Globalization and Global Governance under the Impact of COVID-19

By Gao Fei

COVID-19 swept the world at the start of 2020, affecting over 7 billion people in more than 210 countries and regions. Stock markets crashed, international flights were cancelled on a large scale, and global supply chains were disrupted, inflicting heavy losses on countries. The World Economic Outlook released by the International Monetary Fund on April 14th predicted a 3% contraction of the global economy in 2020, the most severe recession since the Great Depression of the 1930s. David Malpass, President of the World Bank Group, warned on May 20th that the global pandemic and the resulting economic losses might plunge 60 million people into extreme poverty. COVID-19 has become a major event affecting the world at the beginning of the 21st century, after the 9/11 attacks in 2001 and the global financial crisis in 2008. Henry Kissinger, former US Secretary of State, even claimed that “the coronavirus pandemic will forever alter the world order”. Compared with the past epidemics in human history, the fast spread and extensive influence of COVID-19 is, to some extent, attributed to globalization that has grown by leaps and bounds since the 1980s, which has also aroused suspicions worldwide about globalization. The trend of globalization in the post-COVID-19 era has become the focus of people’s attention and the development of the future international order.

I. Globalization is faced with continuous challenges

Globalization is political, technological, cultural and economic. It has brought about tremendous changes in the way societies are organized, and affected all aspects of people’s life. It is even safe to conclude that “globalization is our current way of life”. That said, globalization is a double-edged sword. On one hand, it optimizes resource allocation, drives economic growth, and disseminates new technologies and cultures on a global scale. On the other hand, it exerts impacts on traditional economic models, erodes traditional cultures, and threatens social stability.

Since the 1990s, while globalization has accelerated, anti-globalization sentiments have also been on the rise. From November 30th through early December in 1999, a demonstration against globalizationtook place in Seattle and shocked the world. It was a prelude to massive anti-globalization demonstrations the world has since witnessed. On June 9th, 2001, the International Committee of the World Social Forum was established in Brazil, and the anti-globalization movement itself turned into a global phenomenon. In 2002, Jerry Mander, who rose to fame during the Seattle anti-globalization storm, and the International Forum on Globalization he founded published the book Alternatives to Economic Globalization: A Better World is Possible, which expounded their views on globalization. From a political perspective, anti-globalization forces include leftists, rightists, liberals as well as conservatives. They are also joined, among others, by trade unions, anarchists, socialists, ecologists, feminists, and pacifists. Therefore, anti-globalization is only a phenomenon without a solid core, not a single movement.

Globalization has been through deep adjustment since the 2008 international financial crisis. Somedeveloped countries have witnessed the anti-globalization phenomenon, which culminated in Brexit and Trump’s election in 2016. The anti-globalization sentiments also throw into sharp relief the growing tensions and rising populism within Western countries in the context of weak global growth. The backlashes against globalization, evidenced by popular anti-globalization sentiments and anti-globalization policies pursued by governments, have undermined the traditions and patterns of international relations. Take the United States as an example. In recent years, the Trump administration has adopted a series of anti-globalization policies. First, it pursues trade protectionism, insists on “US First”, brandishes the big stick of protectionism in different parts of the world, and starts a full-scale trade war against major trading partners. Second, it seeks to revise rules. The US has or intends to withdraw from international organizations, treaties and mechanisms, such as the Trans-Pacific Partnership Agreement (TPP), the Paris Climate Change Agreement, the United Nations Educational, Scientific and Cultural Organization (UNESCO), the Global Compact on Migration, the Iranian Nuclear Agreement, the United Nations Human Rights Council, the Intermediate-Range Nuclear Forces Treaty, and the Open Skies Treaty. It forced the World Trade Organization (WTO)into a standstill and withdrew support to the World Health Organization (WHO), thus adding to the uncertainty in the international order. Third, the US advocates political isolationism and insists on taking fewer international obligations, as reflected by building a wall on the US-Mexico border and issuing a travel ban on Muslims.Trump openly attacked globalism at the UN General Assembly in 2019, claiming that the future does not belong to globalists, but to patriots.

