COVID-19 Will Not Reduce Global Reliance on China
At a time when some might be tempted to turn inward, China remains as committed as ever to globalization. The trade, investment, and growth opportunities that this commitment generates could well be a godsend for struggling countries in the aftermath of the COVID-19 crisis.
SHANGHAI – The global recession brought on by the COVID-19 pandemic is almost certain to be far deeper and more protracted than the one that followed the 2008 global financial crisis. While many governments have pledged to bolster their economies with unprecedented monetary and fiscal stimulus – despite holding already-massive public debt – the best they can probably hope for is to stave off economic collapse. If they insist on turning inward – pointing fingers and erecting barriers, instead of upholding international cooperation and economic engagement – even that may become impossible.
Engagement by the United States and China is especially important. In the wake of the 2008 crisis, the global economic recovery got a major boost from Sino-American cooperation, which supported individual stimulus measures (quantitative easing in the US and large-scale fiscal stimulus in China). But the COVID-19 crisis has erupted at a moment when bilateral relations – as well as international cooperation more broadly – are at their lowest point in decades, and the US has shown no inclination to improve the situation.
On the contrary, some US politicians immediately latched onto the COVID-19 crisis to argue that no country – especially China – should have such a central position in global supply chains. Moreover, US President Donald Trump’s administration has seemed more interested in reminding the public that the virus first emerged in China than in taking strong action to manage it. This has severely undermined the willingness and ability of the world’s largest economies to mount a coordinated response.