Is COVID a Bioweapon? Will China Be Punished?

It's hard to remember a time when U.S.-China relations were worse than they are now. 

I mean, it's bad. 

Really bad.

The calls to punish China for its mishandling of the coronavirus are growing — in number, scale, and intensity.

And China is responding with threats, propaganda, cyberattacks, and military muscle.

The rising tensions are unmistakable. They could even lead to an all-out war.

I know because I've been closely monitoring China-U.S. relations for the past several years.

As the publisher and investment director of a stock advisory focused exclusively on global conflict, I've gone in-depth on the trade war, China's militarization of the South China Sea, its military cyber unit, its massive surge in defense spending, and most recently, the country's laser attacks on U.S. pilots.

I can tell you more about America's tense relationship with China than any other financial writer on the planet. 

So I've been fielding a lot of China-related questions these days.

Namely, there are two that seem to be foremost in investors' minds:

1. Did the Coronavirus Come from a Lab?

2. Will China Be Punished?

Those are the two questions I aim to answer today...

Did the Coronavirus Come from a Lab?

The answer to this first question is that nobody knows for sure, but there's considerable evidence to suggest that yes, it did.

Now, to be clear that does not mean the virus is manmade. That is simply not true. It's not a bioweapon. 

However, Secretary of State Mike Pompeo has publicly declared that there's “enormous evidence” it came from one of Wuhan's two biochemical labs.

“There is enormous evidence that that’s where this began,” Pompeo told ABC. “China has a history of infecting the world” as well as "a history of running substandard laboratories.”

It'd be nice if the Trump administration produced this evidence because only a fool would take their word for it. But Pompeo also isn't wrong about China running substandard labs.

As I said, Wuhan is home to two labs. Both labs were studying coronaviruses, and both had researchers harvesting bats from caves.

Furthermore, one lab is the Wuhan Institute of Virology, an affiliate of the government-run Chinese Academy of Sciences. It is the only lab on the Chinese mainland equipped for the highest level of biocontainment, known as Biosafety Level 4 (BSL-4).

Its lead virologist, Shi Zhengli, has spent years fishing around bat caves, earning her the moniker "Batwoman."  

Meanwhile, the other lab, Wuhan CDC, is just a short distance from the Wuhan wet market where officials first said the virus emerged.

And as it turns out, the bats linked to the coronavirus can't naturally be found within 100 miles of Wuhan, but are studied in both labs. 

Furthermore, photos and videos have emerged of researchers from both labs collecting samples from bats without wearing protective gear.

An American State Department expert who visited the WIV in 2018 also noted there was "a serious shortage of appropriately trained technicians and investigators needed to safely operate this high-containment laboratory."

And a peer-reviewed paper published by Chinese scientists on January 24 found that three of the first four cases, including the very first case, had absolutely no link to the Wuhan market.

So is it a bioweapon? Probably not. 

Did it leak from a Chinese lab? Sure sounds like it.

And if that's the case, the Chinese government is definitely hiding that fact, just as it tried to hide details regarding the virus' spread and severity.

Crime and Punishment

So if the virus, which has cost hundreds of thousands of lives and devastated the global economy, was recklessly leaked from a Chinese lab...

If China could have done more to prevent its outbreak but didn't...

And if China is covering all of that up, even going so far as to blame U.S. soldiers for the pandemic's origins...

Then will China be punished?

Many China-hawks (particularly Republicans looking for a scapegoat in an election year) are eager to punish China for its misdeeds.

Florida Senator Marco Rubio wants to halt China’s hold on the pharmaceutical supply chain.

Missouri Senator Josh Hawley has introduced a resolution calling for an investigation into Beijing’s cover-up, and wants to sanction Chinese officials for “the deliberate concealment or distortion of information about public health emergencies of international concern.”

That resolution is backed by Arkansas Senator Tom Cotton, who also wants to afford Americans the right to sue Chinese officials for the pandemic.

“As we get through this pandemic, there has to be an accounting and a reckoning for China,”  Cotton told the Washington Free Beacon. 

“China needs to pay a price at the international level: a full investigation into China’s initial coverup of the outbreak and ongoing propaganda campaign,” said Nebraska Senator Ben Sasse. “The U.S. should lead the international community in determining an appropriate punishment once that investigation is finished.”

And South Carolina Senator Lindsay Graham says the United States should refuse to repay some of the American debt China holds “because they should be paying us.” 

Refusing to honor its debt obligations would almost certainly destroy America's credit with investors and foreign borrowers, send interest rates soaring, and wreak havoc on the U.S. and global economies. 

However, the notion has also apparently gained some traction in the White House. 

Enough that China is now suggesting it may start dumping its U.S. debt.

And both parties are reportedly preparing new tariffs and ratcheting up the trade war that just months ago seemed to be easing.

Indeed, it's worth remembering that Trump was initially a China apologist, tweeting in January:

More recently, the president changed his tone, saying he's "not happy with China." But it remains to be seen whether or not he'll follow through in a meaningful way — especially when a resurgent trade war would make economic recovery all the more difficult.

Nevertheless, the broader American public seems to be on board with holding China accountable.

A Pew Research poll last month showed that two-thirds of the U.S. (72% of Republicans and 62% of Democrats) now have an unfavorable view of China.

There's been a surge in hate crimes against Asian Americans, as well. 

And the states of Missouri and Mississippi have even rushed ahead and filed lawsuits against China, seeking reparations. (Good luck with that.)

No question the political pressure is building. But much of what does or does not happen will largely depend on whether governments in Europe and Asia join the mob. 

If they do, then it will probably be easier — politically and financially — for the U.S. to gain some form of retribution.

But it won't happen anytime soon. 

Because as it stands now, the United States is still extremely dependent on China for supplies to help combat the pandemic. That includes medical equipment, protective gear, and even prescription drugs. 

So it could be a while and could be at the hands of a new administration.

Fight on,

Jason Simpkins

@OCSimpkins on Twitter

Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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