Even if China wins the race to develop a vaccine, its producers are unlikely to compete in U.S., European, or Japanese markets. Chinese vaccine makers have struggled to clear the regulatory hurdles required to sell to developed Western markets. And in part because of the coronavirus pandemic, many developed Western countries are trying to “re-shore” production of medical supplies from China. Most have already signed enormous procurement deals with the major Western vaccine makers Moderna, Pfizer, and AstraZeneca. For a high-income country, the price of vaccinating every citizen is tiny compared with the cost of another lockdown. (Moderna estimates that its vaccine will cost between $64 and $74 per person, including the required booster shot.)

But in the vast emerging markets of Asia, Africa, the Middle East, and Latin America, where more than half the global population lives and many governments can barely afford vaccines, Chinese producers are poised to dominate. Chinese vaccines are in phase three clinical trials in 18 countries, including Argentina, Bahrain, Bangladesh, Brazil, Egypt, Indonesia, Morocco, Pakistan, Peru, Russia, Saudi Arabia, Turkey, and the United Arab Emirates. That is an enormous potential market, even if Beijing ultimately subsidizes most of the vaccine sticker price.

Indeed, Beijing’s vaccine distribution strategy is likely to rely heavily on subsidies. Chinese President Xi Jinping first alluded to this strategy in May, when he promised that any Chinese vaccine for COVID-19 would be a “global public good.” True to his word, Xi has promised $1 billion in loans to Latin American and Caribbean countries to pay for access to Chinese vaccines. Last month, Mexico signed a deal with CanSino, another Chinese vaccine maker with a candidate in phase three trials, to buy 70 million doses with a promised Chinese loan. China plans to begin exporting these doses even before it has vaccinated all of its own people, a gesture that is sure to generate additional goodwill.