Post Covid, there’ll be a new world disorder

On 11 February 2020, I wrote in The Sunday Guardian that given the intensity, lethality and speed of coronavirus’ proliferation, it was no longer China’s local problem, rather a global concern requiring global solutions. Two months down the line, the virus has spread to 210 countries and territories around the world, with 200,0243 confirmed cases and a death toll of 126,758 people (as on 15 April). The ground reality demonstrates that we are far from seeing global solidarity and global solutions in the fight against Covid-19. Moreover, in absence of anyone filling the global leadership void in the post Covid-19 world, especially when the credibility of global institutions is fast eroding, we are likely to witness the collapse of the liberal international order, realignment of geopolitical and economic forces, perhaps bitter political struggles, fall of regimes and even bigger racial and religious divides across the globe.

First of all, even though the struggle for hegemony between the US and China resulted in a bitter trade war between the two and the US pronounced China as a free rider taking advantage of open democracies by way of its smart and sharp power, yet Covid-19 seems to have taken that strategic rivalry to new heights in terms of security and economics. This is to imply that the US has freed itself from the delusions of China being a non-enemy, and the misbelief that liberalization and globalization will affect a peaceful transition in China. It is in such a scenario that we will witness a hard decoupling of the US economy from China. It may not be a total decoupling, but partial and selective decoupling, for example, in sectors such as telecom, electronics and ICT the decoupling is imminent. Being a close US ally, Japan will follow suit, as could be seen from its announcement of allocating $2.2 billion to help Japanese companies move their production out of China. As for the EU, though it has pronounced China as a “systemic rival” since 2019, but if there will be a domino effect, remains to be seen. At this point in time, it appears that Brussels is irked by China’s “mask diplomacy” in Europe, which is sending signals that the EU is incompetent in handling and supporting its fellow members such as Italy and Spain in this time of crisis. The decoupling will further impact adversely on Chinese and global economies. The plunge in global economic growth could be worse than what has been suggested by the IMF recently.

Secondly, Covid-19 has proved that the international order established in the wake of World War II is to serve the goals of the hegemon rather than humanity. Once the established hegemon realises that the institutions it established with its allies have been encroached upon and rendered ineffective by the emerging hegemon, it has started to withdraw from these gradually. The US withdrawal from UNESCO, Paris Agreement, Trans Pacific Partnership, Iran Nuclear Deal, and now threatening to quit from WTO speaks volumes about US retrenchment. China’s alleged shadow over WHO amidst the corona threat and China not favouring a debate on the virus in the UN has further undermined the role of these global bodies. The US, in a fit of rage, suspended the funding of around $500 million to the WHO on account of China’s role in “severely mismanaging and covering up the spread of the coronavirus” on 15th April. Therefore, the credibility of the institutions of global governance will continue to erode as long as restructuring doesn’t take place.

Thirdly, the retrenchment, protectionism and nativism will further get strengthened in the western camp, and the globalization and liberalization will witness a gradual retreat. This will result in exclusivism, racial discrimination, further divisions within diverse societies in the name of religious and other identities. No wonder racial attacks in the US, China and even in India have become the new normal. Religious and racial exclusivism will further sharpen contradictions between communities on the one hand and spur sub nationalistic tendencies in people, rather than them integrating with the mainstream. While popular voices will call for supporting strong leaders, the same may result in authoritarianism, human rights violations, chaos and even collapse of governments in many countries.
Fourthly, the cold war between the US and China will intensify in various shapes and forms. Externally, China will continue to champion the cause of globalization through its Belt and Road Initiative (BRI); building of the Health Silk Road—as pronounced by President Xi Jinping with Italian Prime Minister Giuseppe Conte on 16 March—would be a new soft power tributary of the BRI. In response to US decoupling, China too will intensify relocation of its labour-intensive manufacturing supply chains to other countries, especially the developing countries. In fact, the process of relocation by the Chinese companies was triggered by the US-China trade war in order to avoid tariffs from the US. These have been relocated to Vietnam, Cambodia, Myanmar and Thailand in Southeast Asia and India and Bangladesh in South Asia.

With Chinese and western companies making headways to Southeast Asia, the region is likely to become the next “factory” of the world after China. Meanwhile, squaring of the “infrastructure deficit” by China in developing countries—be it in South Asia, Central Asia, Middle East, Africa, East Europe or Latin America—will continue, albeit cautiously in sectors such as rail and roads, ports, telecom and power as it remains a win-win proposition for all the stakeholders. The “debt trap” narrative has not stopped these countries from inviting Chinese investment for capacity building in these sectors. But will China remember Deng Xiaoping’s words (Selected Works of Deng Xiaoping, 116-17), “never ever attempt to be the leader of the poor countries, all they want is your money”? Gauging the relocation of China’s enterprises and composition of its trade, Asia is going to be the focus of China’s economic activities, and Africa for executing various projects. Even here I think the countries would be happy to go along with China’s BRI in terms of economic assistance and capacity building, nonetheless will continue to maintain social distance with China on matters pertaining to national security. Internally, China will be more inward looking, more authoritarian; witness sharper contradictions between the reformists and radicals and even revisit the class struggle depending on the turns in micro and macro environments post Covid-19.

Finally, as for India, the post Covid-19 world will throw unprecedented challenges. Internally, to realise the plan to become a $5 trillion economy by 2024 will be a distant dream. Though the present economic structure may enable it to rebound quickly, but the damage done to the industrial and agricultural sector will require years to recover. The divide between rich and poor will further widen and society may witness further polarization in the name of religion, caste and ethnicity. Externally, India-US security partnership will be further strengthened. The Indo-Pacific strategy is likely to gain traction and trade and investment will witness an incremental rise. Nonetheless, like the Southeast Asian countries, India doesn’t want to be caught in a zero-sum geopolitical contest between the two hegemons. Economically, India is likely to benefit from the decoupling of the western countries with China, as well as from China’s economic rebalancing in the region. Though the China baiters may suggest India’s “decoupling” from China, but there isn’t much to “decouple”. Though multilateralism will get a beating, nonetheless, India’s engagement with China in the BRICS, the Shanghai Cooperation Organization (SCO), the BRICS New Development Bank (NDB), Asian Infrastructure Investment Bank (AIIB), etc., will continue. Needless to say, India ought to correctly understand, promptly react and formulate feasible strategies to deal with the post Covid-19 challenges.

B.R. Deepak is Professor, Center of Chinese and Southeast Asian Studies.