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Will we usher in a "poorer, mediocre and narrower world"?

Will we usher in a “poorer, mediocre and narrower world”?

by YCPress

The COVID-19 Pandemic is profoundly affecting the direction of the world pattern.

On the one hand, the Pandemic has brought a serious economic recession to the world, and economic globalization has been challenged. On the other hand, the Pandemic has created a vacuum in the global governance pattern, and various forms of nationalism continue to rise, and societies are separated from each other.

In the post-Pandemic era, the reconstruction of global economic and trade pattern and order is inevitable.

Former Australian Prime Minister Kevin Rudd, director of the American Asian Association Policy Institute, said in mid-2020 that “Rampant nationalism in various countries has replaced order and cooperation, and the anti-Pandemic action at the national and international levels is chaotic, indicating that there may be broader Pandemic consequences.”

In fact, this trend has been brewing for many years, and the reasons are intertwined, but the fundamental factor leading to the instability of the geopolitical situation is the gradual transfer of power from west to east.

In the coming years, this conflict of power will lead to chaos, disorder and uncertainty in the world pattern.

Today, the haze of the Pandemic is still spreading around the world.

Travel bans, entry control, import and export restrictions continue. The decline of globalization and the lack of global governance seem to be unstoppable.

Poor countries are facing a more serious survival crisis. Where will the world go?

Today, Uncle Ku shares an article by Klaus Schwab, founder of the World Economic Forum, looking forward to the world pattern in the post-Pandemic era.

This article is an excerpt from the post-Pandemic era of Watchthink tank.

It was published by CITIC Publishing Group in November 2020. The original title is “Gypolitical Reconstruction”.

The original text has been deleted and does not represent the view of Watchthink Tank.

Unstoppable deglobalization

Globalization is a broad and vague concept, which refers to the exchange and exchange of goods, services, people, capital and even data among countries around the world.

Globalization has helped hundreds of millions of people out of poverty and brought the interconnection of today’s world to an unprecedented level.

But for more than a decade, the economic and political momentum that has generated and driven the development of globalization has been weakening.

For example, global trade negotiations have begun as early as the beginning of the 21st century, but no agreement has been reached so far; the social costs caused by the asymmetry of globalization are increasing, especially the unemployment rate of manufacturing workers in high-income countries; and the risk of financial globalization has also increased after the 2008 financial crisis.

As the above factors work together, populist and right-wing parties around the world (especially in Western society) have risen.

When these political parties come to power, they often return to nationalism and pursue the isolationist agenda, which are the opposite of globalization.

The global economy has been intertwined in complexity, so it is impossible to end globalization, but it is still possible to slow down globalization or even reverse the trend of globalization.

At present, the most prominent feature of gradual deglobalization is in its core area, that is, the shortening or localization of global supply chains.

Why do global supply chains show such characteristics? There are two main driving forces: first, enterprises believe that it is a risk mitigation measure that can prevent supply chain interruption (tradeoff between supply chain resilience and efficiency); and second, political pressure from left and right parties.

Since 2008, expanding industrial localization has been an important political issue in many countries, especially Western countries, and this trend will intensify in the post-Pandemic era.

From the perspective of right-wing political forces, the main driving force of resistance to globalization is protectionists and national security hawks, who had accumulated strength to promote the return of industries, including medical services, agriculture and large non-strategic products long before the Pandemic began.

During the Pandemic, they actively promoted the trade protectionist agenda, set up higher barriers, and prevented the free movement of capital commodities and people.

From the perspective of left-wing political forces, activists and environmental groups have been resisting globalization before, and the positive impact of the COVID-19 Pandemic on the environment – which greatly reduces carbon emissions, air pollution and water pollution levels has strengthened their attitude.

Even without political pressure from the far right and environmental activists, many governments realize that trade dependence has lost political viability in some cases.

For example, how can the U.S. government accept that 97% of the antibiotics supplied by the domestic market are produced in China?

The process of deglobalization cannot be completed overnight, and shortening the supply chain is not only extremely challenging, but also at a high cost.

