africa and Brazil, countries are lining up to gain access to vaccines manufactured in India,” he said.

Bery explained, however, China has its own distinct advantage – unlike its South Asian rival, it has brought the pandemic under control much quicker, thus the Chinese economy has recovered faster.

“This allowed it to increase international policy actions, while other countries, such as India, remained distracted by the pandemic,” Bery said.