Economic Globalization in COVID-19 Pandemic and China’s Leading Role

Zhao Longyue

Professor and Dean， School of International Governance Innovation，

Guangdong University of Foreign Studies

The outbreak and spread of COVID-19 has posed serious challenges to economic globalization as well as global governance. According to the prediction by International Monetary Fund（IMF）， global economy will decrease by 4.4%， to contribute， developed countries -5.5% and emergent market and developing economies -3.3%. The influence will surpass that of the international financial crisis from 2008 to 2009. As is pointed out by former US Secretary of State Kissinger， the impact of pandemic of COVID-19 on humans life may be temporary， but the political and economic turbulence it caused may affect generations of people. All countries must solve this problem on the basis of cooperation， otherwise the world will plunge into disaster.

COVID-19 Pandemic and A New Wave of Economic Globalization

COVID-19 pandemic has profoundly influenced economic globalization and brought opportunities for a new wave of the latter. By reviewing the progress of development of world economy， we can see that globalization is a continuously evolving process driven by historical trends， the certain result of which will be deeply integrated world economy. Globalization is firstly about economy and trade. Faced with the pandemic， all countries suffered from economic downward pressure， but none of them can change the following facts. First， international trade is still an important way for all countries to participate in global economy and boost domestic economy. When it comes to the total value of import and export， it takes over 60% of high-income countries GDP and over 50% of that of middle-income countries. Second， international trade consists of trade in goods， services and technologies. Transnational investment is both an important component of trade in services and the main engine of international trade. Third， trade in goods includes finished product and intermediate product. With the latter taking higher and higher proportion in the gross value of trade， demands and potential of international trade keeps growing， which create more space for world economic growth.

While todays economic globalization is boosting science and technology development and economic growth， it is also bringing about the problem of imbalance. The first is the imbalance between economic development and distribution. Imbalances exist between different countries， different regions within a country， different industries within a region and different social status， severely contradicting with openness， inclusiveness and win-win principle. The second is imbalance between resource consumption and environmental protection. Developed countries are attaching more and more importance to the sustainability of economic development， while developing and underdeveloped countries whose location in global value chain is in the middle or low end cannot shift their poorly managed mode of development swiftly， falling into the predicament of overexploitation and deteriorating environment. The third is the imbalance of rules and judges. For a long period of time， international rules have been dominated and manipulated by the US and European countries to prioritize their own interest and needs. The rules do not only fail to take developing countries situations into objective and full consideration， but somehow aim to take precaution against or even contain some developing countries with second mover advantages.

On the one hand， unexpected COVID-19 pandemic stopped normal international exchanges and posed difficulties to the functioning of global industrial chain and value chain; on the other hand， it ignited the long-standing problem of imbalance in international community， revealed the fragility of international cooperation and the absence of impartial international rules， highlighted the importance of sustainable and inclusive development and introduced new chances to reshape economic globalization and improve global economic governance. The world now is standing at new historical starting point. It is a shared question to international community how to take the chances derived from the crisis for the world and promote a new wave of economic globalization.

To promote international cooperation is both the source of power for people of all countries to overcome the pandemic and the major momentum for sooner formation of a new wave of economic globalization in the post-pandemic era. At present， with all countries economic stimulus policies and accelerated development of emergent industries， the impetus of recovery growth has come into being. According to prediction by IMF， in 2021 the world economy will see high-speed retaliatory growth with the world average number being 5%， China， 8%.

Reconstruction and

Innovation of

International Rules

As the Core of New Wave

of Economic Globalization

For long， multilateral mechanism for trade with World Trade Organization（WTO） as its core has played important role in maintaining the order of international trade and promoting world economic growth， but not in reforming and innovating international rules. The agenda of the development of globalization， together with multilateral mechanism for trade to improve has no longer been the main concern of developed countries like the US and some European countries. In the background that globalization will go through a new wave of profound development， seizing the leading position of the reform and innovation of rules for international economy and trade is still the main arena of major countries competition.

