With the number of cases of coronavirus spreading in multiple countries around the globe, the outbreak has already been labeled a pandemic by the World Health Organization (WHO). Global economic relations have been hit hard by the virus, and demands for making the West less dependent on supplies from third countries are getting louder.
What impact could the COVID-19 pandemic have on the globalization process?
The current model of globalization took shape at the turn of the 21st century. A decade ago, the journal Russia in Global Affairs wrote that the whole concept is based on the notion that “the old market economy states will be able to simultaneously move their own production to China and maintain the economic balance of the Western system through financial transactions.” The crisis of 2008-2009 proved this approach to smoothing out “imbalances in world economic development” as being completely wrong.
In March 2014, Time magazine noted that “over the past two years, global trade growth has been lower than global GDP growth. It’s the first time that has happened since World War II, and it marks a turning point in the global economy, with sweeping implications for countries, companies and consumers.” Shrinking possibilities for productive placement of savings coming from peripheral countries “to the Anglo-Saxon center of the global financial system” have since intensified.
The situation has forced all of the world’s leading countries to double down and work out a set of measures guarding against a possible collapse of the modern world order. The policy of sanctions and financial and economic pressure that Washington has pursued the past few years appears to be provoking some governments to look for ways to create a financial and economic system or systems that would not be dependent on the United States. New political alliances are being forged in Eurasia, Asia, and Africa, including in the form of region-wide financial institutions.
Many in the US itself, the originator of the international system existing today, were getting increasingly unhappy with what was going on. The tweets and concrete isolationist measures taken by President Donald Trump during the past three years throw in question the feasibility of almost the entire “West-centric” development paradigm. As a result, by the time the first reports about COVID-19 started coming in, the dynamics of the financial and economic processes going on in the world were largely explained by America’s trade war with China, which has been going on for several years now, taking on ever new trade and economic areas and threatening to spread to the realm of finance.
On the outside, the coronavirus epidemic, which, like a sword of Damocles, is hanging over the current architecture of world economic relations, is a testament to Trump’s and his supporters’ foresight. Indeed, in his new National Security Strategy unveiled in 2017, Donald Trump said that the world had turned into a stage of global competition. Now that literally each day brings us new evidence of how much the West and the rest of the world really depend on supplies from China, few in America and Europe have any doubts about the need to rethink the foreign policy of the previous decades. Above all, the idea that cooperation with rival countries, their involvement in international institutions and world trade processes to the degree of interdependence, is making them “conscientious” members of the international community and constructive partners.
By the close of 2019, Washington’s policy of “breaking down the foundations” had significantly undermined the countries’ WTO-inspired confidence in a system of rules designed to prevent trade wars. Moreover, while previously the White House referred to “national security interests” as justification for the use of restrictive measures, any country can now use the global epidemic as a convenient pretext for resolving trade disputes outside the framework of leading international organizations, primarily the World Trade Organization. Just as The Economist put it, “Much of what has contributed to globalization at its current stage no longer matters.”
The COVID-19 epidemic thus provides a convenient opportunity to legitimize the philosophy of a world order based on “egotism and protectionism.” Faced with the prospect of mass-scale deaths caused by the epidemic, (although so far unconfirmed!), one can discard the official condemnation of unilateralism and recognize it as “the norm, a natural part of the global picture,” thus selling this new official policy to the people as “a focus on national interests.” According to critics, this is the bottom line of America’s “revisionist geo-economic project,” promoted by the current administration, which … “reflects the long-term goals of the US ruling elite even post-Trump.”
This narrative has received a further boost since, according to British media reports, not only the United States, but also a significant part of the world is critically dependent on the import of either antibiotics or communications equipment from China. Moreover, Western analysts believe that from a technological and logistical standpoint, getting rid of this overdependence would be easy because China’s dominance in many sectors of industrial and consumer goods began only 10-15 years ago. This means that the COVID-19 outbreak only threw this whole situation into harsh relief. Since the “forces of nature” are hard to predict, few people will call out the current restrictions on cross-border movement of people and goods within the framework of existing international legal procedures world trade is governed by.
