COVID-19 can delay, but not stop China’s rise

Bill Gates said in his blog GatesNotes: “There is good news coming in 2021. There are two main reasons to be hopeful. One is that masks, social distancing and other interventions can slow the spread of the virus and save lives while vaccines are being rolled out.

“The other reason to be hopeful is that in the spring of 2021, the vaccines and treatments you’ve been reading about in the news will start reaching the scale where they’ll have a global impact.”

Taking off from Bill Gates, former president Gloria M. Arroyo gave her own “predictions into basic conclusions and broad implications for strategy” in the Jan. 29 webinar sponsored by the Center for Strategy, Enterprise and Intelligence (CenSEI) with Microsoft Philippines Inc.

Arroyo said the near future will be dominated by three trends and two areas of strategy marked by the global rise of China and the growing regional prominence of the Association of Southeast Asian Nations of which the Philippines is one of the 10 members. She said:

• No. 1 trend, the rise of China – The international research firm Capital Economics’ forecast of a 10-percent growth this year soon after the pandemic is an exclamation point. The regional trend towards ASEAN’s prominence has been brought to a pause by the pandemic.

In China, employment is at a nine-year high. Noteworthy is the signing last year of the Regional Comprehensive Economic Partnership (RCEP) by the ASEAN with China, Japan, South Korea and Australia/New Zealand.

The big prize for the RCEP partners is the expected $1-trillion annual imports by China. This shows how most of the world has shifted its trade dependence from the United States to China over the 25 years from 1990 to 2014.

As the US has become increasingly preoccupied with international security issues, China has been expanding its circle of influence among trading partners. One of the biggest, if not the biggest, of those partners is the US itself – in borrowing, trade and investment.

• No. 2 trend – The global retreat of the middle class and the advance of hunger and poverty on the one extreme, and the advance on the other extreme of the super-rich business tycoons, politicians and even celebrities that entertain the world.

The United Nations has warned that the world faces its worst food crisis in 50 years. Countries like Yemen, South Sudan and Nigeria may already be going through the throes of famine. Even in advanced economies, the poor face higher food prices at a time of high unemployment. More than one in five American households are food-insecure.

For the first time in half a century, the middle class is starting to shrink – perhaps by over 50 million in Latin America alone. The World Bank fears that up to 150 million people may slip back into extreme poverty this year. Erosion of the middle class historically brings political instability, democratic backsliding and worse conflict.

A global development report from the Gates Foundation last September on the impact of the pandemic said that progress in areas hit by poverty and hunger has been knocked back, deepening inequality.

The report outlines ways in which COVID-19 has wreaked economic damage and derailed progress on many of the global development goals adopted by the UN five years ago.

In remarks accompanying the release of the report, Bill Gates said it highlights how badly global development is needed. The coronavirus pandemic has wiped out progress on lofty goals such as ending world poverty and hunger in the next decade.

This means a further class division in society as we see the concentration of power and wealth in a shrinking percentage of the population, and internationally, in the hands of the small number of powerful nations.

This implies a tendency towards populism, as the middle and poorer sectors of society look for strong, charismatic leaders who will articulate their grievances.

• No. 3 trend – The increasing complexity and acceleration of change in the global system, highlighted by the Fourth Industrial Revolution or FIRE.

FIRE has been very much on my mind even before the country and, indeed, the world were forced by the virus to radically change the way we live and do business.

This fourth revolution follows earlier revolutions that were launched by the advent of steam power, then electricity, then electronics and information technology. While those earlier changes took place roughly every century, the digital revolution has come upon us within half that time. It portends how the pace of change we face will accelerate.

In less than five years, the volume of data being processed worldwide is projected to hit 175 zeta bytes. And five years afterward, we may expect to see 50 billion devices providing interconnectivity to all that data.

This proliferation of information networks will radically change the way the world works. Individual productivity and competition will yield to collaboration in value creation. The linear ways of thinking and doing that depend on advance planning and efficiency measures that will give way to new habits of experimentation whose success is defined by the effectiveness of ultimate outcomes.

I want to thank Microsoft for sharing with us an account of their own journey into the heart of the digital revolution. They focus on the implications of this revolution for reducing the world’s carbon footprint and improving the carrying capacity of the environment.

I began and now I end with Bill Gates. Last spring, when the extent of the COVID-19 pandemic was becoming clear, he wrote that “this is like a world war, except in this case, we’re all on the same side.”

In his year-end blog he reported that the optimistic view that the world would come together to fight COVID-19 has largely turned out to be right. He concluded, “This global cooperation is one reason why I see promise in the year ahead.”

(Note: CenSEI’s next webinar this month will be on doing business in China, a timely issue given China’s positive growth last year despite the pandemic, and the accession of a new US president.)

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NB: All Postscripts are also archived at <ManilaMail.com>. Author is on Twitter as @FDPascual. Email: [email protected]