After the outbreak of COVID-19, the anti-globalization forces transformed from anti-globalization sentiments and policies to de-globalization actions. The shock waves of the epidemic have generated risks worldwide, impeding the flow of goods, services, people and capital. Regional and global industrial chains have been forced to adjust. Racist and radical behaviors have been on the rise. The epidemic has further weakened the pro-globalization forces. Some countries have closed borders to each other, controlled exports of medical supplies, shifted the blame for the epidemic, pushed for reshoring of manufacturing sectors, and restricted food exports. In the face of the ragingvirus, some advocate building walls to keep risks away; some put their own countries and interests first; and some call for returning to the state of “limited globalization” as seen before the 1980’s. Their aim is to reshape the sovereign power of individual countries through “de-globalization”, return to the era of economic sovereignty, realize technology and production independence by relying on their own resources, and achieve the so-called “strategic self-sufficiency”.

At a time when the international architecture is being transformed and the international order is being reshaped, the US magazine Foreign Policy described COVID-19 as an event that shocked the world and will lead to permanent changes in political and economic power. It is almost certain that under the impact of the epidemic, the globalization that people have been accustomed to in the past decades will no longer exist. However, as a long-term trend of global development, globalization will not end either. The last wave of globalization results from the political dividend brought by the end of the Cold War, the institutional dividend of improved global economic, financial and trade systems, and the technological dividend of transportation and information advances. As things stand now, technologies keep moving forward, the demand for connectivity among economies remains strong. The epidemic has revealed the incredible vitality of online shopping, remote education, video conference, and telemedicine. It goes without saying that globalization will not stop, but will be reshaped under new conditions.

II. The world expects a new type of globalization

Since the end of the Cold War, economic globalization has deepened international division of labor and led to rapid gains in productivity, bringing enormous benefits to all countries in the world. Driven by globalization, the total global GDP increased 3.8 times, from US$ 22.62 trillion in 1990 to US$ 85.91 trillion in 2019. The number of people living in extreme poverty dropped from 1.9 billion in 1990 to 656 million in 2018. At the same time, the negative effects of globalization are also emerging. Globalization that has boomed after the Cold War now sees its momentum subdued, as evidenced by the widening wealth gap, proliferation of terrorism, frequent international financial crises, and raging infectious diseases. According to World Bank statistics, the proportion of global trade in world GDP reached an all-time high of 60.90% in 2008. The share of net FDI inflows and outflows worldwide in GDP also reached a peak of 5.37% and 5.34% in 2007, and then declined continuously.

The connectivity enabled by globalization is the foundation of the prosperity of the world economy and, unfortunately, the root cause of the rising vulnerabilities globally. The more closely interconnected the world is, the deeper the global division of labor, the higher the productivity, and the greater the risk of a complex system of labor division. Although globalization represents the development trend of human society in the long run and won’t be reversed, “anti-globalization” and “de-globalization” will bea normal for present.

First, countries around the world will concern themselves more with the core industrial sectors that are vital for the national economy and people’s livelihood, and will bring these sectors back to their shores at all costs. As French President Macron said in a televised address on March 12th, “This epidemic has revealed that some goods and services must be put outside the rules of the market. To delegate to others our food, our protection, and our healthcare services is folly. We must take back control and build a more independent France and Europe than now, a France and Europe that firmly control their own destiny.” It can be predicted that medicines and medical protective equipment will be among the first to be re-shored, and that the diversification of the industrial chain is inevitable.

Second, the process of regionalization of the world economy will accelerate, and the global economic cooperation and mechanism building is not optimistic. In recent years, the International Monetary Fund and the World Bank have accomplished little. WTO reform is struggling. The G20 cooperation process has been hindered. At a time when global cooperation is being held back, regional cooperation can serve as a shock absorber and safety valve, as demonstrated by the breakthroughs made in recent years in RCEP negotiations, the improved atmosphere for trilateral cooperation among China, Japan and the Republic of Korea, the signing of a new cooperation agreement between the US, Mexico and Canada. Under the impact of the epidemic, countries with similar natural and social conditions have coordinated and cooperated in fighting the virus and increased consensus on cooperation. The close proximity has ensured the security of industrial chains.

