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The U.S.’s first shot at vaccine diplomacy in Asia failed to deliver. Can a second do the trick?

September 16, 2021, 10:07 AM UTC

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.

Grady McGregor here, filling in for Clay Chandler.

The top leaders of the Quad—the U.S., India, Japan, and Australia—kicked off their first summit of top leaders in March with a pledge to send 1 billion COVID-19 vaccine doses to the Indo-Pacific region by the end 2022.

“We are committed to leveraging our partnership to help the world’s most dynamic region respond to historic crisis,” the White House said in a joint statement with Quad leaders, optimistically titled ‘Spirit of the Quad.’

Under the deal, Japan and the U.S. agreed to finance (for an undisclosed sum) the production of 1 billion doses of COVID-19 vaccines in India, from drugmakers including U.S. firms Novavax and Johnson & Johnson, which Australia would then distribute across Asia.

Australian Prime Minister Scott Morrison hailed the vaccine pledge as a “new dawn” for the Indo-Pacific region, and the vaccine commitment was widely viewed as a means to counter China’s vaccine diplomacy in that part of the world.

But six months later, the sun has yet to rise on the Quad’s vaccine efforts.

Weeks after the Quad leaders first met, India, the lynchpin to the Quad’s vaccine plan due to its vast vaccine production capabilities, effectively blocked exports of vaccines as its own hospitals became overrun with COVID-19 patients in the spring and summer.

India’s continued restrictions on vaccine exports have all but choked off its ability to deliver vaccines to the region (and elsewhere, for that matter). The U.S., meanwhile, has sent small vaccine donations to Indo-Pacific countries, including 6 million doses to Vietnam, 2.5 million doses to Thailand, 1 million vaccines to Cambodia, and 1 million vaccines to Laos. Japan, too, has donated at least 3 million vaccine doses throughout Asia, while Australia has pledged to share 20 million doses in Asia by the middle of next year.

But the Quad’s individual efforts are measly compared to their collective goal and have not come close to matching China’s campaign.

China has delivered 454 million COVID-19 vaccines to countries in Asia, with at least 326 million of those vaccines delivered to the Indo-Pacific region, according to Bridge Consulting.

On Sept. 24, the Quad leaders are set to meet at the White House for their first-ever in-person gathering. In announcing the event, the White House did not specify that vaccines would be on the agenda, but said the countries will discuss “combatting COVID-19” in the region. The U.S. coordinator for the Indo-Pacific region Kurt Campbell previously promised that the upcoming Quad summit would bring “decisive” commitments in sending vaccines to the region.

But the Quad’s vaccine pledges may continue to be empty promises without access to Indian-made vaccines, which is why U.S. President Joe Biden will reportedly press India Prime Minister Narendra Modi to restart vaccine exports in the lead-up to the event.

A source in India’s government told Reuters this week that India may lift export restrictions “soon.” The move would be a welcome relief to a Biden administration that’s locked up its own vaccine stockpile of 100 million-plus doses for a potential booster shot campaign.

On Tuesday, a Chinese government spokesperson lashed out at the Quad’s diplomatic efforts and declared it “doomed to fail.” It’s certainly true that the bloc’s flashiest collaboration so far has come up way short, starving countries like Indonesia, the Philippines, Vietnam, and Thailand of vaccine doses even as record waves of COVID-19 spread.

If the Quad meeting next week produces a second vaccine plan, it’s likely to be met with skepticism, rather than the optimism that accompanied the first.

“In a context of rampant COVID-19 outbreaks and the associated economic privation, [Southeast Asia] is likely to be less impressed by what the U.S. says than what it actually delivers,” writes Sebastian Strangio, Southeast Asia editor at The Diplomat.

More Eastworld news below.

Grady McGregor
grady.mcgregor@fortune.com

This edition of Eastworld was curated and produced by Yvonne Lau. Reach her at yvonne.lau@fortune.com

Eastworld news

Casino woes 

Macau’s casino operators lost over $18 billion on Wednesday—or one-third of their value—after authorities announced a 45-day consultation for the city’s gambling sector, which sparked investor fears of an industry clampdown. The consultation will address nine key areas, including tightening requirements for casino operators and introducing government officials to “supervise” companies’ daily operations. Shares of Wynn Macau plunged 34% to a record low, while Sands China stock dropped 28%. Macau's casino industry accounts for 80% of the government’s tax income and nearly 56% of the city’s GDP. Reuters

