Is Strategic Cooperation with China Possible?
From climate change and rising inequality to the pandemic and the digital revolution, there is ample common ground for rival powers to pursue mutually beneficial forms of collaboration. Unfortunately, the opposite has happened, raising doubts about the current recovery and the world's future health and prosperity.
MILAN – Looking at the economic landscape as 2021 draws to a close, one cannot help but notice the emergence of new obstacles to a robust recovery. The United States, Europe, China, and others face a growing list of remarkably similar short- and longer-term challenges.
The pandemic remains the most immediate concern. Without full global vaccination, new COVID-19 variants will continue to emerge, potentially forcing governments to renew partial or full lockdowns. The coronavirus thus represents a permanent drag on the recovery.
A second challenge is the blockage of global supply chains, which, together with supply-side shifts in labor markets, has created persistent inflationary pressures unlike anything seen in over a decade. Without cross-border efforts to resolve supply bottlenecks and shortages, central banks may be forced to curtail today’s surging demand by tightening monetary policy.