The year 2020 has finally come to an end. It was a bad year for the whole world because of the global pandemic. In a few more decades, will future historians characterize 2020 as a pivotal year in the turning point of world development?
Throughout human history, there have been plagues with far-reaching effects, such as the bubonic plague in medieval Europe and smallpox and measles in Native American communities after Europeans arrived in the Americas in the 15th century. These plagues had a huge historical impact because they not only spread quickly, but also had a very high mortality rate and brought about massive population collapse everywhere they went.
The plague in the Middle Ages caused the peasant population to plummet and the land to be abandoned. Landowners who owned land did not have enough peasant labor to pay their tribute, and the bargaining power of peasants over landowners was thus greatly increased. This change in power relations contributed to the demise of feudal serfdom and the emergence of capitalist agriculture. The Great Native American Plague, which began in the sixteenth century, led to the collapse of indigenous communities and state institutions, allowing armed European settlers who migrated to the Americas on a large scale to easily expand their territories and occupy most of the Americas’ fertile land resources.
The global pandemic of 2020 will certainly be terrible, but the long-term political and economic impact will not be as great as the historical example above. The mortality rate of this virus is less than that of the Spanish pandemic of 1918. The pandemic of that year brought great difficulties to the economy and society at that time for a while. However, after the epidemic, the global economy recovered rapidly, and the global boom and even bubble of the 1920s was not stopped.
It is believed that vaccines to end the epidemic are already available. If the epidemic ends at the end of the year, will the world return to the interrupted development of 2019, as if nothing had happened? Although the epidemic will not bring about a major turn in history, there are short- and medium-term implications for the world’s political economy.
Some think tanks and media outlets predict that China will be the biggest winner of the plague as its economy is rapidly rebounding and the rest of the world, including the United States, is still struggling, with some consultants even asserting that the epidemic will accelerate China’s emergence as the world’s largest economy. There are far more examples of such linear predictions extending momentary trends into the future that miss the mark than are accurate. If these predictions were accurate, Shanghai would have surpassed London and New York as the world’s largest financial market and Japan would have become the world’s largest economy.
The rebound of the Chinese economy in the second half of 2020 was largely the result of massive lending by state-owned banks at the beginning of the year to stimulate the economy regardless of the consequences, and a momentary increase in dependence on Chinese exports as production stalled in much of the world. When world production resumes, this advantage for China at the end of 2020 will disappear.
During the epidemic, countries saw that China exported medical supplies at high prices, many of which were found to be substandard and counterfeit, and its big foreign propaganda had the audacity to present these exports, which made the world rich from the epidemic, as a righteous act by China to save the world, and even used the import/export business to bully countries that were critical of the Chinese government, such as Australia. This kind of rogue behavior, which is taking advantage of the chaos while the world is struggling with the disaster created by China, is seen by all countries, and I am afraid that when their economies recover, they will be more wary of China.
Meanwhile, the authoritative Institute of International Finance, which publishes an annual report on global debt, warned in the middle of this year that China’s overall economic indebtedness would explode to more than 335 percent of its national output in the wake of the plague. Over the past five years, China’s debt ratio has surged past 250 percent because of the 2009-10 loan stimulus, which has caused the economy to slide. Now the debt continues to rise, and the pressure on subsequent economic growth will be enormous. No wonder Beijing has recently been talking about the internal cycle in preparation for a lockdown, and has also taken the stance that it is ready to plunge into successful private companies and private entrepreneurs.
When the world recovers from the plague in 2021, the global siege of China and the slowdown in China’s economy will be even more powerful. If Beijing’s style of governance remains unchanged, its response to the world will be even more vicious and irrational, and China’s conflict with the United States and the democratic world will be even more intense. We should be prepared for this.
Recent Comments