If there’s going to be a deadly intestinal virus outbreak in central China, you can pretty much bet it’s going to happen in Fuyang. The Anhui city, near the border with Henan province, has something of a history of unwholesome happenings.

So, there were no surprises when a CER colleague sent me a link about the recent Enterovirus 71 (EV71) outbreak. EV71 is a variant of hand, foot and mouth disease (HFMD), but with more severe symptoms:

Typically, it starts with a generalized illness, poor appetite, and sore throat, followed by a fever, rashes on the hands, feet, and buttocks along with mouth ulcers.

State media reports that there are now over 15,000 cases of HFMD in China, resulting in 26 deaths. In Yunnan province there are 113 cases, Jiangxi has 114 and Shanghai municipality has reported 1,988.

In Fuyang, EV71 has infected 3,300 people and caused 22 deaths.

Remember 2004’s fake milk powder scandal that killed 15 babies? That was Fuyang.

And last month, the city government’s “white house” (do we mean Capitol building?) made news. At a glance, we’d guess some dubious sources of income may have been involved. A whistle-blower on the project mysteriously died in prison. The central government is investigating.

“Fuyang is the most luan place I know,” our Chinese teacher from Anhui told us. “The government, the people, the mafia … just go to the train station and you’ll know what I’m talking about.”

We may take a rain check on that one.

Related

Danwei: Darkness in the “White House”

Wikipedia: Fuyang disambiguator (there are two Fuyangs, one in Anhui and one in Zhejiang)

The Financial Times reported today that China’s National Social Security Fund (NSSF) has held talks with three US private equity (PE) firms with a view to buying a stake of nearly 10% in one of them.

Given Beijing’s long-held ambition to boost outbound investment this is hardly surprising. China’s desire to increase capital outflows has gained momentum this year with China Investment Corp’s (CIC) investment in PE group Blackstone (See our July 2007 piece on it), CITIC Securities announcing a tie-up with Bear Stearns and ICBC moving in on both Seng Heng Bank of Macau and South Africa’s Standard Bank.

What is also unsurprising is the concern expressed in the West at the nature of some of these investments. Politicians and industrialists in the US and Europe may be coming around the the fact that the countries that have gobbled up all their forex are now trying to put it to constructive use; but the opaque management of the sometimes politically-motivated sovereign wealth funds doing the buying is proving a little harder to swallow.

So where does the NSSF come into this? CIC’s investment strategy may be a closely guarded secret but its ultimate aim - to realize greater returns on China’s foreign currency holdings, with half an eye on strategic resource purchases - is quite clear.

The NSSF is generally referred to as the lender of last resort for China’s wobbly social security network. But what is this “last resort”? Since it was founded in 2000, various theories have been put forward: it is a strategic reserve; it is to be spent in provinces where poverty is most prominent; it is for use once China’s demographics become so twisted that each worker will have to feed a string of elderly dependents; it is only there to support the pension system; it is a cash pile for welfare in general, including unemployment benefits, medical cover, and so on.

Will the NSSF do all these things? Will it do none of them? This fund has been given license to invest abroad, it has been allocated chunks of big-money IPOs, yet we don’t know exactly why it is there. Ultimately, this isn’t an issue for suspicious foreign trade partners. It is an issue for the Chinese people who are supposed, at some time and in some way, to rely on it for support.

A short but interesting debate unfolds in the letters page of the current Foreign Policy magazine. One of its overarching messages is the critical role family plays in the stability of China.

Families, even extended families, provide a safety net that enables people to weather problems - periods of unemployment are easier to handle, forced relocations can become less of a burden. Family members can also band together to fight legal or regulatory injustice, pitch in for unexpected health care bills or buy land as a group or provide loans to start a business.

In short, families can provide the social safety network that the government does not provide.

In many ways, families balance out the damage that local government causes through corruption and a disproportionate emphasis on economic growth over welfare.

One way to help this is to allow for the faster development of civil society. Non-governmental organizations (NGOs), both domestic and foreign, are not yet allowed in China but there are signs of change.

On May 25, China Daily reported that the government is to create registration policies for NGOs (foreign NGOs have to operate as businesses in China) and streamline registrations for their domestic equivalents.

All this is part of an effort to deal with a very basic problem that Beijing: how to maintain its authority and legitimacy if economic growth begins to waver. As long as more people make more money than they did last year, all is good. If that changes, there are fears of social unrest. Nobody wants that.

Families can provide some stability in bad times but their ability to act as the country’s surrogate social safety provider only goes so far. A strong civil society can give people more recourse in times of trouble but Beijing needs to let go of some of the reins.

Have you heard this gem? Some reporters in Hangzhou decided to put a few city hospitals to the test. They submitted themselves for medical exams, and turned in vials of tea instead of urine samples. Six out of ten hospitals told them they had urinary tract infections, and recommended medications costing up to RMB400. I can’t put it any better than the China News Service did:

“It makes one shiver all over even though it’s not cold”.

There is an interesting legal case in India where Novartis, a Swiss multinational drug company, is suing the Indian government over a declined patent application.

The application is over a cancer drug called Gleevek which Novartis has already patented in 40 countries. India, which is the world’s second-largest producer of generic drugs, has a huge generic industry. (Belgium is the top producer but India produces more drugs used in developing countries such as AIDS treatments.)

As usual with the cases, the dispute is really over a minute point of law, namely a section of India’s patent legislation that says only entirely new drugs can be patented. To over-simplify, variations of old processes cannot be copyrighted.

The case has drawn worldwide attention and spurred a petition from international medical organization Doctors Without Borders for Novartis to drop the case, saying it could ultimately hinder access by the world’s poorest to essential medicines.

Novartis says that’s not the case, that Gleevek is only used by 1-2 out of 100,000 cancer patients and that the lawsuit is about clarifying India’s patent laws.

From an emotional standpoint it is difficult to argue with people who say the world’s poorest need more access to drugs. Generics have been responsible for lowering the prices of antiretroviral treatments used to treat HIV/AIDS from the tens of thousands to just hundreds of dollars per course.

On the other hand, it is also worth considering that companies like Novartis spend hundreds of millions on R&D to get these drugs to market while generic drug makers simply reverse engineer them.

The case will likely continue over the next few months and possibly years. It is one worth following as it will likely impact people around the world.

China’s efforts to reform and improve its woeful public health care system have turned out to be easier than anybody could ever have expected.

In the end, all China needed to do was engineer the appointment of China national Margaret Chan as head of the World Health Organization.

Chan has repaid the favor, praising China’s health care efforts following a meeting with Premier Wen Jiabao this week.

“China has made great progress in building a public disease surveillance and prevention system and has made a huge investment in the field of public health since the 2003 SARS (severe acute respiratory syndrome) outbreak,” Chan told China Daily.

“I’ve noticed that the Chinese Government has made unremitting efforts to improve medical services, especially for the rural population and disadvantaged urban groups.”

Problem solved. Now China can turn its attention to its environmental woes. Forget about dealing with energy efficiency or wastewater discharge, China should simply concentrate on getting its man or woman elected to head the Intergovernmental Panel on Climate Change.

If it plays its cards right, expect a clean, green China to be declared sometime in the next couple of years.