It’s time for a G20 summit on coronavirus: analysis
Coronavirus infection is reported to have spread to more than 70 countries, and there is now a greater likelihood of a worldwide pandemic being declared. China, where the infection first appeared and has been the most affected, says that the new cases have progressively decreased and that the worst may have happened. It is gradually and gradually allowing normal life and economic activity to resume.
But the image outside of China is different. There is a continuous increase in reported cases and deaths, despite the drastic measures being taken in all countries to limit cross-border movement of people, close factories, schools and offices, and implement strict quarantine measures, both in cases. Confirmed as suspects. These are creating major disruptions in a densely interconnected global economy, which operates through transnational global supply chains. The longer the virus has been under control and its intensity decreases, the greater the magnitude of the interruptions.
Even if China is in a position to substantially revive production in its factories, it will not help much if other components of supply chains, located in other countries, remain blocked. The world not only faces a major public health crisis, but also an economic crisis. This is leading to stock markets around the world, including India, recording unprecedented losses. Even without the impact of the coronavirus, the world economy was expected to grow by only 2% during the current year. The last estimate is only 1%, and some analysts believe a contraction is likely.
World trade has been mainly flat in recent years. You are likely to see a significant contraction this year. For the Indian economy, which is already in the midst of a slowdown, this is bad news. The impulses for growth recovery will have to depend mainly on what stimulus can be provided locally. This means that India will not be one of the countries affected by the virus. If so, and the two recent cases in Delhi and Hyderabad, which have resulted in panic, show how suddenly and seriously this could happen, then India will have deeper problems. Any drastic measure to contain the spread of the virus will inevitably cause serious disruptions in the domestic economy, exacerbating the slowdown in growth. The situation is being closely monitored at the highest level of government, and prophylactic measures are being implemented, such as preventing the entry of high-risk countries. This is reassuring, but, despite this, the virus can spread and we need to have contingency plans.
The coronavirus outbreak exposed how much China’s global economy depends on sustaining growth. He has also exposed China’s high level of dependence on the supply of key components, such as generics for the pharmaceutical industry worldwide. This vulnerability to China was already increasing in importance, and the case of Chinese telecommunications giant Huawei, which became the most advanced and economic provider of 5G technology and equipment, is only the most prominent among several other sectors where China’s dependence It is significant.
There is a continuous “decoupling” between China and the West that takes place in high-end technology segments. The coronavirus epidemic is likely to intensify such decoupling. In recent years, as wages in China have continued to rise, there has been a constant change of production platforms from China to other countries. This has happened, for example, with textiles and clothing, which are moving to countries such as Vietnam, Indonesia and Bangladesh. Such relocation can be accelerated under the impact of the coronavirus. It is possible that there will be “outsourcing” on a larger scale, that is, to bring back China’s production platforms to the home locations. Popular dissatisfaction with globalization and increasing nationalist and even autarkic sentiments in all countries can receive additional momentum for fear of the spread of the virus.
Coronavirus is a global public health challenge and requires a collaborative response. Countries that have limited capacities and resources require the support of those better equipped. It is not enough to close the borders and prohibit the entry of people from the affected countries. Countries should coordinate their efforts and share information transparently. Why don’t we see a G20 summit to address this crisis?
China’s global position has been negatively affected by its status as the epicenter of this public health crisis. But China is also causing admiration for its ability to orchestrate preventive and corrective measures on an unprecedented scale. The construction of a new hospital in Wuhan in a matter of days was more seen on social networks not only in China, but worldwide. In the initial stages of the epidemic, it seemed that President Xi Jinping’s political position had been undermined. There was a deep anger over the delay in warning the public about the danger posed by the virus. However, if the drastic measures taken since then manage to overcome the crisis, then it is likely to further strengthen Xi’s authority. It is too early to say that the crisis has peaked in China. The economic consequences can still be serious, even if the crisis has passed. An uncertain world has become even more uncertain.
Shyam Saran is a former Foreign Secretary and principal member of the Policy Research Center.
The opinions expressed are personal.