Third, geopolitics is once again at play. Major countries will compete more intensely, making it difficult for them to coordinate responses to global challenges. Since the end of the Cold War, globalization has been advancing by leaps and bounds, mostly driven by cooperation among major countries. In recent years, the competition between major countries has intensified, as seen in the increasing political disputes between the US and Russia, and the growing trade frictions between China and the US. In the process of globalization, development imbalances between countries have given rise to nationalism. The inequity of social distribution has opened the floodgate of populism. During the epidemic, the US groundlessly accused China of covering up and called the virus the “Chinese virus”, poisoning the atmosphere of cooperation between the two sides and holding back the two governments from cooperating to combat COVID-19.

On the whole, following the outbreaks of trade wars in many parts of the world from 2018 to 2019, “anti-globalization” and “de-globalization” will become the new normal in a period from 2020 onwards. To solve practical problems, globalization must take a new form. The world expects a new type of globalization based on sustainable development, multilateral rules and international cooperation.

III. Improving global governance is the key to getting out of the woods

Globalization is an inevitable trend in the development of human society and represents the direction of history. Like anything else, globalization has both positive and negative effects. What is at stake is whether the international community can establish a global institutional arrangement that is commensurate with the process of globalization and continuously improve global governance.

Since the outbreak of COVID-19 in Wuhan in January, some countries have taken extreme measures such as evacuating nationals and suspending flights, but in the end they have not been able to stay unaffected. The epidemic has exposed deficiencies in the global governance system, such as a lack of cooperation, impeded information sharing, slow policy response, and inadequate coordination. All these make it an urgent task to improve governance capabilities and raise the level of cooperation. Viruses have no nationality. And epidemic responses call for cross-order actions. The epidemic is a stress test, revealing some problems in globalization and providing an opportunity to get globalization right and improve the global governance system. Only by improving the global governance system and breaking through systemic bottlenecks can we conform to the trend of the times and revitalize globalization. Otherwise, the negative effects of globalization will come back, globalization will be interlocked with anti-globalization, and the world will lose the momentum and sense of direction in its development.

The public health crisis is a common challenge facing mankind, and unity and cooperation is the most powerful weapon. The global COVID-19 pandemic has once again shown that mankind is a community of shared future, sharing weal and woe together. Since the turn of the century, SARS in 2003, swine flu (H1N1) in 2009, MERS in 2012, and Ebola in 2014 have posed challenges to the global public health system. It can be predicted that the traditional and non-traditional challenges faced by all countries will continue to increase and cannot be tackled by one country alone. Even though short-term isolation is crucial to control the virus, long-term isolationism will cause greater economic and social damages, and will not help to truly cut off the spread of infectious diseases. Yuval Harari, the author of Sapiens: A Brief History of Humankind, therefore believes that the real solution lies not in isolation, but in cooperation. The global spread of COVID-19 is also a result of insufficient international cooperation in the context of globalization. When the virus was raging in China, people from all over the world offered China a great deal of assistance, which Chinese people will never forget. By contrast, when the epidemic broke out in China, some governments acted slowly, sat idly by, and even made cynical remarks about China, thus missing out the window of opportunities to control the epidemic. If countries fail to rebuild trust and establish effective cooperation mechanisms, power will gather back to nation-states further after the epidemic is over. Countries will choose to establish independent supply chains and seek relative benefits. In that scenario, productivity would drop worldwide; competition and friction between major countries would intensify; and globalization would stagnate or even regress.

Simply blaming globalization for the problems plaguing the world is neither fact-based nor conducive to solving the problems. It is obviously wrong to place hopes on “anti-globalization” and “de-globalization”. The only right way forward is to build a community of shared future for mankind and continuously improve global governance. The world may cope with the shockwaves in three phases: rampant epidemic, economic stagnation and political turmoil, to which no country will be immune. Going forward, efforts must be made on three fronts to improve global governance.

