China, coronavirus and the global economy

News

China, coronavirus and the global economy

BASIL
WILSON

Sunday, February 23, 2020

Print this page Email A Friend!


There was the expectation that once the United States and China had turned temporary swords into ploughshares that the prospects for growth in the world economy would be robust for the year 2020. The “plague” of the coronavirus has dampened the prospect of upturn for the world economy.

When Mike Pompeo, secretary of state for the United States, visited Jamaica and warned Caricom nations, those who attended, to be wary of China, it is obvious that Mr Pompeo is unaware of the role that China plays in the American economy. Pompeo's remarks reflect this contradiction in America vis--vis China. The Phase 1 deal that the United States signed with China entails China purchasing much more of America's agricultural exports, and the opening of the Chinese market to American financial services. At the same time that America seeks new markets in China, the secretary of state is telling Caribbean countries to be mindful of Chinese investment.

Chinese investment in Latin America and the Caribbean began expanding sizably after 2005. Initially, China's interest in trading with Latin America and the Caribbean revolved around extrapolating natural resources like copper, oil, iron, ore, etc. In later years, the economic relationship has become more complex. China's Development Bank and China's Ex-Im Bank are engaged in sizable loan transactions with Latin America and the Caribbean. The Chinese are not just interested in purchasing commodities from the western hemisphere but in making investments that can have a transformative impact on Latin American and Caribbean countries. China is now investing in telecommunication, in solar energy, in manufacturing and transportation.

Those economic relationships contribute to raising the standard of living of the people in the hemisphere.

Economic investment and international trade are not a zero-sum game. American investment has also played a role in the modernisation of Latin America and the Caribbean. In the case of Jamaica, investment in the bauxite-alumina sector of the Jamaican economy contributed to enriching the coffers of governmental revenue and enabled the Government to expand services in crucial areas like education and housing.

Latin America and the Caribbean benefit greatly from foreign direct investment. It is unfortunate that decision makers in the United States have not been able to reset their cold war mindset. They are still at war with Cuba, Nicaragua and Venezuela. They use sanctions as a military weapon that leads unnecessarily to raised tensions and invariably precipitates human suffering.

On the question of China and the Caribbean, the democratic form of government is quite firmly established throughout the English-speaking Caribbean. There is no evidence that since China has expanded its economic influence in the region that it has sought to interfere in the domestic politics of countries in the hemisphere and if China did, it would be counter-productive.

It is somewhat odd that a democratic society like the United States will spend billions on its military budget while cutting back on social programmes. China, the authoritarian society, speaks of economic trade producing a win-win situation at a time when America is eager to build walls and to define itself as a victim when it comes to the world economy.

The Chinese have been resorting to extraordinary measures to roll back the coronavirus. The epidemic began in Wuhan and most of the deaths and those suffering from the virus are concentrated in that province. The spread of the virus reflects the extent that China is an integral part of the world economy and world society.

Already, the coronavirus has triggered a slowdown in China's economy. China plays a pivotal role in the supply chain and if that chain is derailed, it will have a disruptive impact on production in the United States and in other developed countries. The automobile sector will be affected as a recent article in the New York Times articulated. It is clear that inter dependence on a global scale is a delicate phenomenon but there are benefits. The world has created a division of labour and free trade can provide opportunities for a high level of specialisation and economic efficiency. As we have observed in the United States and elsewhere, it can be devastating to particular geographical regions.

What is abundantly clear is that the world economy has evolved and currently lacks the international institutions to ensure that there is equity and that all nations benefit from the exchange of goods and services.

The existence of a global economy does not mean that competition between countries will become non-existent. But the complementary nature of a world economy provides the conditions for cooperation and peaceful coexistence. The requisite of the global economy is a culture of tolerance and high-mindedness. A cooperative spirit will enable the community of nations to fight pandemics, to fight global warming, and the calamities that global warming will trigger which is already playing havoc in certain parts of the world.

China is forming these relationships throughout Asia with the making of the Regional Comprehensive Economic Partnership which brings together most of the countries of Asia except India.

The United States should be leading that charge in the western hemisphere. America put together the Central American Free Trade Agreement that should be extended to include the countries of South America. North American Free Trade Agreement, NAFTA, or what is now called United States-Mexico-Canada Agreement (USMCA) should be extended to the entire western hemisphere, including Cuba.

The old world obsolete cold war mindset needs to be abandoned by elements in the Republican and Democratic parties. America needs to extricate itself from militarism and use its democratic strength to make a better world.

Professor Basil “Bagga” Wilson, a Kingston College Manning Cup football star of the 1960s, is retired provost of John Jay College of Criminal Justice in New York, USA.


Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive


ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT