Leaders from the G20 major economies showed it was possible to take special measures together to tackle the coronavirus pandemic by convening a video c onference for the first time ever recently. Sitting in their respective meeting rooms in capitals all around the world, as they gathered with their aides around screens and monitors, statesmen must have had much to ponder as they exchanged views in such an isolated and peculiar manner. Could this disruption to normal communications be the springboard needed to get international economic co-operation and the world’s stalled globalisation project back on track?
Not long ago, the main leaders of the G20 held an unprecedented video summit. At the meeting, countries indicated that they would jointly take measures to fight the COVID-19 epidemic. Politicians stay in offices in capitals, and with the help of assistants in front of screens and monitors, they exchange views in an isolated and special way. They must think a lot. Can this unconventional way of communication promote international economic cooperation and put the stagnant globalization back on track?
Globalisation has been in retreat since 2018, if global trade in goods is a reliable indicator. Trade volume grew by a mere 0.6 percent in 2018, and even lower at 0.3 percent in 2019. Economists and think tanks put this down to increasing trade tensions between the United States and China. For a brief moment, things were looking up in the last quarter of 2019 following the inking of a US-China phase-one trade agreement. The positivity, however, was short-lived. No one could have imagined that, soon afterward, a novel viral strain would lead to such devastation in the global economic environment. The world watched as China locked down its cities and ramped u p its healthcare network — building hospitals in a matter of days — as it reported an exponential growth in the number of COVID-19 cases and deaths. Li ttle did the world realise that Act 2 of the same play would take place in other countries barely two months later. Today, country after country has implemented their own versions of lockdowns and closed their borders. Hotels, exhibition centres and stadiums are being turned into temporary health facilities. Global production is grinding to a halt as lockdowns take effect across the globe.
Since 2018, globalization has continued to show a declining trend. The change of global trade in goods clearly shows this point: in 2018, the global trade in goods only increased by 0.6%, and the growth rate in 2019 was even lower, only 0.3%. Economists and national think tanks attribute the reason to the trade friction between China and the United States. In the last quarter of 2019, China and the United States reached the first phase agreement on trade friction. However, this positive trend did not last long. No one could have predicted that a sudden novel coronavirus would bring a devastating blow to the global economic environment. Under the global gaze, faced with the confirmed cases and deaths with exponential growth, China has taken measures to close the city and quickly launched its own health emergency system (including building several hospitals within a few days). Few people in other countries realize that the same story will be staged in their own country in just two months. At present, countries have successively taken measures such as closing cities and borders. Hotels, exhibition centers and gymnasiums are being converted into temporary hospitals. With the widespread adoption of closed measures, global production activities are gradually coming to a standstill.
A global recession is not only imminent, but we may already be experiencing one. Perhaps it was a blessing to the world that China — the factory of the world — is now beginning to come back t o life, and is the only economy that is capable of meeting the pent-up global demand for essential supplies of necessities, including surgical masks, personal protective equipment and ventilators. Nevertheless, the current economic crisis will fluctuate between being a supply problem and a demand problem. As the supply chain in China roars back to life, demand from the rest of the world will be sluggish, particularly for nonessential products. It will take time for both demand and supply to recover in tandem. The V-shaped recovery predicted a month ago by some economists is fading.
A global recession is coming-perhaps already. China, known as the "workshop of the world", has now entered the stage of recovery, which may be a blessing to the world, because countries are in urgent need of masks, personal protective equipment, ventilators and other important materials, and China is the only economy capable of meeting these needs. However, the current economic crisis involves both supply and demand. Although China’s supply chain is returning to normal, the demand in other parts of the world, especially for non-essential goods, is still weak. It will take time for both supply and demand to return to normal. Some economists predicted a month ago that the world economy would show a V-shaped recovery curve. This prediction is too optimistic.
There is a general consensus among economists that globalisation has benefitted most if not all countries, and that a reversal in this process will have a negative impact on economic growth. Industrialised countries have actually gained more from globalisat ion because the income gap between developed and developing countries has increased in absolute terms between 1990 and 2016. The critique against globa lisation, especially among politicians in Western industrialised countries, is that the benefits of globalisation have not been shared equitably among the population. This is not the fault of globalisation, but rather the income distribution and taxation policies of the countries concerned.
