- June 1, 2020
- Posted by: prerna
- Category: Feed
Well we like it or not, but Corona Virus is leading the world right now. US’ reluctance to a leadership role and China which had a great opportunity to show the world that they not only have developed the economic muscle but also the magnanimity needed to assist from the pandemic has failed.
Even before the outbreak of Corona Virus, Globalisation was in trouble cause of the Sino-America trade war. The pandemic will further politicise travel and migration and also seek to exploit the inward-looking self-reliance. This will lead to De-Globalisation of the world leaving the economy more vulnerable and create global instability.
After Lehman Brothers collapsed in 2008 most banks and some multinational firms pulled back. Trade and foreign investment stagnated relative to GDP. Then came President Donald Trump’s trade wars, which mixed worries about blue-collar jobs and China’s autocratic capitalism with a broader agenda of chauvinism and contempt for alliances.
China squandered the Leadership Opportunity:
China had an opportunity to be magnanimous—and prove that its championing of globalization was more than just rhetorical. Its doctors, scientists, and officials had grappled with Covid-19 for months. When it came to fighting the virus, it had personnel and equipment and the expertise. Instead, the country lumbered and blundered gracelessly.
Rather than seizing the chance to bring countries further into its orbit, China appears to have sent the message that it sees its rise to global primacy as inexorable—and that other nations should simply bow to that fact. After all, China was a cornerstone of supply chains worldwide. It had splashed enormous sums of money on infrastructure projects in the developing world and bought into key companies everywhere.
Communication is especially important as Beijing and Washington vie for dominance with a fragile first-phase trade deal at stake. It’s key for nations in Europe, Asia, and elsewhere as they consider how or whether to incorporate 5G technology from China telecommunications giant Huawei Technologies Co. and for poorer countries as they ask if China’s loans bind them to Beijing’s political bidding.
The Chinese see themselves as a rising power and the U.S. as a declining power, and Xi Jinping’s policy has been to press what he sees as a growing advantage by confronting the U.S. indirectly rather than directly,” he says. “The U.S. sees its position as stronger and more morally correct and believes the Chinese system has inherent weaknesses that leave us in a stronger position.
The U.S. hadn’t assumed its usual leadership role in a global crisis. Indeed, Donald Trump had criticized European nations over the pace of their border closings as the virus spread. China could have stepped up as the U.S. stepped away.
Despite some instances of co-operation during the pandemic, such as the Federal Reserve’s loans to other central banks, America has been reluctant to act as the world’s leader. Chaos and division at home have damaged its prestige. China’s secrecy and bullying have confirmed that it is unwilling—and unfit—to pick up the mantle.
The Trump administration is proposing to curtail immigration further, arguing that jobs should go to Americans instead. Other countries are likely to follow. Travel is restricted, limiting the scope to find work, inspect plants and drum up orders. Some 90% of people live in countries with largely closed borders. Many governments will open up only to countries with similar health protocols: one such “travel bubble” is mooted to include Australia and New Zealand and, perhaps, Taiwan and Singapore
The Way Forward:
Around the world, public opinion is shifting away from globalisation. People have been disturbed to find that their health depends on a brawl to import protective equipment and on the migrant workers who work in care homes and harvest crops.
Trade will suffer as countries abandon the idea that firms and goods are treated equally regardless of where they come from. Governments and central banks are asking taxpayers to underwrite national firms through their stimulus packages, creating a huge and ongoing incentive to favour them. And the push to bring supply chains back home in the name of resilience is accelerating.
On May 12th Narendra Modi, India’s prime minister, told the nation that a new era of economic self-reliance has begun. Japan’s covid-19 stimulus includes subsidies for firms that repatriate factories; European Union officials talk of “strategic autonomy” and are creating a fund to buy stakes in firms.
Poorer countries will find it harder to catch up and, in the rich world, life will be more expensive and less free. The way to make supply chains more resilient is not to domesticate them, which concentrates risk and forfeits economies of scale, but to diversify them. Moreover, a fractured world will make solving global problems harder, including finding a vaccine and securing an economic recovery.
Wave goodbye to the greatest era of globalisation—and worry about what is going to take its place