Key questions on globalization

The emergence of a pandemic ready to define an era

Editor’s note: Nations are working together to fight the new outbreak of coronavirus pneumonia to limit the damage to human health and the impact on the global economy. Here, in the fourth part of a series called “One World, One Fight”, we examine how countries can work together.

And now for globalization? With much of the world in partial or full lockout, the COVID-19 pandemic is expected to be a landmark event like the global financial crisis of over ten years ago.

One of the big questions concerns the consequences for the interconnected global economic system that has emerged since the 1990s.

Globalization has improved the standard of living for many people around the world, lifting millions of people in China out of poverty, in particular.

But in recent years, there has been a populist backlash in some western neighborhoods, particularly those in former industrial centers who feel they have missed the mark.

Even before the pandemic started, world trade had slowed considerably. In the 30 years leading up to the financial crisis, it had steadily increased at twice the rate of the expansion of global GDP, but since 2012, it has barely followed.

Leaders such as French President Emmanuel Macron have recognized that globalization is facing a major crisis.

One of its most ardent supporters, however, was President Xi Jinping. He explained it clearly in his speech at the World Economic Forum in Davos, Switzerland, in January 2017.

While acknowledging that globalization has created new economic problems, he said that humanity can only progress by cooperating.

Xi’s vision of globalization goes beyond mere commerce, and is embodied in his concept of “community of a common future for humanity” where countries work together to advance human civilization.

Singaporean academic and former diplomat Kishore Mahbubani believes that one of the lasting consequences of the pandemic could be the transition from a form of globalization centered on the United States to a version more centered on China.

He said that globalization has highlighted how interdependent the world has become and that is why the concept of a shared destiny is so relevant to our times.

“I use the analogy of planet Earth becoming like a cruise ship. So essentially, we are all in the same boat, and it is better for us to realize it. This applies not only to this crisis , but to issues like global warming, “he said. said.

“You have to take care of the boat as a whole. There is no point in keeping your own cabin clean. This is actually what a common destiny is.”

Wang Huiyao, president and founder of the Center for China and Globalization, an independent think-tank based in Beijing, said that the pandemic proves above all that globalization is not just about trade, but is a much broader concept.

“If people have not realized this before, they now know that we cannot live with each other. We are closely linked and we affect each other so much that we need a global approach to combat disasters or crises like this. The pandemic is a red flag to remind us of how globalized we are. “

Wang, also an adviser to the State Council of the Chinese Cabinet, said that one of the results of the pandemic would demonstrate what he thinks is the madness manifested in recent years by certain countries pursuing protectionism, unilateralism and embarking on trade wars.

“Unilateralist, anti-globalization is of no use to us now. What we have to do is help each other until the end of this crisis,” he said.

Wang believes that this approach has been well demonstrated by China in recent weeks.

“Despite her own major crisis, she has given her full support to the world community, from the release of the genetic sequence of the virus at the earliest opportunity, to the dispatch of medical teams to Italy. I really hope that when this will be over, eliminating some of the misconceptions and prejudices against China that exist in the West. “

Philippe Legrain, founder of the international think tank Open Economic Economy Network and former economic advisor to the President of the European Commission, is not convinced that the current crisis will lead to a new commitment to globalization.

He believes that the international response was much less coordinated than that of the global financial crisis when the G20 proposed an unprecedented bailout.

“There has been very little international cooperation during this crisis. Most governments have acted unilaterally. Even within the European Union, countries have not responded to Italy’s urgent demand for medical supplies, although China has done it, “he said.

“The closing of borders, restrictions on trade like India’s with exports of pharmaceuticals and the perception of foreigners as carriers of disease all create national economies and a more nationalist policy.”

Before the emergence of the pandemic, the debate on globalization was centered on trade and the slowing down of trade in relation to world GDP represented a kind of setback against the concept.

Parag Khanna, managing partner of FutureMap, a Singapore-based strategic consultancy, and author of The Future is Asian, said that it has always been wrong to view globalization solely through the lens of trade.

“Trade in services is often updated in trade statistics, but it may be more representative of globalization than trade in goods. Trade in percent of GDP should always be expected to decline when large economies (like China and India) are developing in terms of domestic growth (consumption).

“Trade is not the most important indicator of globalization, it is only one. Foreign investment, capital flows, migration, etc. are just as important.”

Mahbubani, academic and author of a new book, Has China Won ?, which focuses on Sino-US relations, said that it has always been an exaggeration to claim that the slowdown in world trade meant the end of globalization.

“When you talk about slowing, you are talking about slowing the growth rate. You are not talking about reversal. OK, it was growing much faster in the 80s, 90s and 2000s, but it’s still actually growing, and I think it will continue to grow. “

However, the pandemic has raised the issue of globalization based on global supply chains and just-in-time manufacturing, which requires an uninterrupted flow of components and other supplies.

Sectors migrate

Some observers have argued that the epidemic could accelerate the departure of manufacturing from China to other countries.

Douglas McWilliams, vice president and founder of the Center for Economics and Business Research, an economic consultancy in London, said it was happening anyway.

“Most of China’s low-cost sectors have already migrated to other countries,” he said.

McWilliams believes the pandemic could accelerate a transition into globalization, from which China will benefit.

“The new model will be based on specialization, particularly in technology. China is a world leader in a wide range of technologies, with companies such as Huawei, Alibaba, Tencent and Geely, all considered world leaders in their fields. All of this should work in favor of China, “he said.

Globalization could also become less on global supply chains, but more on connectivity.

Some commentators believe that this is best illustrated by the Chinese Belt and Road initiative, proposed for the first time in 2013 and which aims to forge links between countries, in particular through infrastructure but also in less physical forms.

Legrain of the Open Political Economy Network argues that the initiative could sum up the meaning of globalization in the 21st century.

“Globalization exists in a political context. In the 19th century, it largely took place within the European empires. In the 20th century, it occurred through international institutions supported by the United States, and in In the 21st century, it can exist in institutions centered on China, like the BRI, “he said.

Khanna of FutureMap, who described the initiative as the equivalent of the United Nations, the World Bank and the Marshall Plan all combined, said it would become an important arm of globalization.

“It embodies investment in infrastructure, trade facilitation, migratory flows and new institutional dynamics around the world. It is undoubtedly an additional layer of globalization,” he said.

Mahbubani believes that the pandemic could be a turning point for globalization, as it comes at a time when the United States and China differ in their thinking about how they want the world to work.

“The Americans have lost confidence in globalization and international trade. They see free trade agreements as increasingly toxic. China is too aware of the cost of cutting the world … It can see that its resurgence economy of recent decades is the result of global engagement, “he said.