For example, if it is to be completely decoupled from China, American companies must invest hundreds of billions of dollars to build new factories, and the government must invest the same huge amount of money in infrastructure, including airports, transportation hubs and real estate, to serve the newly built supply chain.

Although in some cases, the political will to decoupling exceeds the actual capacity, the long-term trend is undoubtedly very clear.

This is reflected in the action taken by the Japanese government, which took out 243 billion yen from the 108 trillion yen economic stimulus plan to help Japanese enterprises move their business out of China. The U.S. government has hinted at similar measures on many occasions.

In April 2020, the U.S. government blocked a public pension fund from investing in China.

eclectic solution

The most likely result of deglobalization is a more eclectic solution: regionalization.

The success of the EU Free Trade Area and the Regional Comprehensive Economic Partnership Agreement (RCEP) launched by the ten ASEAN countries are very important examples of regionalization, which can be a moderate version of globalization.

Over the years, in addition to some direct trade between China and the United States, globalization (measured by commodity trade) has increasingly dominated intraregional trade, while interregional trade exchanges have been weakening.

In the early 1990s, North America absorbed 35% of East Asian exports, and this proportion has dropped to 20% today, mainly because the share of intra-East Asia’s trade is increasing year by year – as Asian countries continue to rise in the value chain, they need to consume more of their own production. Product, this change is also natural.

Mexican immigrants and Mexican Americans residing in the United States line up to cross the border in Laredo, Texas, December 19, 2020. Figure | IC photo

In 2019, with the economic and trade friction between China and the United States, the trade between the United States and Canada and Mexico has increased, while trade with China has been decreasing.

Meanwhile, China’s trade volume with ASEAN exceeded $300 billion for the first time. In short, the trend of deglobalization has occurred, mainly manifested in the continuous development of regionalization.

“Regionalism has begun to explicitly replace globalism before COVID-19 exposed many loopholes in long-range-based interdependence,” noted Parag Connor, senior fellow at the Center for Asia and Globalization at the National University of Singapore.

In the coming years, due to the rise of nationalism and further deepening of international polarization, partial deglobalization seems inevitable.” Superglobalization” has lost all political and social capital, and it is no longer politically feasible to maintain it, but it is necessary to prevent the negative impact of the decline in free fall, and avoid its major economic losses and social harm.

Hasty withdrawal from globalization will lead to trade and currency wars, damage the economy of every country, trigger social catastrophe, and trigger national or sectarian nationalism.

The only viable way to manage the regression of globalization is to achieve a more inclusive and equitable globalization with social and environmental sustainability.

Those areas of globalization that have traditionally benefited from international cooperation, such as environmental agreements, public health and tax havens, are likely to make tangible progress.

These can only be achieved through improved global governance.

If we can’t improve the function and legitimacy of international institutions, the world will soon become unmanageable and put into a very dangerous situation.

Without a global and strategic governance framework, the world cannot usher in a lasting recovery.

Missing global governance

The United Nations believes that “effective global governance cannot be separated from effective international cooperation.”

The concepts of global governance and international cooperation are so closely linked that global governance cannot flourish in a world where the power of countries is shrinking and polarizing.

The more nationalism and isolationism influence global politics, the more likely global governance is to lose meaning and effectiveness.

The “Institutional Decline of the Holistics” presented by Francis Fukuyama in Political Order and Political Decays, fully illustrates the problems facing the world in the absence of global governance.” Institutional decline triggers a vicious circle of nation-states to poorly deal with the major challenges besetting them, leading to a loss of public trust in the country, which in turn leads to the loss of authority and resources of the country, and ultimately leads to the worse performance of the country, unable and unwilling to deal with the problems of global governance.

People wear masks when they travel in San Francisco, USA, November 12, 2020.

The arrival of the COVID-19 Pandemic provides a failure case of global governance.

Under an orderly global governance framework, countries should work together to launch a coordinated and orderly global Pandemic prevention and control “war”.

But the reality is that even in the stage where international cooperation is most needed – the second quarter of 2020 is the decisive stage of Pandemic prevention and control, international cooperation is still seriously missing, and the “national priority” strategy is popular. Countries have closed their borders, restricted international travel and trade, and the supply of medical supplies has been frequently interrupted and competed. Fight for resources.