Slowing growth

China’s economy further decelerated in August, as the government imposed strict measures to quell a COVID-19 outbreak that began in late July. Retail sales in China—a key gauge of the country’s consumer spend—grew 2.5% in August, the slowest pace of growth in a year. China’s industrial output growth slowed to 5.3% in August, down from 6.4% in July. Now, a new COVID outbreak in China’s Fujian province has triggered yet another round of mass testing and lockdown measures, which could further dampen the economy. Fortune

To booster shot or not 

If India decides that its citizens require COVID-19 booster shots, the country's promise to deliver COVID vaccines to lower- and middle-income countries could stall even further. In June 2020, the Serum Institute of India (SII)—the world’s largest vaccine maker by volume—inked an agreement with U.K. pharma giant AstraZeneca to make 1.1 billion Covishield vaccine doses for COVAX, the WHO-supported initiative to equalize global vaccine access. But India has restricted vaccine exports for many months to boost its own domestic vaccine supply. Adding a third dose to Indians' vaccine regimen could extend the ban on exports. Fortune

Cashing in on crypto

Laos has authorized cryptocurrency trading and mining. Six companies have now received approval to start licensed crypto activity. Meanwhile, government ministries are now in discussion with the Bank of Laos and Électricité du Laos to set industry regulations; their findings will be released on Thursday and Friday. Laos, Southeast Asia's only landlocked nation, has a $14 billion debt burden; it's borrowed heavily to build dams, but it has a surplus of hydropower which, experts say, will likely be used for energy-intensive crypto mining. Financial Times

Markets and movers

Canva – Australian graphic design platform Canva is now the world's fifth-most valuable startup. The company’s valuation surged to $40 billion following a fresh $200 million fundraising led by investment management firm T. Rowe Price, announced on Tuesday. Canva’s user base grew significantly in 2020 as the COVID-19 pandemic forced people to work from home. Canva users doubled from 30 million in June 2020 to 60 million this month. Founded in 2013, Canva provides design templates to make social media posts, digital posters, greeting cards, and more.

Prenetics – Hong Kong’s Prenetics, a COVID-19 testing laboratory, will merge with U.S.-listed blank-check firm Artisan Acquisition in a SPAC deal that values the lab at $1.25 billion. Artisan, backed by Hong Kong tycoon Adrian Cheng, will also raise an extra $120 million to support the deal; Artisan raised $339 million in a May IPO. Founded in 2007, Prenetics originally operated as a genetics and DNA testing company but shifted to COVID-19 testing last year. Prenetics will focus on more acquisitions ahead; plus expansion in the U.K. and Europe, said company CEO and founder Danny Yeung. 

Didi – Chinese ride-hailing giant Didi has recorded a 30% drop in daily users since its New York IPO in June, says new data from Aurora Mobile, which tracks Chinese mobile users’ behavior. Last month, Didi’s daily user count fell to 10.9 million compared to 15.6 million in June. Didi’s June listing prompted a swift and stern response from Beijing. Authorities banned Didi from signing up new users as they carried out a cybersecurity investigation into the company, which is still ongoing.

Carousell – Online marketplace Carousell is Singapore’s newest unicorn, now valued at $1.1 billion after securing a $100 million fundraise on Wednesday. Founded in 2012, Carousell operates its app in eight markets across Southeast Asia, Hong Kong and Taiwan. Carousell’s user base grew during the pandemic; in Hong Kong for instance, the number of monthly active users surged 40% from November 2019 to December 2020. Users can buy and sell new and used goods and services via the Carousell app; the most popular categories are electronics, luxury fashion, and furniture.

Japan Inc. – Japanese exports grew 26.2% in August, compared with the same month last year, says new data from the country’s Ministry of Finance. Japan has logged six straight months of double-digit export growth due, in large part, to the strong global demand for chip manufacturing equipment. A majority of Japanese firms believe the economy will recover to pre-pandemic levels in 2022, while one-third anticipate a full recovery by 2023, according to a Reuters’ Corporate Survey released on Thursday. By contrast, the Japanese government estimates that GDP will return to pre-COVID levels this year.

Final figure

400,000 

Malaysia’s Langkawi—a group of 99 islands in the Straits of Malacca—will reopen without quarantine restrictions on Sept. 16 to fully vaccinated travelers, as the country aims to restart its once-thriving tourism sector. Langkawi, one of Malaysia’s most popular destinations for domestic and international visitors, hopes to attract 400,000 tourists and generate $40 million in revenue by the end of 2021. In 2019, Langkawi welcomed 3.9 million visitors which generated $1.3 billion in revenue for the region.

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