Coming together for economic growth
China’s robust recovery amid pandemic shows failure of US-initiated decoupling bid
China’s gross domestic product grew 2.3 percent last year, overcoming the storm of COVID-19 which caused severe disruption, standing as the only major economy in the world to register growth.
Other major economies, such as the United States, the European Union and the United Kingdom, suffered severe contractions. Analysts attribute China’s return to growth to its ability to successfully control the pandemic and evade the repeated shutdowns that have plagued the world.
China’s economy is undoubtedly now the engine room of global growth, giving hope to markets and investors worldwide, especially those looking for certainty or a safe haven. It will be instrumental throughout 2021 in guiding other countries to recovery, and spearheading a global return to prosperity.
However, it comes at a time when some countries are advocating the idea of decoupling — disengaging from the Chinese economy. In its dying days, the Donald Trump administration had slapped an evergrowing number of measures on Chinese companies and targeted its exports.
These moves were a bad idea, serving to add to the detriment of the US as a whole. The world economy is globalized; prosperity is contingent upon interdependence and mutual openness. As latest US data shows, Trump’s trade war against China has cost over 245,000 jobs. Cutting ties with Beijing will not make America richer or grow faster.
As China positions itself to boom further in 2021, the new Joe Biden administration should aim to rethink the legacy of Trump’s selfdefeating and counterproductive policies.
The Trump administration advocated a misleading train of thought that China’s prosperity was at the
US’ expense. This pushed a series of arguments that decoupling with Beijing in trade, financial and technological spheres would make America wealthier and bring jobs home, as well as quash China’s rise. This, of course, was completely false.
The global economy is not a zerosum game. Countries’ economic fortunes are interconnected, especially when things such as supply chains and consumer markets span multiple countries. When one major economy gets hurt, others get hurt too, but when one drives growth, others experience the ripple effects.
The year 2021 is set to see the global economy rebound. The proliferation of vaccines and the unwinding of lockdown and travel restrictions will see life return to normal and businesses recover lost ground. But the cornerstone of all this is China. It boasts the world’s largest consumer market and industrial base, which have proven resilient over the course of the past year.
For investors and consumers worldwide, China is a safe bet, with 7-8 percent GDP growth forecast for the coming 12 months, which will subsequently have a ripple effect across countries seeking to escape massive slumps. China’s recovery — coming in a cyclical, global form — means inbound imports from neighbours such as Japan and South Korea will boom.
Trump’s decoupling logic did not stifle China as much as it damaged American interests. It was assumed by the Trump administration’s advisors that a push for decoupling could divide the world into two economic blocs and alienate China, but given the size and global scope of its economy, this is just impossible. Not surprisingly, the idea found little enthusiasm, hence two major economic agreements involving China — the EU-China investment treaty, and the Regional Comprehensive Economic Partnership — were signed last year.
Such moves only serve to alienate
America and shift the balance of economic power away from it. The US needs to engage in the global economy to stay relevant, not disengage.
China’s economic data should remind the Biden administration that the US has nothing to gain from its current path, and ought to moderate its approach toward Beijing in the view of facilitating its own recovery. Trump’s spree of last-minute attacks against China did not seem to represent any strategic logic as much as they appear to be a bitter, last-minute outburst in pursuit of a confrontational Cold War vision.
China will irrespectively continue to drive global economic growth. It must be understood that openness, not confrontation, can bring about a global recovery and return to normality.