The year 2020 will go down in history as the year of the pandemic. Death tolls are well on track to register over a million, companies are shuttering and unemployment levels are at their highest. Small businesses, in particular, are severely impacted and many have perished for good. Although governments worldwide have announced stimulus packages, they are faced with enormous difficulties in trying to revive their economies.
A recap of China’s recent history
Systems and formulas that have long been propagated by economists seem to have gone haywire and the world economy lies fractured. All governments are seeking to unravel as to what exactly went wrong. And amid the chaos, several world leaders are laying the blame squarely on China for not adequately containing the pandemic when it first broke out in their country. They are blaming the ‘dragon’ and are now attempting to find ways to take it to task.
However, is China alone to be blamed for all that has transpired? The world was well aware what the CPC (Communist Party Of China) stood for, when it was incepted in 1921. The Communist ideology led to the emergence of the ‘Great Leap Forward’ ideology and the ‘Cultural Revolution’. Meanwhile, the CPC was considered pragmatic and as only being interested in a ‘what works’ policy. The latter policy was envisioned by Chairman Mao Zedong in 1958 to bolster China’s economy and industry.
The ‘dragon’ adopts an aggressive economic stance
The Chinese opened their economy in 1979 to foreign trade, investment and Beijing implemented free-market reforms. The dragon fired on all cylinders and manufactured consumer products for the globe. The World Trade Organisation (WTO) officially commenced in 1995 replacing the General Agreement on Tariffs and Trade from1948. China made its WTO entry in the winter of 2001 with the help of then US President Bill Clinton. He’d granted China the ‘most favoured nation’ status.
In the years since, China has evolved from being an agrarian society to now having established its position as an industrial power house. The rapid growth cast the spotlight on China – which has gradually made its ’super-power’ ambitions felt. Western leaders, Wall Street and the majority of technology companies all favoured China for a considerable period. The prevailing adage was ‘God made the world and the rest is made in China’. This blind support to the dragon allowed it to become a manufacturing major but the unintended consequences could well be catastrophic.
The over dependence on tourism
What basically followed was that when China commenced manufacturing of industrial and consumer products, the Western world became much cleaner environmentally. Their economies began transitioning to more services based industries. Europe, with its Renaissance heritage, sold tourism to the world. Spain was the most sought out destination with 90 million tourists in 2019, followed by Italy, which registered an inflow of 63 million tourists.
Every major city in Europe, the US, Canada and Australia was packed during tourist seasons and these burgeoning numbers amounted to trillions in revenue generated. Simply put, advanced countries looked like Disney Land, while the onus of pollution-intense manufacturing was mostly on China. But with it came economic clout and ever swelling ambition on China’s part.
COVID-19 will cause more damage than the Great Depression
The Chinese–with their huge labour and industrial strength–made cheaper consumer products and started catering to the world. Ordinary citizens were happy as they were saving more money and traders who dealt in these commodities were definitely amassing wealth with the advent of inexpensive Chinese products. The German and Japanese economies were the only ones where precision work continued unabated. Besides relying on tourism, they also enhanced their economies by leveraging technology.
However, with the pandemic raging on, it is the travel and tourism industry that has been most severely impacted. As nations shut down to curtail the virus’ spread, airline operations were suspended and leisure travel all but stopped in its tracks. The tourism industry’s temporary closure has cast a wide ripple effect — one that will contribute towards many other businesses also being severely impacted. This pandemic will surpass the damages inflicted by even the Great Depression of the 1930s. It will take years or perhaps even a decade to undo the damages.
Time to analyse and reassess
The big question for all of us is what lessons are to be learnt; what really should be our key takeaways? Does the WTO’s progressive trade liberalisation–encouraging and enhancing efficient use of available global and local resources–hold true anymore? Should local factories and industries be relocated to a different part of the world for economic benefit while creating unemployment in the home country? Should factories be allowed to open in emerging economies where child labour and unsafe industry practices are often followed? Should one nation be made so strong that others’ sovereignty is now at peril? Should tourism alone form the basis of a post modern economy?
The business ethos has to be rechecked and a more sustainable structure must be put in place. In Southeast Asia, Thailand’s woes are mounting as its economy is heavily dependent on tourism. Perhaps certain countries may need reintroduction of an agrarian society where conducive environments are offered for farmers to flourish, using technology as a dependable crutch.
With an increasing global population, there is always a pressing need for more food security and the checks and balances must be vetted by the stronger economies of the world. Global leaders need to formulate robust plans to advance their economies, build better healthcare and education facilities and foster an environment for a safer world. The path for the future generations needs to be paved by strong leaders of today for only then will we have used the pandemic as an inflection point – a major time stamp that we must draw lessons from to build a sustainable and stable future.