In addition, some international organizations have not played their due role, such as the World Health Organization, which was divestled by the United States.

But the failure of Pandemic prevention and control is not the fault of the World Health Organization. This specialized agency of the United Nations is only a symptom of the failure of global governance, not the root cause.

The World Health Organization’s respect to donor countries reflects its complete dependence on member states, because only when member countries agree to cooperate can it operate smoothly.

The World Health Organization does not have the power to force member states to share information or implement Pandemic prevention and control measures.

Like other United Nations specialized agencies, the World Health Organization has very limited and declining resources: in 2018, its annual budget was $4.2 billion, which is worthless compared with the health budget of any country in the world.

In addition, it has been at the disposal of member states for a long time.

It lacks effective tools to directly monitor the Pandemic, carry out Pandemic prevention and control planning, ensure that relevant measures are effectively implemented at the national level, and provide resources to countries in urgent need of help.

Such dysfunction fully reflects the fragmentation of the global governance system, but there is no consensus on whether existing global governance institutions such as the United Nations and the World Health Organization can be reformed to better respond to the global risks of today’s world.

If we can’t repair multilateral institutions, the world will be in danger.

The need for global coordination will be more prominent in the wake of the pandemic crisis, because without sustained international cooperation, the global economy cannot be “restarted”; without international cooperation, we will face a “poorer, mediocre and narrow world”.

Who will win?

From the perspective of Sino-US relations, the Pandemic has not only not united these two huge geopolitical forces, but has further intensified the confrontation and competition between the two sides.

Wang Jisi, former dean of the School of International Relations of Peking University, believes that the adverse impact of the COVID-19 Pandemic has caused Sino-US relations to be at the lowest level since the formal establishment of diplomatic relations between the two countries in 1979.

Many politicians have also publicly expressed their concerns.

In an article published in June 2020, Singapore Prime Minister Lee Hsien Loong reminded the international community to guard against the serious dangers posed by the Sino-US confrontation, saying that “the tension between China and the United States raise profound questions about the future of Asia and the emerging international order pattern”, and “Southeast Asian countries, including Singapore, are particularly worried because they are at the intersection of the interests of various major powers and must avoid being caught in the middle or forced to make unpleasant choices,” he added.

Analysts and prophetes who study China, the United States or China have little data and information, and what they see, hear and read, but sometimes they still draw the opposite conclusion.

Some people think that the United States will win in the end, some people think that China has won the competition, and others think that there is no winner in the competition.

China Wins

We will briefly introduce these three views in turn.

The main arguments for this view are that the COVID-19 Pandemic has exposed the weaknesses of the United States.

First, in the face of the invisible enemies of the microscopic world, although the United States has the most powerful military force in the world, it has no use.

Second, in the words of American scholars, the COVID-19 Pandemic has damaged the soft power of the United States, because “the Pandemic prevention and control measures in the United States are weak”.

Third, the COVID-19 Pandemic has exposed a shocking aspect of American society, including severe inequality, inadequate universal health coverage, and the systemic racial problems shown by the “Black Lives Are Lives” movement.

Ma Kaishuo believes that the COVID-19 Pandemic has reversed the role of the two countries in responding to natural disasters and providing international assistance.

In the past, the United States always took the lead in providing assistance to areas in urgent need (such as when the mega-tsunami hit Indonesia on December 26, 2004), but now this role belongs to China.

In March 2020, China provided Italy with 31 tons of medical supplies, including ventilators, masks and protective clothing, despite the helplessness of the European Union.

According to Ma Kaishuo, 6 billion people live in 191 countries, forming the “other parts of the world”, and these people have begun to prepare for the geopolitical competition between China and the United States.

While most countries don’t want to fall into a geopolitical zero-sum game, but rather want to keep an open choice, many events have shown that the United States is putting pressure on traditional allies such as France, Germany and the United Kingdom to choose a sideline.

In the face of such a difficult situation, the final choice of countries will determine who will win between China and the United States, and their choice will depend on “benefit analysis of the benefits that China and the United States can provide for them according to the cold rational calculus”, that is, on who can ultimately help them improve the living standards of the people.

