Trade
How and when to restart the economy after the coronavirus
Author: Editorial Board, ANU
The Wuhan lockdown has now been lifted and the Chinese government’s new challenge is to restart its economy while guarding against a second wave of infections. It took 40 days from the peak of the health crisis until its containment. Restoring economic growth will take at least 40 days, even if everything goes more or less right.
Other countries are desperately trying to contain the virus, at different stages of flattening the curve or curbing the exponential growth of those infected. Australia seems to have succeeded in slowing the rate of growth and there is talk of gradually lifting some restrictions. Japan appeared to be an outlier alongside its South Korean, Taiwanese and Hong Kong neighbours but is now fumbling into partial lockdown as the number of infections has risen sharply. Prime Minister Shinzo Abe declared a state of emergency on 7 April, but relies on requests from governors in designated prefectures and public compliance as more draconian legal enforcement measures are unconstitutional in Japan.
Can those governments and societies that appear to have had success start looking at restarting their economies and gradually easing lockdowns? All the analysis and data would suggest that unless there is mass testing or inoculation (still many months away), the risk is a rapid rebound of virus infections.
It’s still difficult to get tested in many countries. Even with some symptoms, there are often strict criteria such as having to have recently returned from overseas or having been in close contact with someone with an officially confirmed infection. Many carriers, including children, are asymptomatic and there is a lag until symptoms show. Decisions simply should not be made on the basis of the incomplete and partial data that many countries have.
The key for countries now is to get the re-transmission rate, R, to below one, and keep it there so the infections die down. An R of one will mean a constant infection rate, a knife-edge because any R above one means exponential growth, which we all understand now is explosive. In Japan, R is currently greater than one and, as the United States and Europe show, every day counts before infections get out of hand and health systems are overwhelmed. Lifting lockdowns too early will mean that exponential growth returns. The costs in terms of human life and the health burden are too high.
Until there’s a vaccine, there needs to be mass testing everywhere. If not mass testing, there needs to be random testing at scale so that choices can be made on the basis of reliable data. South Korea is exhibit A. Many may question the accuracy of the Chinese data but the trend is clear and it’s difficult to imagine the lockdowns being lifted if the virus were not now largely contained.
COVID-19 spread so rapidly thanks to our interconnected world with its daily mass movement of people around the globe. Past epidemics from the Black Death in the 14th century to the Spanish Influenza in the early 20th century managed to spread globally even before today’s hyper-globalised world. With globalisation spreading the virus faster, exponential growth in any one country is a risk to the rest of the world.
But in today’s interconnected world, information moves faster than the virus and we can learn from other countries’ experience more quickly. Many governments have squandered the lead time they had in preparing to fight the virus, exposing weaknesses of some kind or other in almost all governments and systems.
It’s not just the real-time experience from other countries that informs policy responses. As Barry Eichengreen reminds us in one of our lead essays this week, responses are heavily informed by narratives entrapped from history. ‘In seeking to avoid past mistakes, we risk committing new ones’.
The COVID-19 crisis is unlike past epidemics or economic crises and the differences must inform our responses to it, alongside the experience from other countries as it unfolds. It is a truly global virus that does not discriminate. Financial and economic contagion will move faster than the viral contagion. Although there’s a political instinct to deny it, one country’s problem is everyone’s problem.
Global cooperation is therefore essential to the remedy for COVID-19. More information sharing, cooperation and assistance across borders is the only path that avoids ongoing health and economic catastrophe. Yet there’s no obvious leader or institution to forge such cooperation strategies. The G20 has been ineffective with Saudi Arabia…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
- China’s Golden Rooster Film Festival Kicks Off in Xiamen – Thailand Business News
- Italy and China New DTA Set to Take Effect in 2025: Important Changes and Implications
- China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
- U.S. national debt is its Achilles’ heel, but China sees it as an opportunity
- Business Update: Southern Sun Reports Earnings Growth; China Stimulates Property Market – News24
- Vietnam’s Approach to China: A Balance of Cooperation and Struggle