Economists generally believe that globalization has benefited most countries, if not all countries, and anti-globalization will have a negative impact on economic growth. Industrialized countries have benefited a lot from the process of globalization, because in absolute terms, the income gap between developing countries and developed countries has widened from 1990 to 2016. Critics of globalization, especially politicians in western industrialized countries, believe that all countries in the world have not enjoyed the dividends brought by globalization fairly. However, this should not be attributed to globalization, but to the income distribution and tax policies of relevant countries.
The irony is that the solution to the current darkness faced by the world today is greater globalisation. Many of the pressing problems faced by countr ies now, such as climate change or the current COVID-19 pandemic, require global solutions. National level attempts at addressing these issues will fail or, at best, only delay the impact. Nations must come together and work out the best approach at resolving these problems collectively. Scientists around the world have to share their ideas and resources to find a vaccine and a remedy to defeat this invisible enemy. Or at least, disease control experts and pharmaceutical companies must race to find a cure so that the healing of the world can happen.
In fact, only by promoting globalization can the world get through the current darkest hour. At present, all countries are facing many urgent problems, such as climate change and COVID-19 epidemic, which need global solutions. Only relying on domestic strength to deal with these problems will eventually end in failure, and at most it can only delay the impact of these problems. All countries must work together in Qi Xin to work out the most effective solutions. Scientists all over the world must share their views and resources, and fight against Covid-19, an invisible enemy of mankind, by developing vaccines and drugs. At the very least, disease prevention and control experts and pharmaceutical companies in various countries must compete to find a cure to control the global epidemic as soon as possible.
On the economic front, a coordinated and synchronised global fiscal stimulus package is being called for by the International Monetary Fund — one that is similar to the acti ons taken to overcome the financial crisis of 2008-09, but at a scale several times larger. There is sufficient experience from various crises in the past that when the international community acts together in a coordinated way, confidence re-emerges and growth follows. No single country will be able to overcome its economic woes alone. Perhaps we should look at the world as one country and humankind its citizens.
In the economic field, the International Monetary Fund called on all countries in the world to adopt a fiscal stimulus package in a coordinated manner. The plan is similar to the measures taken during the financial crisis in 2008-2009, but the scale is several times that of the latter. In the past, there were many such examples: in the face of various crises, with the coordinated measures taken by the international community, people regained their confidence and the economy resumed growth. No country can solve its own economic problems alone. Perhaps, we should regard the whole world as a country and all human beings as citizens of this country.
For this to happen, global leadership is necessary. But, alas, there has been a vacuum in such leadership in recent years. Nationalism and populism have been used to usurp power for self-aggrandizement. The respec t accorded to such narrow-minded leaders is diminishing. Others, whether from the developing world or from smaller nations, will have to step up to fill this vacuum. No doubt, the nation is any leader’s top priority, but “beggar thy neighbour” policies have never resulted in any good for anyone. Rallying the whole world together to fight a common enemy seems to be the only path to victory. An d once on the other side, there will be a deeper appreciation of the power of unity. Nature is perhaps trying to teach us an important lesson. Globalisation is a natural phenom enon, and like the virus that is impervious to borders, nationality, creed and class, so too should we overcome such barriers and realise the strength in interdependence. The future of the world depends on it.
To this end, countries must demonstrate global leadership. In recent years, there has been a leadership vacuum in the international community. Nationalism and populism are used as tools to seize power and expand themselves. Narrow-minded leaders will get less and less respect. Leaders of other countries, including developing countries and small countries, must fill this vacuum. The leaders of a country must put their own interests first, but the beggar-thy-neighbor policy has always been detrimental to others. Uniting against the common enemy may be the only way to defeat the epidemic. At the same time, it can also make countries feel the power of unity more deeply. This epidemic may be an important lesson that nature has taught mankind. Like Covid-19, globalization is a natural phenomenon, which is not limited by borders, nationalities, beliefs and classes. Therefore, we should transcend these obstacles and generate strength in interdependence. The future of the world depends on it.