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The coronavirus is China's chance to weaken the liberal order

Bloomberg • 7 min read
The coronavirus is China's chance to weaken the liberal order
Assuming the coronavirus ends up hitting the world’s democracies as hard as many predict, it could deal another staggering blow to the US and the international order it leads.
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(Mar 20): As markets gyrate and the world faces the possibility of a punishing recession, comparisons to the last global economic crisis are inevitable. The financial collapse of 2008 was not simply an economic shock, it was also a profound strategic shock to American power.

Assuming the coronavirus ends up hitting the world’s democracies as hard as many predict, it could deal another staggering blow to the US and the international order it leads. If we now look back on 2008 as the end of America’s unchallenged post-Cold War primacy, we might one day look back on 2020 as the moment when Washington’s global authority truly began to buckle.

It is hard to remember now, but the two decades after the Cold War were a golden era for American power. Washington was geopolitically supreme; democratic practices and institutions had spread more widely than ever before. The dynamic US economy was leading the world into an era of ever-deeper and seemingly ever-more-profitable globalisation.

There were some clouds on the horizon: A costly and chastening war in Iraq, signs of growing restiveness by autocratic powers such as China and Russia. Nonetheless, it was America’s “unipolar moment”.

Then the financial crisis delivered its threefold shock. First, it took the luster off the US model — its economic model, primarily — and raised profound questions about the basic competence of American leaders. Second, it lent respectability to the thesis that autocratic governments might actually outperform their democratic counterparts in terms of delivering stable growth and managing crises. Third, it turbocharged Chinese geopolitical assertiveness and fuelled fears of American decline.

In international affairs, the psychological balance of power — the world’s sense of who is rising and who is falling — often changes far more rapidly than the physical balance of power. The 2008 crisis shifted that psychological balance dramatically, creating a widespread — if premature — perception that the American era had reached its end.

The parallels to today’s crisis are alarming. I wrote a few weeks ago that Beijing’s bungling of its initial response to the outbreak showed that the Chinese Communist Party remains ill-suited to global leadership. But as the crisis has progressed, it has begun to seem that the US may suffer even greater damage to its international position and prestige.

America’s reputation for basic competence and steadiness has always been critical to its global leadership. Who wants to join the posse if the sheriff can’t shoot straight? That reputation was already suffering under President Donald Trump, and it has taken a further hit because of the coronavirus. The list of the administration’s failures is long: The failure to take advantage of the breathing space that early travel restrictions helped purchase; the failure to acknowledge the severity of the crisis; the failure to respond with alacrity when weaknesses such as severe shortfalls in testing capacity became clear; the failure to communicate accurate and timely information to the public; the failure to convey a sense of calm and determined leadership; the failure to effectively coordinate with international partners.

And that list is all the more depressing given that other countries equally surprised by the outbreak have reacted so much more adeptly.

The 2008 crisis was so damaging because it revealed that economic policymakers who confidently claimed to have tamed the business cycle did not realise that their policies had also permitted vast, systemic vulnerabilities that nearly plunged the world into depression. What international observers are seeing today is that the country that claims to lead the world has so far turned in a distinctly underwhelming performance in dealing with the greatest global crisis of this century.

The coronavirus saga is also certain to set off another round of debate on the merits of democracy and authoritarianism. The irony is abundant. It was actually the authoritarian characteristics of the Chinese system that initially allowed the virus to spread, and some democracies — notably South Korea and Taiwan — have done remarkably well in responding to the outbreak. Yet the fact that China subsequently claimed to have gotten a handle on the epidemic by energetically enforcing a draconian lockdown of the affected population, while the world’s leading democracy dithered in its own response, will be used by proponents of authoritarianism to argue that their system is best equipped for crisis.

More recent events are further advancing the narrative. As America struggles to test its citizens and build adequate stockpiles of basic healthcare supplies, such as masks, the Chinese government (and prominent Chinese firms) are providing supplies to countries such as Italy and even the US itself. Beijing has promised additional funds to aid World Health Organization programmes in poor countries, and the Communist Party propaganda arm has touted these contributions for all they are worth, while also alleging that the virus somehow originated in the US.

Only a few weeks ago, when the impact of the coronavirus was still heavily concentrated in China, the dominant narrative was that Beijing was once again the new “sick man of Asia”. Now, the theme seems to be that the coronavirus shows just how badly America’s relative power and prestige have fallen. After 2008, this perception led to a surge in China’s willingness to defy the US and its friends and allies in the South China Sea, in international institutions, and in negotiations on global responses to climate change. No doubt the coronavirus will stimulate new Chinese efforts to displace and discredit American leadership in global affairs.

Of course, that perceptions of the crisis have shifted so rapidly reminds us of the unpredictability of that psychological balance of power.

There is still a window — albeit a fast-closing one — for Washington to take action.

The needed steps include leading the G-7 in fashioning a multilateral economic stimulus package; promoting international cooperation in finding a vaccine and managing the cross-border ramifications of the disease; providing more coherent and effective guidance for domestic local and state authorities seeking to mitigate the damage; helping tell the stories of democracies that combated the disease while remaining true to their values; and taking this as an opportunity to rebuild the public-diplomacy capabilities needed to wage the battle of global perceptions with China.

If the Trump administration can manage this, it might yet shift the near-term trajectory of the crisis — and the long-term impact on American leadership.

Here, too, the story of 2008 is important.

Two presidents, George W Bush and Barack Obama, took unpopular but necessary actions to keep the crisis from turning into a global economic catastrophe. They showed decisive leadership in bailing out large financial institutions and aiding critical manufacturers such as the automobile industry; they used innovative mechanisms including the Troubled Asset Relief Program to inject liquidity into the financial system and address the problem of toxic assets; they used the G-7 and G-20 as vehicles for a multilateral response.

This strong course of action helped the US recover more quickly than many analysts initially expected; it showed that periods of intense strain could serve as showcases for American resiliency. But if the US cannot repeat the performance today, the coronavirus crisis will inflict great damage on a superpower, and a world order, that has already suffered too much of it in recent years.

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