In order to serve the interest of the US best， the then Obama Administration worked actively for Trans-Pacific Partnership（TPP）， Transatlantic Trade and Investment Partnership（TTIP）， and Trade in Services Agreement（TISA） in order to bypass WTO and take the commanding height of international trade rules making. The Trump Administration brought serious challenges to the multilateral mechanism for trade with WTO as its core by randomly and rudely practice of unilateralism and bullying. Although the Trump Administration has withdrawn from TPP， Paris Climate Agreement and other international mechanisms， it doesnt intend to give up the leading position in making international rules. Contrarily， that is the strategy of “withdrawal for aggression” and an approach to further improve the status of America and serve for its interest with the highlighted slogan of “America First”. In May， 2020， the US and the UK formally commenced negotiation for free trade agreement and promised to try to reach an agreement as soon as possible as a response to the impact of the pandemic to trade and economy of both countries.

China has been the initiator and promoter of the new wave of economic globalization. In G20 2016 Hangzhou Summit， China put forward “to build an innovative， vigorous， connected and inclusive world economy” and made the pursuit of common development the core agenda for international economic cooperation， so as to usher global economy into a new era of growth and sustainable development. There are three aspects to elaborate. First， G20 Hangzhou Summit is the first to prioritize development in the global macro policy framework. It also formulated G20 Action Plan on the 2030 Agenda for Sustainable Development and launched the G20 Initiative on Supporting Industrialization in Africa and Least Developed Countries. Second， it advocated an outlook on global governance featured with equality， openness， cooperation and shared benefits. China promised to contribute more to the growth of world economy by five means， i.e.， enhancing policy coordination， innovating growth methods， improving global governance， promoting world openness and advocating inclusiveness and coordinated measures. Third， it promoted G20 mechanism reform. While consolidating the functioning of G20 mechanism， China tries to shift the goal of G20 mechanism from crisis response and short-term policy coordination to long-term governance and policy reform. Chinese wisdom and solution has helped economic globalization steer itself to a more equal， justice， reasonable and efficient development direction by reforming rules for global trade， investment and environment. A new wave of economic globalization is about to begin.

Different from the preceding two waves of economic globalization respectively motivated by technology and capital， the new wave advocated and promoted by China is pushed by the joint force of technology， capital and rule. With economic globalization developing further， new economy and new business forms are developing fast and international economic and trade rules have been inadequate to meet the requirements of economic development. With tariff rate getting lower and lower， focus of international trade negotiation has been shifted from conventional “trade preference” like tariff cut to “standard levelling up” and the main topic of “rules at the border” has been replaced by “rules within the border”. In post-pandemic era， all countries want economic recovery and development， but whats more important is to actively promote the reform and innovation of international rules so that the existed economic global governance can be improved.

Since the 18th National Congress of Communist Party of China， China has put forward a series of new ideas and concepts on full participation in global economic governance and reform and innovation of international rules before it took an array of new measures. On the one hand， China has defined its outlook on global governance as “extensive consultation， joint contribution and shared benefits” and its idea on new-type economic globalization as “open， inclusive， and balanced for the benefits of all” to contribute Chinese wisdom and solution to the problem of global economic governance and international rule reform. On the other hand， Chinas active moves for “Belt and Road” construction has made important contribution to the reform and improvement of global economic governance system.

At present， COVID-19 pandemic is accelerating the periodical changes of global economic situation， thus bringing opportunities to a new wave of economic globalization. Since the outbreak， China has succeed in taking comprehensive measures to control the pandemic and maintain social and economic development. The achievements are outstanding， manifesting the superiority of System of Socialism with Chinese Characteristics and Chinas governance institution. With sufficient material supply， complete industrial system and resolve and confidence in upholding mutual-benefit cooperation， maintaining multilateral systems and building a community with a shared future for humanity， China is playing an important role in maintaining multilateralism and development of the world. Meanwhile， the new wave of economic globalization is in desperate need of Chinas leading role.

Firstly， China will contribute to the reform of international rules. General Secretary Xi Jinping has clearly pointed out that markets， resources and rules， both at home and aboard， should be taken into full consideration and put into comprehensive use when observation and planning of reform and development is done for China. In the process of leading the reform and improvement of global governance system and making economic globalization more open， inclusive and balanced for the benefits of all， balancing international and domestic rules is crucial for planning international and domestic markets and resources as a whole. China needs better abilities and more achievements in making its domestic rules international while improving the efficiency and benefit of adopting international rules.

