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COVID-19 at low ebb in China: Is the “world factory” opening up?

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The coronavirus epidemic in China is showing clear signs of a decline and amid an easing of the government-enacted strict quarantine measures and travel restrictions announced late last month, the country’s economy is starting to look up. According to China’s Ministry of Industry and Information Technology, in parts of the country outside Hubei, the province where the virus was first identified, large industrial enterprises are now working at 95 percent and more of their capacity, the figure among medium and small enterprises has reached 60 percent, and about 80 percent of company employees have already returned to their workplaces.

Vice Minister of Industry and Information Technology Xin Guobin still said that the epidemiological situation elsewhere in the world was making the prospect of resumed industrial production in China questionable. Indeed, according to a Reuters report, in the first two months of this year, industrial production in China dropped by 13.5 percent compared with the same period of last year – the worst such figure in the past 30 years, with investments in fixed assets down 24.5 percent, retail sales dropping 20.5 percent and the number of unemployed registered in February spiking to 6.2 percent, compared to 5.2 percent in December 2019.

This relatively bleak picture could seriously undermine the prospects for reopening the “world factory,” as China is often called. Explanations for this can be found both in China itself and beyond. First of all, these are the unprecedented restrictive and quarantine measures verging on complete closure, thanks to which the coronavirus epidemic began to decline in the first place (something no other country in the world can so far boast of). According to some Russian experts, the current statistics suggest that the decline in China’s GDP growth will not be just one percent, as the Chinese authorities say, but could actually reach two percent this year.

But even so, we should bear in mind the fact that at the end of last year, China owed almost 53 percent of its GDP growth to domestic consumption and the service sector (precisely the economic sectors hardest hit by the COVID-19 epidemic).

Secondly, these are external factors, which China will hardly be able to change. The impact of the coronavirus epidemic (now a pandemic) on the  global economy has been very serious and includes, among other things, a drop in demand for products and services of various industries, including those, which depend on freedom of movement and personal contacts: the transport industry, the tourism business, trade in nonessential goods and services; the destruction of international and domestic economic relations, as well as increased business risks and, as a consequence, reduced access to financial and credit resources.

Experts believe that it may take months before the situation in the economy returns to normal. The quick spread of infection around the world, especially in Europe, may reduce consumer demand for Chinese-made goods; so much will depend on the dynamics of Chinese exports to the EU and the United States. As for global trade, it could remain under this pressure for another three to four months.

When it comes to Russian-Chinese relations, the changing situation in the global economy and trade is affecting them in two ways. On the one hand, the specter of a new world recession is looming over them too. On the other, the opening of the “Chinese factory” for Russian enterprises is good news, since they (namely those built into international production chains) are largely dependent on Chinese components. At the end of the day, those of them, which did not break off production chains with China during the ongoing crisis, but instead chose to just wait it out, can end up the winners.

In 2019, China accounted for nearly 17 percent of Russia’s foreign trade figure, and the difficult economic situation in China is certainly creating serious problems for Moscow. This primarily pertains to energy supplies, which have already dropped by almost a third. However, Russia has a common border and a well-structured network of pipeline communication with China. When the current economic downturn is over, Russia could increase its presence in China and the EU, including against the backcloth of its present disagreements with Saudi Arabia over oil prices.

Meanwhile, with Bloomberg analysts calling China the winner in the “oil war,” Beijing will have a chance to boost the yuan’s exchange rate and be able to pay for imported oil in its national currency.

However, this does not solve the problem of the present economic slowdown in China, which is heavily dependent on the state of the global economy, since “Made in China” goods play such a prominent role in international trade.

From our partner International Affairs

Ph.D. in Political Science, An active member of the Academy of Military Science, Chief Researcher, Institute of Far Eastern Studies of the Russian Academy of Sciences (IFES RAS)

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East Asia

The China Syndrome: The Rising And The Existing Power

Dr. Arshad M. Khan

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China is a large country.  It has a large population, a productive population.  It has the largest Gross Domestic Product of any country in the world including the US on a purchasing power parity (PPP) basis.  It was $27.307 trillion.  A nominal GDP basis does not reflect the actual buying power of the currency.  China’s nominal GDP of $14,140 trillion is much less than the US, which is $21.44 trillion, both nominal and PPP as the dollar is the benchmark.  Since 1871, the US has been the world’s largest economy without question.  Now there is a question although the real question might be, so what?

Britain used to be the world’s foremost power.  No longer, yet Britain remains wealthy and will continue to be so in the foreseeable future, as will Europe and North America.  A couple of hundred years earlier to that the great powers were:  China, India, Persia and the Ottoman Empire.  The world changes. 

Among the problems President Trump has with China is its friendship with Iran.  Why that is a problem with Donald Trump is not some nefarious plan Iran has concocted to harm the US but the impression he has generated of he himself being a wholly-owned subsidiary of Benjamin Netanyahu and his LIkud party.

