Advertisement
Sino File | Coronavirus: China faces an economic reckoning as Covid-19 turns world against globalisation
- Trump, Brexit, trade war … the forces against globalisation have been gathering pace since 2008. Now the coronavirus threatens the knockout blow
- That’s bad news for an economic giant that is one of its biggest beneficiaries
Reading Time:4 minutes
Why you can trust SCMP
One of the more worrying consequences of the coronavirus is that it looks likely to become a catalyst for deglobalisation.
Advertisement
At the centre of this will be the decoupling of the Chinese economy with developed economies and the US in particular. The world’s three largest free economies – the European Union, the United States and Japan – are all drawing up separate plans to lure their companies out of China.
European Union trade commissioner Phil Hogan has called on companies to consider moving away from China; US President Donald Trump’s top economic adviser Larry Kudlow has said the government should pay the costs of American firms moving manufacturing back from China onto US soil; and Tokyo has unveiled a US$2.2 billion fund to tempt Japanese manufacturers back to Japan or even to Southeast Asia.
Meanwhile, bills are piling up in the US Congress aimed at reducing America’s reliance on Chinese supply chains and pushing for a decoupling of the world’s two largest economies.
While these are recent moves, the truth is the debate on globalisation – and deglobalisation – began more than a decade ago in the wake of the global financial crisis of 2008.
After decades of globalisation in trade, capital flows and even people-to-people exchanges, the trend has reversed over the past decade as trade and financial integration stalled.
Protectionist tendencies are on the rise. Since 2008, G20 countries have added more than 1,200 restrictions on exports and imports. Britain’s decision to leave the EU, the election of Trump on a protectionist agenda, and the rising popularity of right-wing political parties in France, Italy and elsewhere are all examples of rising public discontent with the status quo.
Advertisement