Coronavirus News Asia

Sex Pistols-style anarchy threatens world economy

Forgive the punk reference and the play on the Sex Pistols’ cult single, but are we about to experience economic Anarchy in the World?

Cracks were already starting to appear in globalization before the Covid-19 crisis amid a Sino-American standoff. Now, they could fracture further in a post-pandemic landscape, reshaping manufacturing and supply chains.

“The pandemic seems to be pushing globalization back to the years before the 1980s, as countries are locked down and borders sealed,” He Yafei, the former deputy minister of China’s Ministry of Foreign Affairs, said earlier this week in a series of “Anarchy Scenarios.”

“Globalization was already under siege before Covid-19 with the system ravaged by trade wars. The pandemic has disrupted world commerce, trade and the free flow of people, [while] Chatham House CEO Robin Niblett said that globalization as we know it is coming to an end,” he wrote in an essay on the academic website China-US Focus.

For He, this is the worst-case scenario after highlighting the opening salvos in the New Cold War between China and the United States. 

“The pandemic has broken down global supply chains and brought the global economy into negative growth. The International Monetary Fund estimated that global GDP in 2020 would be minus 3% [while the OECD predicted global economic activity would fall 6%],” He, a senior research fellow at Renmin University’s Chongyang Institute for Financial Studies, said.

Relations between Beijing and Washington were already frosty before the coronavirus outbreak in January. A  two-year trade war launched by US President Donald Trump, and friction in the South and East China Seas, are still open sores.

But the atmosphere has become even more poisonous after the clampdown on Hong Kong’s pro-democracy movement in the past few weeks and revelations about Muslim detention camps in the Xinjiang region last year.

Rivalry in the high-tech sector has also sparked new levels of hostility amid national security concerns. Academics and analysts have even used the “decoupling” buzzword as Trump pushes to bring American manufacturing back to the US.

‘Strategic engagement’

“For three decades, Western nations have pursued a policy of strategic engagement with China. We hoped that by trading and engaging ever more closely with China, it would open up and move towards democracy over time. In fact, if anything, China has become steadily more authoritarian,” a report published by the Henry Jackson Society and entitled in part, Breaking the China Supply Chain, stated.

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