Coronavirus: China pessimistic over global powers’ efforts to save world economy amid distrust

Finbarr Bermingham

A pledge from G7 leaders to “act together” to solve the “health and economic risks” of the coronavirus pandemic has been met with pessimism in China, which has found itself on the sidelines of initial discussions on how to save the global economy.

China is not part of the G7, but the fact it did not warrant a single mention in a near-800 word communique released on Monday from the influential grouping, despite being arguably the only major economy to have been through the virus’ wringer, suggested just how far out in the cold it has landed.

The Group of 7 (G7) consists of Canada, France, Germany, Italy, Japan, Britain, the United States, and the European Union.

The suggestion was hammered home in a subsequent tweet by US President Donald Trump, referring to “the Chinese virus”, in the sort of pejorative language that has become prevalent among senior members of his administration.

Chinese officials, meanwhile, have been propagating the myth that the virus may have originated outside China, in some cases even blaming the US for introducing it to Wuhan, the central Chinese city at the centre of the outbreak.

The virus crisis is unfolding at a time of deep mistrust between global powers, amid rising protectionism and waning interest in multilateralism, presenting an arguably unprecedented challenge to global leaders.

“Global coordination either through the G7 or G20 is needed. If we lose control, the pandemic will risk a new round of global economic crises and social turmoil,” said an adviser to the Chinese government, who spoke under condition of anonymity. “So far there is no coordinated global action and we may not see one any time soon.”

China will be involved in any consultations of the Group of 20 (G20), of which it is a member, but there is scant confidence in the possibility of a multilateral response.

“I fear the crisis will be used to put up more barriers, more nationalism, more protectionism, more restrictions,” said one Western source.

Monetary policy moves from the US have fallen short of the mark, while the European Union failed on Monday to agree on how to utilise its €400 billion (US$446 billion) bailout fund to fight the coronavirus. China, on the other hand, has some measure of control over the spread and is slowly putting its economy back to work. Even so, its courting of other nations is viewed with deep suspicion.

“Not surprisingly no-one seems to want to involve China at the moment on future economic policy,” said a European trade official in Asia, adding that China’s efforts to enlist European countries in its Belt and Road Initiative had been seen as efforts to “divide” the bloc, making Brussels “cautious about economic policy discussions on China”.

China has been exporting medical equipment to beleaguered European nations including Italy, even as the European Union banned such exports from outside its 27 member states.

The growing use of export controls has been slammed in some quarters, with Simon Evenett, a trade law professor at the University of St Gallen in Switzerland describing them as “sicken thy neighbour” policies. Chad Bown at the Peterson Institute of International Economics, meanwhile, has argued that trade war tariffs are obstacles to national-level responses to the pandemic.

In a display of the division sown in Europe by China’s involvement in the recovery effort, Serbian President Aleksandar Vučić dismissed “European solidarity” as “a fairy tale on paper”.

“The only country that can help us is China,” Vučić said.

At a press conference in Beijing on Tuesday, Lei Chaozi, a director of the science and technology department at the Ministry of Education, confirmed that China has begun supplying Italy, Britain and the Netherlands with coronavirus test kits and said “the country is very willing to enhance cooperation with other countries” in the preventive effort.

But there has been no comment from Beijing as to whether China is willing to work on an economic response with the G7, with which it has a prickly relationship.

“The G20 was created because the G7 needed China’s help to counter the financial crisis in 2008,” said Chen Long, a Beijing-based partner with the independent research agency Plenum. “The G7 alone will not save the world. China’s participation should be a part of a global rescue plan.”

However, with Saudi Arabia at the helm of the G20 this year while engaged in an oil price war with Russia, this group will also face a struggle in achieving a multilateral plan of attack. “The virus has imposed a severe test on global governance due to the lack of mutual trust,” Chen said.

If we keep following the current trend, people will lose confidence in global governance, and just witness the world fall into the pit of chaos

Huo Jianguo

It is against this complex geopolitical backdrop that leaders face the biggest challenge to the globalised economy in generations.

“If we keep following the current trend, people will lose confidence in global governance, and just witness the world fall into the pit of chaos,” said Huo Jianguo, the former head of the Chinese Ministry of Commerce’s research institute, who encouraged the G20 to take the lead on an economic solution.

Warning that the world faces even more pressing challenges than the global financial crisis more than a decade ago, Wang Huiyao, president of a Beijing think-tank president and adviser to China’s cabinet, urged international cooperation.

“It is time for each country to offer their solutions, such as China’s new infrastructure projects and the [US] Federal Reserve’s interest rate cuts, to know what each country can do,” he said.

Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.

More from South China Morning Post:

This article Coronavirus: China pessimistic over global powers’ efforts to save world economy amid distrust first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2020.