The United States wins

Among the camps that believe that the United States will eventually win, the main views are centered on the inherent advantages of the United States and China’s structural injuries.

Supporters of “America Wins” believe that it is difficult to determine whether America’s leadership will suddenly end in the post-Pandemic era.

Relatively speaking, the status of the United States may be declining, but on an absolute level, the United States still has unshakable soft power; the attractiveness of the United States may have declined globally, but the success of the international strategy of American universities and the charm of the American cultural industry shows that it still has strong attraction.

In addition, as a global currency, the dominance and security of the US dollar in international trade are currently largely unchallenged.

All of this can be transformed into strong geopolitical power and help the U.S. government squeeze some enterprises and even countries out of the dollar system.

At the same time, they pointed out that China itself faces many challenges on its way to becoming a superpower.

The main challenges often mentioned include: first, as the rapid aging of the population and the peak of the working population in 2015, China will face demographic disadvantages; second, China’s economy is highly dependent on energy. .

*No one wins

Some people also believe that the COVID-19 Pandemic is very unfavorable to China and the global order.

Like almost all other countries in the world, the economies of China and the United States are bound to be seriously damaged by the Pandemic. “It is difficult to re-emerge the world pattern created by China or the world order led by the United States.

The new rise, in fact, the internal and external strength of China and the United States will be weakened.

In fact, no one can reasonably or clearly predict the direction of Sino-US relations, but it may swing between the following two extreme situations: on the one hand, the deteriorating relationship between the two countries is controlled and managed under the buffer of economic interests, and on the other hand, the two countries have entered a long-term comprehensive state of hostility.

From bad to worse

The boundary between fragile states, countries that are failing and countries that have failed is volatile and fragile.

In today’s complex adaptive world, the nonlinear principle means that a fragile country may become a failed country in a flash, and a failed country can also improve rapidly under the coordination of international organizations or driven by foreign capital.

In the coming years, as the COVID-19 Pandemic causes difficulties for the world, the most likely scenario is that the world’s poorest and most vulnerable countries will undergo one-way change – from bad to worse.

At present, national vulnerability remains one of the most important global challenges, which is particularly common in the African region.

The root causes of this problem are multiple and intertwined, including economic inequality, social problems, political corruption and inefficiency, as well as internal and external conflicts and natural disasters.

At present, 1.8 billion to 2 billion people live in fragile countries, and these countries are particularly vulnerable to the Pandemic, so this number is bound to continue to rise in the post-Pandemic era.

The fragile nature of these countries, the weak national capacity to provide the most basic public services and security, determines their inability to cope with the COVID-19 crisis.

The situation is even worse in countries that are going to failure and countries that have failed.

Almost all of these countries are victims of extreme poverty and frequent violence, and they can hardly or can no longer perform basic public functions such as education, security or governance.

In the absence of public power, helpless and desperate people often fall victim to gang struggles and criminal incidents, and often need the intervention of the United Nations or neighboring countries (not always well-meaning) to avoid falling into humanitarian disasters.

For many of these countries, the external impact of the COVID-19 Pandemic will make them further fail and sink.

For those countries that are still suffering from conflict, the impact of the COVID-19 Pandemic is particularly lethal.

It will not only inevitably lead to the interruption of humanitarian relief and assistance, but also limit peacekeeping operations and delay diplomatic efforts to end the conflict.

Specifically, what risks do different countries face?

For richer and more developed energy economies such as the Russian Federation and Saudi Arabia, the collapse of oil prices “just” represents a serious economic blow, which will stretch their fiscal budgets, put pressure on their foreign exchange reserves, and pose serious medium- and long-term risks to them.

However, for low-income countries, oil represents almost all their export revenue (99%), so the impact of the Pandemic will have devastating consequences for these countries.

In Iran, in addition to the large number of people infected with the novel coronavirus, the sanctions taken by the United States have made the situation worse.

At present, many countries at political risk are located in the Middle East and the Maghreb region.

Long before the outbreak of COVID-19, the economic situation in these countries was becoming increasingly serious, and a large number of young people lost their jobs, causing social unrest.