Thus Mr. Trump’s dead-on-arrival peace plan, to all appearances, had its birth on the drawing boards of the LIkud.  Iran happens to be Netanyahu’s nemesis and surprise surprise is also Trump’s.  A perfectly reasonable nuclear agreement bearing the imprimatur of the UN and the major European powers has been jettisoned by Trump in favor of saber rattling.  Europe is not cheeringly on board in this solo venture.

Meanwhile, Netanyahu feels free to start annexing the West Bank — at least the choice parts — and using it to shore up political support while he goes on trial for corruption.  He is the first sitting Israeli prime minister to be so besmirched in the country’s history.

The implacable Xi Jinping and the stubborn Donald Trump happen both to be making their respective countries great again.  Donald Trump claims he has succeeded using a metric known to him alone:  China’s effort is more prosaic.  Between 2014 and 2018 it put to sea more ships for its navy than the British, German, Spanish and Indian navies combined.  And it has embarked on a campaign for tighter control of its coastal waters.  The ship-building program betrays a clear intent to project power beyond coastal waters to the open seas in a challenge to the U.S., the present policeman maintaining open sea lanes.  China prefers complete independence. 

Then there is China’s bid to be a prominent player in the world of high-tech industry, a role that can influence future economic power.  Huawei and its 5G capability is one example.  But the Trump Commerce Department has issued new rules designed to choke off Huawei’s access to chips and semi-conductors that it needs to manufacture 5G cellphones and infrastructure.  These are made made mostly in Taiwan and South Korea, and the new export rules issued May 19, 2020 forbid chipmakers from using US machines and software to make and sell chips to Huawei.  It closes a loophole allowing such sales as long as the manufacture was outside US territory.  While Huawei plans alternatives, its customers in Europe and globally are likely to be affected by higher prices and delays.

The cold battle goes on.

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East Asia

From Patriotism to Humanity: China Leading the Fight of the COVID-19

Sabah Aslam

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The outbreak of the novel coronavirus has not only impacted human and social life in terms of disease and infection but also created a controversy in the international media and social network to the point that some western media fell into the trap of racism and xenophobia showing an unusual and an inhuman reactions, instead of solidarity and unity exhibition.

Since China is the first country infected with this virus, so it has already started its fight, the government as a leader has put a clear and effective strategy with successful measures of treatment, protection and prevention. In order to maintain the situation the government dedicated all kind of resources and today’s statics shows an increasing of the confirmed infections and death cases and a considered decrease of healed people’s number.

As a matter of fact, the World Health Organization’ Chief TedrosAdhanomGhebreyesus has defended his earlier praise of China’s response to the outbreak and mentioned that all the member of the WHO has praised China for what it did by taking action in the epicenter, helped to prevent cases of being exported to other provinces in china and the rest of the world. This formal statement just confirmed the truth to the world about China’s reliability and the sacrifices made to safeguard the world.

All Chinese government’s management and measures wouldn’t be successful without the great response of the society. As a matter of fact we need to acknowledge the high level of patriotism of the Chinese citizens. No matter their social status;the military, police, engineers, workers, doctors and nurses, business and company owners, celebrities, civilians and ordinary people, students and volunteers, young-middle-old generations, all this people responded to the call of duty applied and followed meticulously all the recommended measures by the government, indeed by their own free will, they sacrificed wealth, made many donations, provided help and assistance donated free masks , free supplies, goods, food and even provided free services, and differently some people made a priceless contribution such the doctors, fully dedicated, working on clock on the front line risking and even sacrificing their lives to save other people’s lives.

Meantime, in the other side of the globe the coronavirus kept spreading, the virus is traveling the world it has no boundaries and it’s affecting the economy, the social life and the public health, it becomes a public enemy, presenting a threat especially for the African communities, in fact many of them they do not have neither the financial means nor a good health security. But since the outbreak of COVID-19, the Africa CDC (Center for Disease Control and Prevention) took many actions and followed the Chinese in term of union and solidarity.

Indeed Africa CDC collaborated with the World Health Organization to train in-coming analysts in event-based surveillance. Also The Africa CDC has been working with member states to build infection prevention and control capacities in healthcare facilities and with the airline sector to support screening of travelers.

These prevention measures may help control the COVID-19, but African leaders still need to pay attention and follow suit to avoid an outbreak and not reproduce the Italian or Iranian scenarios. Recently, World Health Organization chief TedrosAdhanomGhebreyesus warned about the efficiency of the prevention measures and said mediocre preparations could have fatal consequences. He also said the real struggle lies in management of the situation in case of an outbreak.