But what about the political and ideological notions, according to which private companies are not told where to produce their goods when it comes to minimizing costs? How to dovetail public interests and the companies’ desire to maximize profits for their owners and shareholders? Finally, “national security”-boosting measures and restrictions imposed in the fight against a pandemic both make a breach in “the thin fabric of trade agreements,” that the whole world has been building the past decades.
Besides, the US establishment as a whole remains eager to maintain America’s leading position within the international system. In this effort, as Donald Trump’s first year in the White House clearly demonstrated, America wants more than just reaping “the benefits of bilateral trade relations, ignoring the benefits of participating in international trade agreements. Moreover, practice has shown such agreements can be worked out and implemented without the United States.” For example, right now, America is being held hostage to Saudi Arabia’s frustration with Washington walking back its commitments in the Middle East. Riyadh wants to reformat the global oil market through dumping offers, and the US shale oil industry, where booming extraction has spurred Washington’s readiness to apply sanctions as an instrument of foreign policy pressure, could find itself the first victim.
Western politicians’ and businesses’ past history of “outsourcing” all and everything could sap their desire to “quickly” reduce their dependence on China. True, the existing market configuration may come undone as the situation is getting increasingly unbalanced. Still, the search for “new equilibrium points” is already on. Changing times are always a period of searching for and finding new opportunities. And Western companies are not necessarily “doomed to success” in this race as Chinese manufacturers have repeatedly proved more able to adapt to changing market conditions than anyone else, while Western firms kept losing flexibility and ramping up development and production costs. Finally, it looks like China has already left the peak of the epidemic behind by effectively checking its spread. Chinese stock indices are on the rise. As for the Americans and Europeans, it seems that the main blow looks still ahead.
Theoretically, a possible slowdown of the current model of globalization may somewhat reduce frustration with the existing imbalances in development, but whether this deceleration is actually capable of mitigating the general structural problems that the global economy is facing today remains a question.
Optimists believe that “as the epidemic develops, its relative impact on the economy will decline.” As for the impact of the virus on the economy, it will actually prove beneficial: the growth rate will slow down, but it will be a “healthier,” natural growth. Speculative “bubbles” in the asset markets will burst in a natural way, and the leading central banks will increase the money supply. All this will allow “… leading economies to maintain their growth, albeit at a slower pace, rather than fall into recession.” This means that “a global crisis due to the epidemic is impossible.”
Critics, for their part, believe that the medical consequences of the coronavirus epidemic can prove much less destructive for global development compared with the measures that states may, if necessary, take to combat the spread of the disease. Experts at Oxford Economics are already warning that a policy of limiting communication and freedoms can only exacerbate the crisis and create additional problems in the future.
Ten years after the 2008-2009 crisis the COVID-19 epidemic is once again demonstrating to politicians, the business community and the general public the vulnerability of the current international financial and economic model. “Political pressure will be brought to bear on states and enterprises through consumers.” Many economic entities will try to reorganize production and supply lines, primarily by moving production closer to end consumers. The pandemic is sure to contribute to further “social atomization” and “online escapism.” Trade, education, medicine and the entertainment industry may finally go online.
Finally, the authorities in many countries are likely to work out measures to restore or expand domestic production in strategically important sectors, including the food and pharmaceutical industries. The policy of state support for domestic producers is gaining popularity again.
“The goal is not so much to limit international trade, but to create a reliable domestic market that will be less dependent on conflicts and the challenges posed by global trade.”
The current configuration of the world order is not just becoming ideologically unsustainable. It now appears absolutely impractical and even dangerous, in the technical sense of the word, in the event of new global upheavals, whether humanitarian, technological or climatic. Globalization will obviously continue to evolve, both ideologically and from the standpoint of application. There is no way that new contacts between people and countries can be completely prevented, but globalization will be taking on new forms, no doubt about that. The international community will have to find a new balance between the priorities of national and global development. Under the circumstances, it is imperative for Russia, just like for any other country, to keep pace with the demands of the day. From our partner International Affairs
Nurturing Sino-EU Ties through Multilateralism
Considering the fact that relations between China and the EU are shifting, they will continue since China’s position as a crucial economic powerhouse for the EU cannot be understated, especially as the EU confronts a real and technical economic downturn. In the Eurozone, countries such as the Czech Republic, Lithuania, and Germany are experiencing a deceleration in economic growth, which requires immediate consideration. The primary reason for this is the industry-related crisis caused by the collapse of export operations on both domestic and global markets due to a lack of purchasing power.
