Once-in-a-century Changes under COVID-19:Features and Impacts

Zhao Lei

Vice President & Professor,

Institute for International Strategic Studies, Party School of the Central Committee of CPC

(National Academy of Governance)

The COVID-19 pandemic has accelerated changes unseen in a century, highlighting global and regional conflicts and risks, and also creating a window of opportunity for building a new political and economic order. In particular, it has wide ramifications on globalization, global governance, social trends and major-country relations.

A New Type of Globalization:

From a Single Center to Multiple Centers or Decentralization

The pandemic has laid bare the vulnerability of globalization. According to the world-systems theory, globalization, a typical example of the core-periphery order, used to be uneven. In the economic system, core countries with dual advantage in production and exchange could exploit semi-periphery and periphery countries for maximal profits. Similarly, in the political system, with the pursuit of hegemony as the main driving force of the capitalist world, Western countries have built a vertical alliance to maintain hegemony. In the cultural system, the so-called universal values of the Western culture have taken precedence over other cultures, thus harmonizing or westernizing other civilizations.

In the post-COVID era, a new type of globalization built around a “node-network” order will see the emergence of multiple centers or a process of decentralization. With greater connectivity, periphery countries can be turned into nodes of a large network. Each country can become a mini-center, and enjoy equitable benefit from the network. Like the blockchain, “distributed”, “multiple centers” and “decentralized” will be the hallmarks of this new-type of globalization. That said, “decentralized” here is not the same as no center, but a mutually reinforcing multi-center structure.

In the prior round of globalization, whenever a crisis arose, the US and Europe used to give prescriptions to others, and urged others to learn from their economic and political system and values. When they themselves suffered the plight of the 2008 financial crisis, the weak momentum of core countries slowed the global economy down. In the face of the coronavirus, the overall response of Western countries has been disappointing. Against this backdrop, the international community has come to the realization that the future of the world and common interests of all can no longer be held in the hands of a few Western countries, as their troubles may paralyze the whole world.

For quite some time, speaking of major changes, the first thing coming to our mind was power transition, namely one power or center replacing another. However, the COVID-19 pandemic has shown that we all live in a world of mutual dependence and intertwined interests, in which no one can replace others. There can be multiple centers. We should see globalization as a process that reshapes the identity of international actors, and redefines power, authority and state-to-state relations, rather than a competition that divides countries into winners and losers.

According to the article entitled “How China is preparing its economy for a future where the US isnt the center of global demand” by CNBC in September 2020, the US was the global demand hub (see Figure 1) in the prior round of globalization, but in the new round of globalization featuring a multi-modal structure of multiple demand centers, three regional centers, namely Europe, North America and Asia, coexist and interact with each other (see Figure 2). In the post-COVID world, there may be more global and regional centers in economic globalization than before. Non-Western nation states, capital and social organizations may take a more active role and have a greater say in globalization. As their aspirations are more reflected in the globalization process, the West-centered or US-centered trend may be reversed, thus making the new round of globalization more balanced.

Stagnation of Global Governance and Short-term Inward-looking Trend

The coronavirus has brought unprecedented consequences to the world economy. According to IMF estimates in October 2020, the global economy will drop by 4.4% in 2020, the worst recession since the Great Depression in the 1930s, and the first synchronized recession for both developed countries and emerging economies. Specifically, the US, the Eurozone and India will see their economies drop by 4.3%, 8.3% and 10.3% respectively. International trade and global investment will plummet as well. According to WTO estimates, global trade in goods will decline by 9.2% in 2020.

Amidst the COVID-19-induced recession, poverty and low-income population will surge. The World Bank estimated in May 2020 that 60 million people may fall into extreme poverty due to the pandemic. Its August estimate revised the number up to between 70 million and 100 million. According to statistics from the US Department of Labor, nationwide unemployment rate increased from 4.4% in March to 15% in April, hitting a record high since the Great Depression. As the wealth divide widens, polarization in the country becomes more prominent. Racially speaking, African Americans and Latino Americans are the most vulnerable, with a poverty rate of over 25% in September, while that of white Americans, 12%.

