China connects nations amid gloomy world economy
The announcement of the cancelation of the Chile APEC meeting should provide global policymakers with a warning.
As we approach the third decade of the 21st century, global economic order is under pressure.
The trade wars that the conservatives in Washington have initiated to reshape the economic landscape are creating havoc, and the solid gains that the world achieved through globalization and regional economic integration are eroding faster than a rescue plan can be conceived.
Shockwaves of the 2008 financial crisis are still reverberating 11 years later, with no clear view on a recovery.
Advanced economies have not been able to grow, and most European economies have been hit hard, particularly Greece, Spain, Portugal and Italy. Germany, which is considered the powerhouse of the
EU, is this year experiencing a record drop in GDP growth.
That developing nations such as China had to step in to bail out Greece and Spain is extraordinary and a clear indication of the difficulties ahead for a sound global economic rebound.
Most world economies have not returned to their pre-economic-crisis state. Economies in South America, Africa and the Middle East are all seeing their citizens’ incomes hit hard by inflation.
Another dangerous indicator is the global debt level. The result is what we see across the Middle East and the northern Africa region – local governments are unable to keep pace with IMF financial restrictions
While our world economy is not recovering, economic integration is also falling apart.
We can see a trend of pulling away from a global marketplace through the low level of investment in developing nations and emerging markets compared to 2007 statistics. This negates any progress made by emerging and developing economies.
At the local level, strengthening the domestic market and domestic consumer power is the best option as we see international trade taking hit after hit.
The drive to shift the focus to local economies goes beyond practical concerns about the unstable nature of our globalized economy. It comes from deep dissatisfaction with the results of a free trade economy that marginalized most of the world population in favor of multinationals and select market places. There is also the fact that most low-income nations are starting from weak income positions, affected by debt, conflict and violence. Most are at a geographical disadvantage, either isolated or landlocked, making economic integration impossible.
In addition, Washington policies are not helpful in creating a cohesive global market. Divide and rule is the key strategy pushed by the administration under US President Donald Trump. Creating standstill trade conflicts with all major economies and threatening tariffs are techniques employed by the administration.
So how do we move on from here? What are the options for major emerging economies like Brazil, Russia, India, China and South Africa?
Looking at these BRICS countries illustrates the importance of a new perspective.
In an era based on Westerndominated institutions such as the IMF, the G7 and the OECD group, the BRICS group is independent from last century’s colonial thinking and is geared to focus on emerging economies as major powers, bringing Africa, South America, Eurasia and South Asia a unique platform.
From an economic policy point of view, having two UN veto members should enable the BRICS nations to carry more weight in the global economic vision.
China is crucial to the BRICS group as it has the resources and the will to provide tangible funds, transfer key technologies and
open its market to the other members. By doing so, China is helping to improve the local, domestic economies of these nations.
There are challenges, of course. India is still struggling with its nationalism and Russia is trying to wear down US financial sanctions. However, with China on board, the group’s vision holds and it is now time to take practical actions to stay relevant and counter the global pessimism of other international institutions.
But then again, China can only do its own part in bringing nations together. Result will depend on the sovereign decisions of the emerging nations to re-structure their economic models with Chinese support and stop thinking of the West as their Mecca.
Are we in the midst of a turbulent economic era? The answer is yes.
Is global growth impacted by trade wars? Are there any new alternatives, ways of thinking that might help us move toward a new model of economic cooperation? The answer to both questions is yes.
China is making a bold move that will shake old dogma about economic supremacy and the role that emerging markets play in assisting other low-income economies that are struggling.
These nations should throw their support behind China as the West has abandoned them, closed its borders and built tangible and intangible walls.