If this mild downturn becomes a full-blown crisis, the economies of both the European Union and the United States could stagnate. Because of these challenges, the European Union (EU) must strike a fine balance between resolving the current crisis and accommodating U.S. demands. The recent summit of European Union leaders holds great importance as the EU determined its policy towards China. The EU’s economic prospects are highly dependent on developing strong ties with China.
When combined with China’s growing consumer market and massive expenditures in infrastructure, the European Union’s economy has a once-in-a-generation chance to rebound and thrive. The European Union (EU) stands to gain from closer economic connections with China due to the opportunities it presents for increased collaboration, broader trade, and the infusion of much-needed Chinese investment into the EU’s flagging industrial sectors.
Recognizing this undeniable potential, the EU must priorities capitalizing on the benefits of its partnership with China, whilst likewise making sure that the relationship remains mutually beneficial and sustainable. The path towards achieving such equilibrium, however, is fraught with obstacles, mainly due to external pressures from the United States. Notably, the United States has imposed tariffs and trade restrictions on a number of European products, creating financial challenges for European companies. These actions are frequently used as pressure to influence Europe’s approach to China.
The EU is in a precarious position, compelled to navigate an environment where financial goals, geopolitical issues, and common values intersect. Maintaining a delicate equilibrium is essential. The pressure exerted by the United States highlights the necessity for Europe to assert its own interests and independence in international affairs. It is essential that the EU devise an independent and principled strategy that protects its own interests while approaching China with a productive discussion.
European Council President Charles Michel’s recent statement that it is in the EU’s best interest to maintain “stable and constructive” ties with China has, in a sense, confirmed the continuation of EU-China relations. In a latest commentary, Josep Borrell, the EU’s high representative for foreign affairs, pointed to how the EU could modify its policy towards China. However, he advocated for “vigorous engagement” between the EU and Beijing.
Under the weight of US pressure, maintaining a delicate balance in EU-China relations requires careful handling. European leaders will have the opportunity to define the EU’s position on China at the upcoming EU summit, ushering in a future of balanced, constructive, and mutually beneficial engagement. It is essential that European leaders seize this opportunity and set a course that protects their economic interests and fundamental values. In this manner, the EU can promote stability, resilience, and sustainable growth in the face of changing global dynamics.
At this critical juncture, leaders must engage in exhaustive dialogues that incorporate the many facets of the EU’s relationship with China. The promotion of human rights should be coupled with economic considerations. Considerations such as trade disparities, rights to intellectual property protection, and the development of equitable market practices must be addressed in an open discussion. This strategy will ensure an equitable playing field for EU and Chinese businesses, fostering an environment conducive to healthy competition and long-term economic growth.
The foundation of Sino-EU relations should base on mutual interest and respect, multilateralism, and economic exchanges, and they should be exempt from illicit US interference and pressures. By navigating these complexities and forging a path that safeguards economic interests and fundamental values, the EU can promote stability, resilience, and sustainable growth in the face of changing global dynamics.
China-Germany Win-Win Cooperation
The China-Germany cooperation exemplifies the transformative potential of collaboration based on mutual regard, shared objectives, and complementary strengths. This exceptional partnership has spawned a domino effect that extends beyond bilateral relations, inspiring other nations to pursue similarly mutually beneficial partnerships.
As the world becomes more interconnected, countries can learn from the China-Germany model of cooperation, which fosters economic development, technological advancement, environmental stewardship, and cultural exchange. By adhering to the principles of win-win cooperation, nations can construct a more prosperous, sustainable, and harmonious global community.
