The strategy of “infrastructure-led growth” (growth, not economic and social development) seems to be showing its limits in Africa, where China has largely been instrumental in promoting it. This strategy is based on the Keynesian multiplier theory whereby any increase in aggregate demand would result in a more than proportional increase in GDP.
To date, there is little reason to think that global demand for dollars is drying up. But there is another way the United States could lose its status as issuer of the world’s dominant reserve currency: it could voluntarily abandon dollar hegemony because the domestic economic and political costs have grown too high.
As the United States awakens to its supply-chain vulnerabilities amid heightened pressure on companies to “reshore” from China, it is grappling with an uncomfortable truth: most will not end up relocating to the US. And, business experts say, the relatively few that do probably should not have left in the first place.
The Chinese government is likely to face a tricky economic policy choice in the second half of this year. If it loosens its fiscal stance, public finances will worsen significantly. But if it cuts expenditure to offset the pandemic-related revenue shortfall, growth will be lower, with dire consequences.
Every month of this year has brought new evidence that voting in 2020 hasn’t been going very well. And with perhaps the most consequential election in generations—when the nation ratifies or rejects President Donald Trump’s divisive agenda—experts are starting to believe that the general election will be much, much worse.
A deep determination to battle against great odds may explain why East Asia has so far responded much better to the COVID-19 pandemic than most Western countries. And if the region’s economies also recover faster, they may well offer a glimmer of hope to a world currently drowning in pessimism.
After keeping its society and economy running throughout the coronavirus pandemic, squashing the outbreak, and donating millions of face masks to many countries, Taiwan has earned a lot of positive press internationally. But there is another vital area in which the world could also learn from Taiwan’s experience.
It took four days of almost constant and uninterrupted negotiations, but in the end, a deal was made: EU leaders agreed on a roadmap out of the coronavirus economic crisis in the early hours of this morning, with the package predictably hailed as “historic” by almost all involved. Historic it might be, but that is hardly a positive development: instead, it will further intensify EU integration in areas where an “ever closer union” is unwise…
By any measure, China’s recent foreign policy has displayed an astonishing level of assertiveness. That Beijing has shed its prior inhibitions in the midst of a devastating global health and economic crisis for which the Chinese leadership itself bears culpability, and a still-fragile economic situation in China itself makes it all the more remarkable.
Most Americans think with its democracy, the United States has the best form of government. China, with its one-party dictatorial state, communist or otherwise, has the worst form. This is China’s Achilles’ heel and will spell the downfall of the Chinese Communist Party. In reality, from the Chinese people’s perspective and theirs alone, their government today enjoys greater legitimacy and popularity than any American or Western government with respect to their own citizens.