The triple blow of COVID-19, the collapse of oil prices (some countries face this problem) and the freezing of tourism (tourism is an important source of employment and foreign exchange earnings in these countries) may trigger large-scale anti-government demonstrations.

At the end of April 2020, during the Pandemic blockade, due to the increasing unemployment and poverty, many riots in Lebanon were a bad sign.

Famine, poverty and instability

The COVID-19 Pandemic has brought food security back to people’s attention.

In many countries, humanitarian crises and food crises are on the way.

Officials of the Food and Agriculture Organization of the United Nations predict that the number of people affected by serious food security problems will double to 265 million people in 2020.

Traffic disruptions and trade restrictions caused by the COVID-19 Pandemic, coupled with rising unemployment and restricted or interrupted food supplies, may trigger large-scale social unrest and lead to large-scale waves of migrants and refugees.

In fragile and failed countries, the COVID-19 Pandemic has raised trade barriers and caused the disruption of global food supply chains, thus exacerbating the existing food shortage problem.

The situation is so serious that David Beasley, Executive Director of the United Nations World Food Programme, warned the United Nations Security Council on April 21, 2020 that in more than 30 countries, including Yemen, Congo, Afghanistan, Venezuela, Ethiopia, South Sudan, Syria, Sudan, Nigeria and Haiti, It can “multiple large-scale famines”.

In the world’s poorest countries, pandemic lockdowns and recessions in high-income countries can cause significant losses to the income of the following groups: poor workers and groups that depend on them.

According to World Bank statistics, the impact of the embargo on many countries around the world and the accompanying economic “hibernance” will lead to a 20% reduction in overseas remittance revenue in low- and middle-income countries, from $554 billion in 2019 to 2020 The year is 445 billion US dollars.

In countries such as Nepal, Tonga or Somalia, overseas remittances account for a large proportion of GDP (more than 30%), and the decline in overseas remittances caused by the Pandemic will have a devastating impact on the economies of these countries and have far-reaching social impacts.

Even in larger countries such as Egypt, India, Pakistan, Nigeria and the Philippines, overseas remittances are the main source of external financing. The Pandemic will make the economic, social and political situation of these countries more fragile and face real risks of instability.

Tourism is also one of the industries most affected by the Pandemic, and it is also the economic lifeblood of many poor countries.

In Ethiopia, tourism revenue accounts for about half (47%) of the country’s total exports, so the loss of income and employment caused by the Pandemic will hit the socio-economic situation.

In Maldives, Cambodia and several other countries, the situation is very similar.

In addition, in all conflict areas, many armed groups are considering how to use the opportunity of the COVID-19 Pandemic to continue to advance their goals.

For example, in Afghanistan, the Taliban demanded that the government release the prisoners of the organization, and in Somalia, Al-Shabaab in Somalia is taking advantage of the opportunity of the COVID-19 Pandemic to serve The opportunity subverts the government. 23 March 2020 UN Secretary-General calls for a global end to military conflict, but armed groups turn a deaf ear to it.

In 2020, 43 countries reported at least 50 incidents of organized violence, of which only 10 countries responded positively to the call of the Secretary-General of the United Nations, and most of them simply expressed their support and did not really put it into action.

In the 31 countries facing long-standing conflict, instead of taking measures to respond to the call of the Secretary-General of the United Nations, the parties concerned have intensified the scale of violent conflicts.

It was thought that the Pandemic and the emergency health incidents it caused might contain long-standing conflicts and even promote the peace negotiation process, but so far, such hopes have been disappointed. This also proves once again that instead of curbing worrying or dangerous trends, the Pandemic will accelerate it.

Rich countries turn a blind eye to the tragedies in fragile and failed countries, which is actually very dangerous.

Risks can be transmitted in some way, exacerbating the instability of the world and even leading to chaos.

One of the obvious forms of economic difficulties, dissatisfaction and hunger in the most vulnerable and poorest countries to the rich countries may be the outbreak of a new round of population migration, just like the wave of immigrants in Europe in 2016.

Rich countries must make the right choice.