China and Germany’s dynamic and mutually beneficial cooperation is a shining example of win-win collaboration on the global stage. Both nations have nurtured strong economic and diplomatic ties over the years, resulting in enormous advances and benefits for their respective societies.
Strong and coordinated global action is needed immediately to combat climate change and advance sustainable development. There is still a lot to be done, but China and Germany have already shown their dedication to environmentally friendly and low-carbon development. By aligning their strategies and exchanging best practices, they can expedite the transition to a low-carbon, sustainable economy.
China’s pledge to peak carbon emissions before 2030 and achieve carbon neutrality before 2060 shows its commitment to a deep low-carbon transformation of its economy and society. Through the International Climate Initiative (IKI) administered by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, the German Federal Government supports Sino-German climate change cooperation.
Collaboration in areas such as energy efficiency, renewable energy, the circular economy, and sustainable transportation can lead the way for a greener future, mitigating the effects of climate change and nurturing ecological equilibrium.
China and Germany have established a strong economic partnership that has benefited both countries significantly. Germany’s main commercial partner is China, and vice versa, and this strong bilateral commerce has led to significant economic growth and employment creation. This collaboration has given German businesses access to the sizable Chinese market.
Notably, the exchange of products, services, and knowledge between the two nations has fostered innovation, productivity, and economic resiliency, thereby laying the groundwork for long-term cooperation. This commitment to cooperation has yielded an array of beneficial effects, strengthening the conviction that win-win partnerships can drive progress and prosperity in an interdependent world.
The dynamic economic partnership that has grown between the two nations is one of the pillars of China-Germany cooperation. Germany, known for its scientific prowess, inventiveness, and precision engineering, found a favourable market in China, with its enormous customer base and rapidly expanding economy.
On the other hand, China’s manufacturing expertise and devotion to infrastructure development have presented German businesses with incredible possibilities to expand their operations and enter new markets. Entrepreneurs from both nations could keep pursuing openness, inclusiveness, and win-win cooperation, as well as keep the stability of industrial and supply chains with high-level practical cooperation. This symbiotic relationship has allowed both nations to capitalize on their respective strengths, resulting in economic expansion and job creation for both countries.
China and Germany have also established cooperation in the fields of innovation and research, recognizing that advancements in these fields are crucial agents of economic and societal progress. Through joint research initiatives, academic exchanges, and institution-to-institution collaboration, both nations have been able to pool their intellectual resources, foster innovation, and address global challenges. This cooperation has not only led to revolutionary scientific discoveries, but it has also set the groundwork for future innovations in technology that will benefit all of humanity.
China and Germany have fostered cultural exchange and people-to-people diplomacy in addition to their economic and technological cooperation. By encouraging education exchanges, cultural events, and intercultural dialogue, both countries have built bridges of appreciation, understanding, and friendship. Not only do these interactions enrich the lives of individuals, but they also strengthen the bilateral relationship as a whole. They facilitate dialogue, eliminate preconceived notions, and set the groundwork for mutually beneficial relationships and respect.
By expanding on these accomplishments and upholding a spirit of mutual respect and shared objectives, the China-Germany partnership can continue to advance progress and inspire global collaboration.
The China-Germany model of win-win cooperation provides valuable lessons for nations seeking to forge prosperous partnerships. It emphasizes the significance of mutual respect, trust, and open communication as the foundations for productive collaboration. It also emphasizes the importance of recognizing and capitalizing on balance in strengths and resources, which allows nations to maximize the positive effects of cooperation.
The Eurasian Zeitenwende: Germany and Japan at the Crossroads
Russia’s decision to invade in Ukraine in February of last year has been nothing short of a critical juncture in recent history—sending reverberations across the entirety of Eurasia. Seldom have events on one end of the continent been so consequential on the other. Russia’s invasion has shattered the prime directive underpinning the long peace after the Great Wars—the inviolable right to sovereignty has been shattered, as mass armed aggression has reared its head once again. Nowhere is this sweeping change felt than in Berlin and Tokyo—to capitals separated by over 12,453 kilometers of land and sea.
