China After Coronavirus: What are the Economic and Political Scenarios?

2020 started very badly for China. In January it was confronted with a new virus that it did not understand. It came under savage criticism from the West for being slow off the mark and for allegedly covering up the extent of the virus. By late January the Chinese government was aware of the deadly threat posed by COVID-19 and with great speed proceeded to lock down Wuhan and much of Hubei province.

In March the virus began to spread across Europe and the United States, and progressively across the world. The West had had at least two months to learn from China and other East Asian countries. That time was squandered. The West was totally unprepared. It was an extraordinary display of provincialism – the assumption that a virus in East Asia could not possibly spread to the West.

What Conclusions Can be Reached After One Year of COVID?

A year later and it is clear that the West has been utterly incapable of dealing with the virus. Without a vaccine, we would be destined to co-exist with COVID-19 indefinitely, perhaps forever. In stark contrast to China, the objective was never clear: was it to eliminate the virus or to contain it? In practice, in every Western country bar New Zealand, the reality was containment. No attempt was made to eliminate it. Without a clear overarching goal, government policy constantly yo-yoed.

Should the priority be life or the economy? The initial lockdowns were followed by opening up until it was realized, too late, that the virus was again out of control, and restrictions and then another lockdown were once more needed. There was, alongside this, a continuing argument about the rights of the individual versus the role of government.

La missione dell'Oms a Wuhan tra ospedali e laboratori (LaPresse)
The WHO mission in Wuhan among hospitals and laboratories (LaPresse)

In Donald Trump’s America, the economy took overwhelming priority over life and individual rights took precedence over the role of government. Europe was more like a halfway house. In civil society, people failed to grasp the new disciplines with the speed and universality that was required: mask-wearing, social distancing, staying at home and the rest. COVID-19 bore witness to a disastrous failure of governance. We know the price in human life that has been paid.

Asia Did Far Better Than the West in Tackling the Coronavirus

It did not have to be like this. China, South Korea, Vietnam, Taiwan and, to a lesser extent, Japan did far better. Around 4,600 people have died in China out of a population of 1.4 billion; over 400,000 in the US (population: 328 million) and over 100,000 in the UK (population: 67 million). Unlike everywhere else, China, we should not forget, was on the front line with a preparation time of zero.

Why did the West fail miserably and why did the East Asian countries, in contrast, succeed in the near-elimination of the virus? Ultimately, the reason is systemic.

The governments in East Asia showed far greater competence and took a strategic view of what was needed. The people were similarly disciplined. They expected and required government to provide leadership. These societies are rooted in a Confucian tradition which respects government, puts society above the individual, and is socially responsible. The response of Western governments was belated, behind the curve, confused, a prisoner of vested interests, lacking a strategic perspective and for the most part incompetent.

China’s Unprecedented Rise

We are all familiar with the extraordinary rise of China over the last forty years; from when it was 5% of the size of the US economy in 1978 to the present when it is roughly a fifth larger than the US (according to GDP measured in terms of primary purchasing power). It has been the most remarkable economic transformation in human history. The defining moment, hitherto, in China’s rise and America’s decline was the Western financial crisis in 2008. While China was largely unaffected, the US was plunged into its greatest crisis since 1931. The result was a major shift in global economic power from the United States to China. In the years that followed there was a dawning realization that China was likely to replace the US as the world’s leading economic power.

The pandemic will have a similar economic effect, but on a much bigger scale. By virtue of the fact that it managed to defeat COVID-19, China was able to open up its economy from the early summer last year. Despite the huge economic hit it took in the first quarter, the Chinese economy grew by 2.3% in 2020, a remarkable achievement under the circumstances.

In contrast, the US economy contracted by 3.7%, the UK by 11.4% and the eurozone by 7.6%. With the West still mired in the pandemic, though mass vaccination will over time serve to ameliorate the situation, and China back to normal, the marked disparity in growth will continue in 2021 and probably 2022 and beyond. The economic cost of failing to defeat COVID-19 over a prolonged period will be enormous and cast a shadow over much of the 2020s; it is now widely projected that China’s GDP as measured in dollars will overtake that of the United States in 2028, a year or two earlier than was previously thought.

The Geopolitical Impact of the Pandemic is Far More Than Just Economic

However, it would be a mistake to measure the impact of the pandemic in primarily economic terms. Hitherto China’s rise has overwhelmingly been seen as an economic phenomenon. But it is governance rather than the economy that has dominated the pandemic. The ability of economies to recover has been a function of the capacity of governance to defeat the virus. Politics, or political systems and cultures, rather than economics has been the overriding factor.

A man wearing a mask is silhouetted as the sun sets along the riverbank in Wuhan in central China’s Hubei province on Friday, Jan. 15, 2021. (AP Photo/Ng Han Guan)

In this context, China has triumphed and the West, above all the United States, has failed disastrously. In the geopolitical contest between a rising China and a declining US, the pandemic has been the first occasion when the question of governance has been both center-stage and decisive.

The pandemic has seen the greatest failure of liberal democracies since 1945. The crisis of Western democracy, though, is even more serious than this.

In the United States, long regarded as the home of Western democracy, democratic norms came under growing attack during the Trump presidency. It may be that Joe Biden will restore the country to the status quo ante, but this must remain very doubtful: America is deeply polarized and hopelessly divided. The underlying reason for the break-up of the previous long-running consensus is American decline, a process that will certainly continue and which is likely serve to exacerbate America’s divisions even more.

What Lies Ahead for China?

It is, of course, impossible to foresee the future. To judge by the 2008 financial crisis, which led not only to a shift in power from the US to China but also growing disillusionment in the West’s governing elites and institutions, the impact of the pandemic – which has been a far bigger event than 2008 – will be profound and far-reaching.

The coming decade is likely to see great instability in the West, which will be burdened with a mountain of debt, a young generation which has lost out very badly, large-scale unemployment, a slow recovery, very low growth rates and a big increase in inequality. In such circumstances, it seems likely that Western societies, as during the pandemic, will turn inwards and be consumed by these huge challenges.

In contrast, China has already recovered and is likely to see strong growth over the next few years, culminating in it becoming, by both measures of GDP, the largest economy in the world. Although it remains an unattractive model of governance as far as Western societies are concerned, a combination of its success in handling the pandemic and the crisis of democratic governance in the West will temper these negative sentiments and foster a growing if grudging respect.

People look at semiconductors on display from the Tsinghua Unigroup at the China Beijing International High Tech Expo in Beijing, Saturday, Sept. 19, 2020. China’s leaders vowed Thursday, Oct. 29, 2020 to speed up its development as a self-reliant “technology power” amid a feud with Washington that is cutting access to U.S. components and hampering Beijing’s industrial ambitions. (AP Photo/Mark Schiefelbein)

The world, in which the developing countries constitute the great majority, will come to regard China as the global leader in multiple aspects – as the leading economy, the biggest contributor to global growth, the largest single market, highly competent governance (if too authoritarian for many in the West), and probably the key leader in the fight against climate change.

Finally, in respect of Europe, we should not underestimate the gravitational pull of China. Although Europe is still largely Atlanticist in outlook, it is increasingly looking eastwards, and this process – complex and uneven as it is – will slowly gather momentum, especially in the context of the Belt and Road Initiative.