When countries focus on their own economic and social issues during the pandemic, there is a lack of leadership in coordinating response to global challenges. Global governance faces stagnation. No one can deal with global issues in the post-COVID era on its own, not mechanisms for major-country coordination and global governance like the G20 or G7, or developed countries like the US and Europe. In the short term, the pandemic may exacerbate nationalism especially economic nationalism. To cope with the pandemic, governments had to resort to emergency measures for crisis management, and gained some power. Yet, as the situation gets better, some are reluctant to let go their newly gained power, raising objection from communitarians and liberalists. In all political systems, there is an inward-looking tendency to control their own future. Given the vulnerability of global supply chains, many countries choose to establish their own supply chains, take a tougher stance against mass immigration, devote more resources to domestic reconstruction and economic crisis management, and cut their commitment to regional and global issues including climate change. Some scholars have thus come to the pessimistic conclusion that many countries may hardly recover from the crisis, and weak and failing states may be more prevalent. Populism, major country competition and attempts for strategic decoupling may be on the rise. Faced with the pandemic and vulnerability of global governance, the instinct of many countries is to pursue nationalism, but in the long run, the international community will embrace a new type of internationalism that is pragmatic and protects the safety of all countries.

In the medium and long run, engagement in global governance and offering of public goods may become the mainstream of foreign policy for major countries. The logic of anti-globalization is to put security interests above economic interests, which means economic interests may be compromised for security. However, the pandemic has made it clear that economic development and wellbeing of the people are the foundation for national security. Without economic reopening, it will be difficult to control the pandemic. Likewise, without global economic and trade cooperation, it will be difficult to manage global recession. Countries may reflect on the security of their supply chains, but the global industrial, supply and value chains will not be broken, and international division of labor will not suffer serious setbacks. Advanced and emerging economies will enter a new period of interactions. Countries need to work on the reconstruction of the global market, and institutional arrangements for sustainable development. In the post-COVID era, countries may attach greater importance to economic resilience while pursuing economic efficiency.

On 15 November 2020, leaders of 15 countries including China, Japan, the ROK, ASEAN, New Zealand and Australia signed RCEP, the largest free trade agreement in the world. It speaks volumes about the aspiration for greater economic cooperation and rejection of trade protectionism. That said, RCEP members may fight with each other and compete with CPTPP countries for an upper hand in setting rules and standards, intellectual property, technological superiority and global governance.

Diverging Social Trends:

Rising Anxiety and

Extreme Ideas

The meaning of global governance lies in joint response to global issues, and the power of global governance comes from international consensus. Under the pandemic, reversion or reshaping of consensus has added challenges to global governance. While some crises are natural like contagious diseases, others are man-made, like Trump administrations decision to withdraw from the WHO. Some Western scholars believe that, over the past four years, the US, having walked away from liberal internationalism and even multilateralism, has been the greatest revisionist in international politics. Thus, global governance should not only address issues like infectious diseases, but also the anxiety of some countries.

Apart from political and economic impacts, the coronavirus may also change peoples mindset and generate anxiety or extremist ideas. Social trends emerged during this time have highlighted realistic problems and the intense, complicated international relations. Divisive ideas are on the rise, including nationalism, populism, exclusiveness, bullying, ecologism, nihilism, anti-intellectualism, anti-elitism, technological pessimism, pan-entertainmentalism, feminism, multiculturalism and ethnic nationalism.

The best example of diverging social trends is the rise of conservatism and populism. Under COVID-19, Western countries have become more hostile towards others and more conservative on the whole. Peoples perception of declining national strength has provoked populism. Fear may result in irrational policy decisions, while widening internal social division in the US, Europe and other Western countries may further intensify fear.

The pandemic has amplified the differences and conflicts between collectivism and individualism. Some believe that cultural and civilizational factors may be one reason for the poor handling of COVID-19 in the US and Europe compared with East Asia. While the collective spirit of East Asian countries has pooled the people together, individualism has hampered epidemic response in Western countries and global cooperation. The pandemic has shown that cultural factors may be more important than institutional ones during crises.

