In a thought-provoking article on Lokmaanya, a vital question was asked about a strategically important and politically sensitive issue. The question was whether China will let go off international manufacturers easily and relinquish its income and growth?
The answer though straight and simple is a counter question – With a global disaster in form of COVID-19 pandemic, emanating from China, that has disrupted global economy and killed a few hundreds of thousands, does China have the authority to compel manufacturers to stay?
Over 185 countries are affected by the spread of virus. All sections of the society irrespective of their financial or social stature found their daily schedule of routines thrown off the track. Shifting from an established base is indeed arduous. COVID 19 has created disruption and it demands a change in our thinking and style of working.
China might have been a thriving home for manufacturers, but the governments across the world can no longer play spectators as their economies suffer while millions get affected by the CoronaVirus.
The governments across the world find themselves in a catch-22 situation, where on one side they have to take concrete actions against the deaths caused by this pandemic and on the other hand protect their economy which is heavily dependent on Chinese manufacturing.
With this situation in mind, the odds of countries opting for a softer form of retaliation are more compared to an outright hostility towards the China. Moving their industrial bases right now thus seems to be a plausible action that could help them earn some political mileage domestically.
China on its part will not allow this to happen so easily. It will deploy all defensive and offensive techniques to counter this direct threat to their economy. China knows it will have to face some wrath of the global community through sanctions against some of its non-state actors and it will affect their economy adversely.
In the meeting organized by WHO and led by Australia, close to 70 countries have endorsed the view that WHO needs to quickly analyze and find out the origin of the virus. Japan has announced allocation of 230 MN USD aid for Japanese companies willing to shift their base out of China.
US President Donald Trump’s noise over China is an indicator of some action that will follow. US has been the worst hit country with significant loss of life and damage to its fiscal health. A consensus needs to build around the idea that it is absolutely essential and in the larger interest of human life, that the root cause of this virus needs to be investigated thoroughly.
In such a situation China has very little option left and to compel international manufacturers to stay back in China, it has to confront the following:
Credibility Challenge: Beijing is currently being accused of a clandestine research on biological science with potential to inflict heavy damage on the global population. China will find it hard to justify to the world her stand and intent and come out clear. A show of transparency does not go well with the ruling CCP.
Diplomatic Challenge: The extent of devastation is so big that little can be done through mere diplomatic damage control. Australia, Japan have been vocal in their displeasure with the way China has reacted to this pandemic. The Sino-American relations are at an all time low and President Trump is no mood to back down from a consistent war of words. By cutting off WHO funding and vocally supporting the Hong Kong protestors, US has been building its anti-China rhetoric.
Financial Challenge: The damage done by virus within China is deadly enough for Beijing to revise its budget in all spheres and set aside a bulk amount for Public health and welfare. This will adversely affect the fiscal planning of the Chinese government.
In this perpetually wired world, when big powers vie with one another for supremacy, every action has a reaction with impact. A behavioral change towards China is imminent and is likely to change the international relations landscape.
Along with its diplomatic fire-fighting to counter these challenges, China is stepping up her offensive strategies too. Increased military activities in South China Sea along with its recent tensions with India along its border in Ladakh, are some indicators that China might use a tougher approach.
The global scenario right now is too dynamic for anyone to foretell the future of Chinese hegemony over manufacturing and trade. With the whole world currently engaged in controlling the pandemic the call for a united stand will be louder.
However, by the end of this year, countries across the world gain some control over the pandemic. US presidential elections will also determine whether President Trump gets a second term to really build a global initiative around his anti-china rhetoric. Till then however, we can only work towards ending this pandemic that has already claimed lakhs of innocent lives and has brought our world to its knees.
(This post first appeared here in The Tilak Chronicle.)
The views and opinions expressed in the above article belong to the author(s) and do not necessarily represent the official opinion, policy or position of Lokmaanya.