Generally, Africa doesn’t have a high level of public health. Many diseases and viruses have appeared on the continent, such as HIV, Ebola and tuberculosis. In order to fight and eliminate this threat, a number of African governments have increased expenditures allocated to health and started cooperation for health development with the Chinese government.

China promised to continue to scale up assistance to African countries by creating a health care intuitive allowing the African countries to achieve independent and sustainable development. The plan also contain a long-term strategy of health development, exchange of scientists and new research and technical support for strengthening health-related capacities under the International Health Regulations. China aim to improve African medical and health service and hospital management to provide a better services to the African people by training medical staff, public health workers and administrative personnel. Besides China promised to upgrade its medical and health aid programs for Africa, particularly flagship projects such as the headquarters of the African Center for Disease Control and Prevention.

The cooperation’s plan shows the Chinese-African comity, the friendship and the mutual respect and we can clearly see that China is determined to the contribution in the development of the African nations. The actual epidemic situation of the COVID19 in Africa needs more attention and prevention, the collaboration precisely with china will be a wise action considering the Chinese experience of management, logistics, and organization to maintain the situation in case of outbreak and bringing out the best of the Sino-African alliance.

Despite that China is still fighting this epidemic in its own territory, the government express his readiness to help the other infected countries, recently the Chinese Foreign Ministry expresses sincere thanks for the support and assistance provided by many countries such South Korea and Japan, adding that China is ready to improve and strengthen the mechanism of responding to health and epidemic emergencies and promote the exchange of epidemiological information, exchange of experiences, prevention and control, to implement cooperation In the areas of diagnosis, treatment, research programs, and the development of medicines and vaccines.

China is acting heroically; in the middle of its own fight against the virus the PRC still showing gratitude and good will to help others countries. Till now Africa still has the chance to prevent and learn the Chinese experience, sadly some Africans countries still didn’t take serious prevention measures but China can provide the help and the assistance.

During the outbreak of the COVID-19 we all have seen the Chinese citizen showing patriotism and helping to maintain the situation, meanwhile the Chinese government have shown the same to the world, the lockdown was a strategy to stop the virus from spreading globally, if the Chinese government didn’t take the decision to lockdown cities and stop flights and traffics, experts confirmed that the COVID-19 could infect much more of global population, in fact it was a noble and human act, full of altruism and unselfish, all the matter was the human life.

Now China jumps to the next step which is helping the affected countries and proposing ways of preventions, sharing the genetic code for the virus with researchers around the world and providing medical trials information, treatment, and research programs for the development of medicines.

It’s time for solidarity and support and to have hope. This is a matter of life or death, and China can fight against the outbreak with the rest of the world to the safety…. to restore faith in humanity.

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Predicting the course of US-China relations in the post Covid-19 era

Ayush Banerjee

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Authors: Ayush Banerjee and Dhritiman Banerjee*

The coronavirus pandemic is a natural threat to the geopolitical order. And it is needless to state that this majorly affects the currently international paradigm in a manner that the world has not seen before. Although there have been a few instances where pandemics have shaken the mortality rates, no pandemic has spread this amount of sheer panic among the public at large. This is largely due to the growing interconnectedness and the advent of the cyberspace. Just as the internet has influenced the lives of the most privileged public, data has been influential in academics and politics alike. However, this argument has its own set of problems that continue to affect public-politic relations in ways more than one.

In the same regard, one of the most strained and keenly debated relations in international politics is that between the United States of America and the People’s Republic of China. In the context of the virus itself, the virus originated in Wuhan, a province in China while the most number of fatalities have resulted in the United States of America. This idea fuelled with the new world media at the public level created an atmosphere of tension on such platforms. On Twitter notably, there were several instances of a tweet naming Covid-19 as ‘Chinese Virus’ spread like wildfire. This sparked a major controversy even at the diplomatic level. Even Donald Trump momentarily subscribed to the idea and deliberately worded his speech to use the phrase ‘Chinese/China virus’ to refer to Covid-19 at least 20 times between March 16th and March 30th 2020. The US Secretary of State- Mike Pompeo went on to accuse China of its lack of transparency, even scrapping a joint G7 statement after its members refused to refer to the virus as the ‘Wuhan virus.’ China has remained apologetic ever since. Hence, it can be rightly inferred that the relationship shared between China and USA have strained ever since the Covid-19 outbreak.

However to predict how the outbreak might jeopardise the current paradigm of world politics we must look no further than the Phase One Trade deal signed between the two countries. This deal previously ended an 18-month long trade war between USA and China. Through this deal, China committed to purchasing $200 billion additional foreign goods and services in the sectors of agriculture, energy and manufacturing. However, it is evident that in the post-Covid19 era, it will be rather implausible for China to adhere to the terms of the deal due to reasons more than one. The IMF estimated the reality of an unprecedented economic slowdown in which China is expected to grow at only 1.2% this year. Several reports suggest that investors are planning to pull out their investments from Chinese industries to fit in with the Western bandwagon.