Public health crises require science-based and professional response both at the national and international governance level. In traditional diplomacy, a countrys international influence depends much on its international standing and the personal charm of the leader. However, during a public health crisis, influence comes from professional medical knowledge and capability as well as public goods offered to the international community. The more a country knows about pathogenesis, the faster vaccine R&D breakthroughs can be made, and the greater advantage it will gain. Counterintuitively, some countries have seen mounting anti-intellectualism and anti-professionalism in the fight against COVID-19. For instance, under Trumps influence, some American people have been bent on pursuing so-called individual freedom in disregard of the professional guidance of Antony Fauci, director of the US National Institute of Allergy and Infectious Diseases. Some have even gone as far as making threats to Dr. Fauci and his family. In the short term, anti-intellectualism and anti-elitism may stay there, but in the long run, people will attach greater importance to rationalism and science. Separating science from politics is how things should be. It is also a hard lesson that mankind will learn again and again from public health crises like the pandemic.

Major-country Relations

as a Key Determinant in Changes: Mutual Accommodation of China and the US

Wars and peace and conflicts and cooperation are eternal themes in international relations, while major-country relationship is a key determinant in international relations and global changes. For China, the three most consequential bilateral relations are China-US relations, China-Russia relations and China-Europe relations. The developments of the China-US-Russia triangle used to depend mainly on power disparity. As unprecedented economic turmoil has weakened global demand for oil and gas, oil price has plunged. Against this backdrop, Russia faces increasing economic difficulties, lagging further behind China and the US. That said, history has shown that a strong China-Russia relationship at a high level meets the interests of both countries, and underpins strategic balance and world peace and stability. COVID-19 has deepened the need for strategic cooperation between the two countries. In addition, the EU will be a center of competition for the foreign policy of China, the US and Russia despite the setbacks brought by Brexit.

On China-US-Europe relations, although China was among the first to resume economic growth, it will do no good to China if stagnation of Europe and the US lasts. Its worth noting that while the US and EU are reviewing their supply chain vulnerabilities to reduce dependence on China, the EU also stresses greater autonomy from the US. On 30 December 2020, leaders of China and the EU announced the conclusion of negotiations on the Comprehensive Agreement on Investment as scheduled. It shows that major-country relations are experiencing a restructuring instead of a melting down or nosediving. Economic, political and strategic mutual dependence between major countries is still there.

On China-US relations, they are not only the most important bilateral relations in the world, but also a key factor in global changes. The US has upheld the “America First” policy with a skeptical or even dim view on China-US cooperation, and made the assessment that China-US relations was in “free fall” and a “new cold war”. Some US politicians have gone out of their way to seek decoupling from China by urging US businesses to leave China. Despite their attempts, China, a large market of 1.4 billion people, remains an attractive investment destination for American companies even during the pandemic. According to a joint research by AmCham China, AmCham Shanghai and PwC China released on 17 April 2020, over 70% of American companies said they would not shift production, supply or purchasing business out of China because of the coronavirus. According to the USCBC 2020 Member Survey released on 11 August, 83% of American companies take China as among the top five priorities for their companys global strategy, and around 70% have confidence in Chinas market prospects in the coming five years.

Response of China and the US to the pandemic has caught the worlds attention. Some Western scholars believe that the Trump administration has failed the leadership test, and made the world a worse place. The country will no longer be regarded as the global leader. In addition, as a result of the blame-shifting and inflammatory behavior of the Trump administration, the American public have lost confidence in globalization and international trade, and ascribed their trouble to globalization and free trade agreements. By contrast, China knows well that its economic development over the past decades is attributable to globalization, and sets its eyes on maintaining competitiveness in various fields. Therefore, some Western scholars believe the US has two options. If its primary goal is to maintain global leadership, it has no choice but to engage in a zero-sum game and geopolitical competition with China. If its goal is to create a better society and improve peoples wellbeing, it should work with China.

In a nutshell, COVID-19 will be remembered as the third most consequential event in the 21st century following the September 11 attacks and the 2008 global financial crisis. It will bring about new changes unseen in a century and have implications for globalization, global governance, social trends and major-country relations. At a new historical juncture, countries, statesmen, businesses and citizens should not only think for “myself” but the greater “ourselves”. This is the right mindset to build a community with a shared future for mankind. Amongst new changes, China and the US should adapt to new realities. Specifically, the US should get used to a stronger China of a higher level of modernization, while China should accommodate to a less confident US with decreasing influence. The Biden administration will usher in a period of adjustment in China-US relations, and will, to some extent, reshape the balance of power and the international landscape.