First, countries must combat COVID-19 in a scientific way and strengthen international cooperation on public health. Life is priceless. The most important task at the moment is to save lives. Countries should carry out international cooperation to speed up research on drugs, vaccines, and testing, share experience on prevention and control, and contain the spread of the virus as soon as possible. They should do away with political bias, support scientists from all countries in carrying out research on the source and route of transmission of the virus. After the global pandemic is brought under control, a full assessment of global responses should be made to review what has been achieved and what needs to be done. International organizations including the WHO should be supported to play bigger roles. And regional public health emergency communication mechanisms should be established as early as possible. COVID-19 is not the first, nor the last global public health emergency of the century. Improving the response mechanisms and making faster responses to public health emergencies will be crucial for coping with similar challenges in the future.

Second, countries must pursue multilateralism and strengthen international coordination on macro policies. The epidemic has taken a heavy toll on the global economy. To protect the economy and avert recession, countries have resorted to interest cuts and fiscal expansion. In this economically interconnected world, however, a single country won’t be able to cope with the impact on its own. In recent years, G20, the premier platform for global economic governance, has encountered many difficulties in internal coordination. The WTO, the most important arbitration body for global trade, has been paralyzed. The World Bank and the International Monetary Fund also see their coordination capability on the decline, casting a shadow on cooperation to tackle the crisis. Revitalizing the global governance platform and speeding up the reform of existing institutions to make them more efficient is the best way to boost the economy through international cooperation.

Third, major countries must rebuild trust and avoid political turmoil. Power comes with responsibility. Major countries have greater responsibilities in leading responses to global challenges. COVID-19 has hit hard major countries in different parts of the world. China is the first country to be affected, and the US has suffered the most. To defeat the common enemy, China and the US should have worked together. However, it is regrettable that senior US officials were discriminatory, calling the virus “China virus” or “Wuhan virus”, which was only met with tough responses from China. The diplomatic rows between the two countries have impeded global cooperation against the epidemic. China is the largest developing country and the US the largest developed country. China-US relations are important for the world order. “Cold War” is a past tense. The global pandemic compels the two countries to think long and hard about their relations. It is crucial for them to resolve differences, rebuild trust, and pursue cooperation by thinking out of the box and looking at the bigger picture. The many differences do not mean that the two sides cannot cooperate. A stable China-US relationship is beneficial to both countries and the world.

In its response to the epidemic, China has acted with a sense of responsibility for its own people and people of the world. It has established an online knowledge center for the prevention and control of COVID-19, which is open to all countries. It does what it can to provide medical supplies and protective equipment to affected countries and regions. Supplies donated and made by China have helped with the global response. On May 18th, Chinese President Xi Jinping delivered a speech entitled “Fighting COVID-19 through Solidarity and Cooperation, Building a Global Community of Health for All” at the virtual event of the opening of the 73rd World Health Assembly. In the address, he made six proposals, including making full efforts to prevent and control the epidemic, giving full play to WHO’s leading role, increasing support to African countries, enhancing global governance in public health, restoring economic and social development, and strengthening international cooperation. As he pledged, China will provide 2 billion US dollars over two years to help with COVID-19 response in affected countries, set up a global humanitarian emergency depot and hub in China to ensure the operation of anti-epidemic supply chains, establish a cooperation mechanism to pair up Chinese hospitals with their African counterparts, ensure the accessibility and affordability of vaccines developed by China, and implement the G20 Debt Service Suspension Initiative for the poorest countries. These five measures demonstrate China’s responsibility as a major country.

Crisis is both a test and an opportunity. Human beings, after drawing hard lessons, should develop a clear vision for the world. After the epidemic is over, globalization will not be smooth sailing, but it will not come to a full stop either. Changes must be made. In a community of shared future where people rise and fall together, falling back to isolation or dividing the earth into “two camps” and “three worlds” is not the way out. The only right way forward is improving global governance through cooperation and promoting healthy globalization. As Winston Churchill once said, “Don’t waste a good crisis”. The COVID-19 crisis calls on humankind to cooperate more effectively, improve the global governance system, and build a more just and reasonable international order. Otherwise, the crisis will be wasted.

Gao Fei is Vice President and Academic Dean of China Foreign Affairs University (CFAU).