Secondly， China will steadily promote “Belt and Road” construction. Upholding the philosophy of extensive consultation， joint contribution and shared benefits and practicing the methods of interconnection and cooperation is important for the new wave of economic globalization. In the practice of “Belt and Road” construction， the logical connotation of the “five-pronged approach”. Policy coordination is the precondition and foundation for effective cooperation， on which connectivity of infrastructure and facilities， unimpeded trade and financial integration will together serve to facilitate closer people-to-people ties to achieve common prosperity. At the same time， China must keep its feet on the ground to complete the projects of “Belt and Road” with best quality and work hard to build a platform of global services to promote cooperation and development in fields of science， economy， politics， rule of law， management， organization， culture， mindset， people-to-people exchanges and international relations.

Thirdly， China will continue to open its market to the world. China is not only the biggest export country， but also the worlds biggest import country. In recent years， China has consecutively lowered its tariffs to release the potential of import. Since the beginning of 2020， Chinas trade has registered a good number in spite of the impact of COVID-19 pandemic. For the first three quarters， the total volume of imports and exports surpassed 23 trillion CNY， with a 0.7% year-on-year growth. The fifth plenary session of the 19th National Congress of CPC pointed out China must comprehensively enhance development and security， accelerate its pace for building a modernized economic system and foster a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. The adjustment of Chinas economic structure and the shift of its growth method will inject powerful momentum to world economy and global trade growth， expanding the development space for the new wave of balanced and inclusive economic globalization.

Fourthly， China will take lead in science and technology innovation. Now， China has put the strategy of innovation-driven development into full practice， with related indexes of research and development and research result transformation being on the rise. In World Intellectual Property Report（WIPR） 2019， China ranks the 14th in Global Innovation Index. With the overall innovation capability greatly improved and new progress in building an innovative country made， China has become an influential major country of science and innovation， especially in field of quantum science and 5G communication where China has taken the leading position of the world. This pandemic is also a cruel test for Chinas science and technology innovation capability， in which China has demonstrated its powerful science and technology innovation as well as international leadership by leading in the R&D and producing the test kit， medicines and vaccines.

Fifthly， China will actively expand overseas investment. The 21st century has seen the rising influence of Chinas overseas investment. Since 2012， Chinas flux of investment has been the one of the top three in the world. In the background of changing international economic landscape and severer international competition， all countries are paying more attention to economic and social development， which provides China with extremely rare opportunity to invest aboard. In the future， China will enhance the training and guidance for enterprises that are going to make overseas investments so that they can more efficiently pioneer bilateral cooperation with better understanding of target countries policy， law， history， culture， religion and society. In this way， overseas investment can make great contributions to leading the formation of rules and standards.

Sixthly， China will speed up in fostering international talents. The new wave of economic globalization has silently emerged in fields of international organizations， regional organizations and global governance mechanisms and platforms. China should engage with fostering high-end professional talents with patriotism in heart and international vision in mind， who will participate in the reform and management of international organizations and let Chinas development philosophy and policy for the new wave of economic globalization bear fruits by put them into practice. Domestically， in the first place， the efforts should be made from colleges. The colleges should train high-end intellectuals with comprehensive and cross-disciplinary knowledge in aspects of international politics， diplomacy， law， economy and management. In the second place， training for employees needs to be reinforced so that officials at all levels with the duty of international affairs are equipped with knowledge of international management and international development trend， capability of strategic arrangement and awareness of globalization， so that Chinas participation in international cooperation and exchange can be more efficient and fruitful. In the third place， open human resource mechanism should be explored. The fostering of brains within the institution should be reinforced while existing professional talents outside the institution. Last but not the least， researches must be done on the interactive mechanism to channel the pools of international talents and domestic institutes. On the one hand， China should actively provide international organizations management positions with talents from junior to senior levels so that to form a benign echelon of intellectuals; on the other hand， participation in international organizations should be made as an important channel to foster high-end managers familiar with international rules and internationally advanced management skills for Chinas domestic institutes.

Internationally， on the one hand， China should enhance cooperation with developing countries by training intellectuals for them so as to improve the status and capability of them in the new wave of economic globalization; on the other hand， China should try harder to attract foreign talents by improving and inventing all kinds of policies and measures so as to attract and maintain a number of professional talents for China to take lead in the new wave of economic globalization.