Boao Forum for Asia：
China’s Role in Post-pandemic Asia
Vincent H.S. Lo，
Board Member, Boao Forum for Asia，
Chairman, Shui On Group, China
COVID-19 has dealt a severe blow to the global economy, resulting in concurrent downturn of the advanced and emerging economies. Despite government rescue packages and massive quantitative easing, the world tumbled into a recession deeper than the 2008 global financial crisis. According to the IMF, cumulative fiscal stimulus reached USD11 trillion by mid-year, equivalent to around 12.5% of global GDP. While these funds were primed to provide relief for unemployment and falling consumption, the stimulus packages have further aggravated global imbalances, evidenced by rising government debt burden, asset bubbles, and further widening the income gap between the rich and the poor.
There is a need to revitalize the multilateral trading system through coordinated policies and concerted efforts to reduce imbalances in the global economy. China, the first to emerge from the crisis, is the only major market that has returned to positive economic growth.
Around the world, city lockdown and social distancing measures to contain the pandemic have led to production stoppages and a huge surge in unemployment. The hospitality and travel industries were particularly hit hard, where insolvency and job losses had been the most pronounced. According to the World Travel and Tourism Council (WTTC), worldwide travel restriction will put 121 million jobs in the global travel and tourism sector at risk, with international tourist arrivals declining by 53% this year. Government statistics showed that unemployment in the United States soared to 14.7% in April, before an improvement to 8.4% in August. The Eurozone also witnessed a rise of unemployment to 7.9% in July. Countries in East Asia, which introduced prompt intervention, showed greater resilience than South Asia, where the disease remained rampant. According to the World Bank, South Asian economies are projected to suffer a contraction of 2.7% in 2020, more than twice that of East Asia.
China’s rapid policy response and success to bring COVID-19 under control stand out as a notable global exception. The World Bank projects global GDP to contract by 5.2% this year, with advanced economies registering a decline of 7.0%. China will be the only G20 member country to achieve positive economic growth in 2020, while many emerging economies, ill-equipped to deal with the crisis, will suffer major setbacks.
Before the pandemic outbreak, the widening wealth gap had already spurred a rise in populism and protectionism. Brexit, United States』 withdrawal from the TPP, and escalating China-US trade frictions are symbolic events of globalization in reverse. The trend towards nationalism and deglobalization is also apparent in the international trade statistics. While merchandise trade accounted for 51.4% of global GDP in 2008, the ratio had fallen to 44.0% in 2019. The World Trade Organization (WTO) expects severe impairment to international trade flow as a result of COVID-19, predicting that global merchandise trade will fall by 13% this year.
Nationalism and populism breed xenophobia, which poses significant threats to social stability and regional peace. The populism index tracked by Bridgewater Associates rose to a post-World War II high in 2017, an indication of a complex, volatile political landscape susceptible to rising turbulences. The pandemic crisis further exacerbates these trends, and a sluggish economic recovery will strain international relations and increase geopolitical risks. Recent episodes of US-China disputes over technology and cybersecurity issues paint a dismal outlook for the world’s two largest economies working together to spearhead global recovery. On the contrary, mishaps and deterioration in US-China relation would delay economic recovery and prolong the downturn.
The pandemic-inflicted downturn has created pressing needs for new investments in the Belt and Road countries to bring their economies out of recession. There is now an opportunity for these countries to take advantage of the softening U.S. dollar and low interest environment to expand their investment in infrastructure.
The world should rally against deglobalization because it undermines cross border trade and creates headwinds against global recovery. There is a need to revitalize the multilateral trading system through coordinated policies and concerted efforts to reduce imbalances in the global economy. China, the first to emerge from the crisis, is the only major market that has returned to positive economic growth. With continued reform and market opening, China’s expanding middle class and huge consumer market will remain an important source of demand and growth engine for the post-pandemic world. China should take the lead in fighting deglobalization, foster economic cooperation and help to preserve a sound environment for global trade and investment.
In the past year, US-China confrontation has intensified from trade, finance, technology issues and spillover to military arena. More recently, US-China tension has been accentuated by cold war rhetoric from the Trump administration, further complicating bilateral relationship. This situation, unfortunately, will likely prevail after the US presidential election this November. The world is currently in a very volatile and sensitive situation, with geopolitics and the coronavirus pandemic playing havoc at the same time. It needs a bold vision and program to bring the world back on track, and farsighted leadership to steer a better future for all mankind. The 「Belt and Road Initiative」 can be that grand plan!
Since the inception of 「Belt and Road Initiatives」 in 2013, the number of member countries/regions increased to 138, and more than 200 investment agreements and contracts have been signed by January this year. The pandemic-inflicted downturn has created pressing needs for new investments in the Belt and Road countries to bring their economies out of recession. There is now an opportunity for these countries to take advantage of the softening U.S. dollar and low interest environment to expand their investment in infrastructure. China, with the help of Asian Infrastructure Investment Bank (AIIB) which has 103 member countries/regions, can provide expertise and funds for infrastructure projects in Belt and Road countries, enabling Chinese and international enterprises to participate in economically sound and feasible infrastructure projects to improve connectivity between all participating countries. These projects, which are beneficial to job and income growth of the host countries, can also provide venues to channel excess liquidity unleashed by central banks』 quantitative easing, putting capital to productive use. Similar investment in infrastructure, healthcare and 5G projects can be rolled out to other Belt and Road countries in Eastern Europe and Africa in due course.
As the world emerges from the pandemic, China will have the opportunity to advocate solidarity and prioritize the sharing of vaccines and therapeutic drugs with other countries, particularly with those along the Silk Road Economic Belt and the 21st-century Maritime Silk Road.
In the post-pandemic era, the global economy will undergo profound adjustments, and the external environment will remain turbulent. China intends to pursue a 「dual circulation」 strategy of development which is more resilient to external disruptions and shocks. While greater reliance will be placed on the domestic market as a key economic growth driver, a boost to domestic circulation will also increase demand for imports and create market opportunities for inward investment that fuel external circulation. To achieve higher quality growth, China needs to be more proactive in opening up the domestic market. Strengthening of regional connectivity will also create ample opportunities to attract capital and technology inflow, increase trade for Belt and Road countries, as well as enabling diversification of some labor-intensive industries to low cost countries, allowing Chinese companies to expand into strategic emerging industries and move up the industrial value chain.
As the world emerges from the pandemic, China will have the opportunity to advocate solidarity and prioritize the sharing of vaccines and therapeutic drugs with other countries, particularly with those along the Silk Road Economic Belt and the 21st-century Maritime Silk Road. This will help to cement and enhance trade and economic ties with Belt and Road member countries. China’s contribution to post-pandemic economic recovery will bring benefit to the whole world and, at the same time, contributing towards maintaining peace and stability in Asia, which is the backbone for growth and economic prosperity. In this respect, the proximity of Hainan Province to the ASEAN makes it an ideal strategic bridgehead and platform to promote closer cooperation between China and ASEAN countries, leveraging on Hainan’s recently conferred free trade port status as Boao Forum for Asia celebrates its 20th Anniversary.
亞洲浪潮，博鰲視野
立足亞洲 面向世界
傳遞論壇最新動態 促進亞洲深度合作
全球重要對話的傳達者 亞洲共同發展的瞭望者
喜歡此內容的人還喜歡
原標題：《Boao Forum for Asia：China’s Role in Post-pandemic Asia》
閱讀原文