German Chancellor, Olaf Scholz spoke to the Bundestag just three days after Russia’s invasion, on the ‘historic turning point’, the Zeitenwende this moment presented. Not a year later, on December 16, after much negotiation Japan finally released their first National Security Strategy in almost a decade. Ukraine provided for both governments the impetus to shed decades of consensus on defense policy. Berlin and Tokyo were once partners in the greatest conflict wrought on mankind, and today they are once again on the same page—but this time arming in the name of global peace.
The postwar consensus
With 1945 came the crashing down of the German and Japanese imperial ambitions that underwrote the explosions of violence from 1914 to 1945. The first half of the twentieth century saw successive orders predicated the passing of power; the imperialist order long preceded the turn of the century, and came crashing with the First World War. From there, a brief liberal interlude of the Washington Conference was doomed to fail given Anglo-American isolationism, and from that chaos was born—a return to imperialism. With these passing orders, German and Japanese leaders debated and sought to reinvent themselves in response to changing tides across the globe.
In fact, twice in the last century, during Twenty-five Years Crisis, Wilhelmine and Nazi imperialism exploded in the European theater. For the Japanese, a slow roll to imperial domination in Asia began much before the war and exploded in the 1930s. This imperial flame was extinguished almost as soon as it was ignited—bringing with it the deaths of millions through genocide and war, and the destruction of much of the world’s industrial capacity. In the wake of it, a similar thinking overtook both Berlin and Tokyo. In the wake of the horrors of war, both peoples came to a similar conclusion that militarism ought be eschewed—with Japan going as far as enshrining its anti-militarist urge in the constitution’s article 9. Though it must be noted, the Germans accepted their guilt—the Japanese continue to engage in denialism and apologia.
For decades, under the guise of guilt in Germany, and occupation-enforced constitutional limits for Japan, both countries eschewed providing for their own national defense needs—instead relying on the all-powerful U.S. security guarantee.
A new look in a new environment
This change that has occurred here has happened within the context of what Dr. Kent Calder described in The New Continentalism: Energy and Twenty-First Century Geopolitics, and Supercontinent: the Logic of Eurasian Integration, as ‘proto-continentalism’—the modern stirrings of transcontinental integration. The continent was transformed by China’s Four Modernizations, the Oil Shock, and the Collapse of the Soviet Union—all requiring readjustments on the continent. Continental integration followed the integration and modernization within China, the Oil Shock highlighted the need for energy-driven interconnection, and the collapse of the Soviet Union meant no more Cold War political antagonisms. These changes meant that there were suddenly lower costs for trade across the continent—one rife with great complementaries. Like some geographic providence, the world’s largest energy producers in the Middle East, sat between the world’s biggest consumers in Europe and Asia.
Of course, this integration isn’t just relegated to the economic realm—but also the defense sector. Whereas integration was predicated by the near-collapse of mass interstate conflict, the War in Ukraine would seem to threaten just that. But in fact, integration ensures the costs associated with this conflict are felt from one end of the continent to the other. This inherently ties the most far-flung countries on matters of defense—exactly what ties Berlin and Tokyo, and their similar responses to the war in Ukraine. This integration doesn’t just tie Berlin and Tokyo, but also Seoul and Warsaw, both of which have seen deepened defense cooperation not limited to the production of South Korean tanks and artillery in Poland. Furthermore, Japan has sought out increased cooperation with NATO.
The mutually-reinforcing loop
Russia’s invasion has been an unmitigated tragedy for the people of Ukraine—but a boon for solidarity in the ‘Western’ security architecture, including the West’s numerous Asian allies and partners, and Eurasian integration writ large. In fact, the mutual economic ties that have fostered closer defense ties across the region, will continue to reinforce each other. Integration between these partners, across various sectors is the greatest mitigator of future conflict—an idea that underpins the great postwar peace, and one that will continue to endure.
Today, Germany and Japan, once imperial menaces to the international system, now make a proactive contribution to global peace—in deciding to behave like normal countries, and arm amidst a threatening global environment. Their contribution to the peace is in the solidification of transcontinental defense ties—ones predicated on deep economic integration.
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