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Economic primacy shifting back to Asia after 150 years

  • September 8, 2020
  • , Nikkei Asian Review , 4:40 p.m.
  • English Press

TOKYO — Do you think it is possible for a single country to solve all problems common to humankind?

 

In July, Philippine President Rodrigo Duterte asked China to help give his nation early access to COVID-19 vaccines that it develops. He also said the Philippines has no intention of taking sides between the U.S. and China, suggesting tolerance of Chinese military facilities in the South China Sea.

 

A spokesperson for the Chinese Foreign Ministry immediately welcomed Duterte’s remarks and declared China’s willingness to give priority to the vaccine request.

 

The coronavirus pandemic is accelerating changes in the global order, even encouraging the Philippines to resort to a naked balancing act between the U.S. and China.

 

The combined economic strength of Chine and other emerging economies in Asia — measured on the basis of purchasing power parity, which adjusts figures to reflect relative prices — will this year surpass that of developed countries, led by the U.S., according to the International Monetary Fund. An analysis of data from the IMF and the Maddison Historical Statistics Project also has pointed toward the first such reversal of economic power since the era of American dominance began when it passed China roughly 150 years ago.

 

The U.S. and China have deepened their antagonism, refusing even to cooperate in fighting crises caused by the pandemic. While the death toll from the coronavirus has mounted past 180,000 in the U.S., China has clamped down on freedom of speech in Hong Kong and reinforced its effective control in the South China Sea.

 

The U.S. and Britain have decided to ban 5G telecommunications equipment made by Chinese giant Huawei Technologies. Deutsche Bank estimates that “tech walls,” especially between the U.S. and China, will cost $3.5 trillion in the coming five years as companies are forced to rebuild supply chains and deal with rival computer systems.

 

Adam Smith wrote that the division of labor is limited by market size, envisioning the growth of economies with larger and thus more diverse and productive markets.

 

Globalization, the foundation of modern prosperity, is in crisis. The ratio of trade to global GDP, which had risen to 60% this century from just 10% following World War II, will drop this year to 37%, the level when the Cold War ended.

 

Although one may wonder if the confrontation between two major powers will split the world again, the world is no longer as simple as it once was, with intricate digital and supply links deepening countries’ mutual dependence. Regardless of their political systems, “middle powers” have strengthened their presence through the skillful utilization of data and technology.

 

New Zealand Prime Minister Jacinda Ardern has vowed that her country will make its economy stronger than it was before the COVID-19 outbreak. By promptly introducing measures such as lockdown restrictions and wage payments on behalf of employers, the New Zealand government has held the unemployment rate at the pre-pandemic level of 4%. It also works out its policies using digital interfaces with the public such as the centralized gathering of requests from companies and citizens.

 

Finland continually updates public maps showing the spread of infection, made possible through simple tests and the integration of electronic data from medical institutions.

 

An index compiled by the World Bank shows that South Korea and Taiwan, which are considered to have succeeded in their fights against the coronavirus, had earlier achieved great improvements in the “efficiency of government” and the “rule of law” between 2008 and 2018.

 

Under the leadership of the World Economic Forum, public and private experts from more than 50 countries began deliberations in July to find app-based ways of mutually certifying negative test results for COVID-19. “Negativity is a passport for mobility,” said Chizuru Suga of the WEF’s secretariat.

 

The project is a voluntary drive to protect the freedom of mobility from confrontation between nations.

 

The Turkish Nobel-winning historical novelist Orhan Pamuk has written that for the first time in history, human beings everywhere face a common problem.

 

We live in a world where successes and failures can be instantaneously compared. Ideology cannot save lives. Now that the age of the great powers has ended, it is time for nations to compete to have the world’s smartest government.

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