The outbreak turned pandemic coupled with the authoritarian nature of China’s response to the entire situation has had a detrimental effect on their domestic economy creating various tremors in the anticipation of demand for various products and services. For instance, the 12 most Covid-19 affected countries account for over 40% of the Chinese exports. Nations like India and Italy that also make that list of twelve may voluntarily pull out of importing to China as they are set to gain from deferring of investments. These nations are also top suppliers of intermediate goods for the Chinese economy. The Chinese economy is quite dependent on external demand stimuli from the US and most western European states such as the United Kingdom. Therefore, until the point in time the US and EU economies completely recover from this pandemic, Chinese policymakers are bound to hold back domestic stimulus efforts as it will only have little effect if the global economy is in shambles.

The Chinese economy has crippled down considerably due to the ongoing trade war that has led to a disproportionate ratio of debt to the annual Gross Domestic Product. This ratio reached an overwhelming 248.8% by the end of March 2019 and it has only increased ever since. China has also been forced to restructure the debts of the Belt and Road initiative (erstwhile OBOR). This restructuring meant that the capital owed to China as loans by the contributing states have been readjusted to affect the projected collection considerably. As Covid-19 nearly decimates the economy of most developing nations, it is becoming increasingly difficult for these states to pay their loan back to China within the stipulated timeframes. Thus adding to the stress on the Chinese economy at large.

There has already begun a region-specific boycott of Chinese goods and industries, especially in conservative parts of USA, among the southern districts. Instances of racial abuse against ethnic Chinese communities have been on an unfortunate rise. These are all deterministic factors of public consciousness, if not, public opinion for the future that lies ahead of us. This reaction has already seen international spillovers and investors have become more anxious about investing in Chinese companies.

According to Deepanshu Mohan, the world may experience radical shifts in the global political economy post-Covid19 based on two factors namely, the relative degree of economic recovery in the affected nations and the existing domestic political scenarios in such nations. He further states that in the post-Covid19 era, protectionist trade policies are likely to increase in the developed nations who in the name of ‘supply security’ may disentangle trade relations with China which will inversely affect the current geopolitical world order. Donald Trump could also make the pandemic a focal point in the 2020 election campaign and therefore aim to capitalise on the anti-China fervour in the US and thus strain relations even further. There lies evidence for this as well. Trump recently presented his anguish towards China being categorised as a ‘developing’ state under the World Trade Organisation list and due to the low contributions of China to the World Health Organisation. Although this may seemingly appear appropriate accusations, this is far from the whole truth. The USA, themselves have cut major proportions of its funding capacity towards the United Nations especially concerning peacekeeping and security operations.

Minxin Pei, on the other hand, stated that the Covid-19 outbreak has led the average American to view the Chinese political system with chronic scepticism as Americans blamed the repressive Chinese political system for the pandemic with the Harris poll indicating widespread American dissatisfaction with the alleged Chinese cover-up of the virus. This poll also showed overwhelming support for US punitive measures on China and the removal of US investments and businesses from China. These developments could lock the two countries into a cycle of escalation that could trigger another potential international diplomatic conflict leading to numerous security issues and economic degradation. USA and China remain the two largest economies in the world. Hence, it can be inferred that this fallout of diplomatic and economic ties between the two states might amount to significant damage in the entire global political order and the globalised system of economies and markets. In the US itself, the number of jobs created since the recession in 2008 has been washed away in two weeks.

The trade war between the two economic giants had already shaken the world before the outbreak. And the prevalent fault lines will only widen in the post-Covid19 era just as a global economic slowdown is expected. Thus, it is imperative for the world economy that this US-China relation remains amicable and stable. However, the available narratives indicate a significant detour from the ideal stability that USA and China should normatively maintain to protect the global economy from crumbling down like biscuits. The USA has resorted to legislations that are actively anti-China in terms of financial relations and international trade while China has strengthened its protectionist response system both politically and economically during this outbreak.

The Covid-19 outbreak has not acted as an impediment to Chinese aggression in the South China Sea region either. China has recently renamed 44 features in the disputed region, a decision that is considered illegal under international law. This has been time and again criticised by the US Secretary of State Mike Pompeo. With increasing US-China missile competition a reality in the region post the abrogation of the INF treaty, the post-Covid19 era will likely see more prominent conflicts in the South and the East China Sea regions which is a strategically important waterway for both the countries alongside other nations such as Japan, Vietnam, Philippines and India.

*Dhritiman Banerjee is an undergraduate student at the Department of International Relations at Jadavpur University, Kolkata, India. He has recently published for the Millenniumpost, a Kolkata based newspaper as well as contributed to publications like the Geopolitics and South Asia Monitor. His interests lie in International Relations in general and Strategic Studies in particular.

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