KAMPALA – As the first major economy to resolve the Coronavirus problem it has an advantage. Chinas biggest advantage is its internal market with a huge middle class, over 700 million people and still growing China may not need foreign markets as quickly as other countries do for their economic recovery. They may not give a damn about the US economy because if they can have other economies gobbling up their products, then it doesn’t have to bother a lot with the American economy. The Chinese Belt and Road initiative is to open countries and link them to China for ease of flow of goods in relation. It is working in Europe. Europe may not remain united as it has been.
We may see extreme measures in the American economy for instance the US government kind of freezing payment of interest on what they have borrowed. This may be a problem and of course create a less confidence in the world markets and may set off a very very bad trend for the American economy. This will destroy the current economic order and the end of the American Era.
Yes the world is going to change much after the Coronavirus Pandemic. Nature has its way of reacting to things as they develop. It destroys as it creates. We are seeing dead bodies and dead companies. We also see new developments. A key question now is why the virus. Numerous stories are being told about why it was created and the likely outcome. While we know a lot about the US despite its attempts to “flatten” the information. Very little is known about China, what we need to agree on is about who controls the world. Who calls the shots. The Americans have done this for a century. Money is very important in this struggle. Who has money has influence. The Americans had it. Today it is the Chinese!
The world order is shifting
The world will change dramatically in the next 12 months. Many companies, big names will go under. This will include Banks, Airlines and manufacturing and service organizations, like Hotels. Like Austrian economist Joseph Schumpeter said as others close, new ones will open. The creative destruction! Unless aided by their governments, many companies in the western countries will close shop. New companies managed by Robots will emerge most likely Chinese or Asian country owned. The FORBES list may get a new name, probably Chinese name! There is excitement and fear of 5G technology. If implemented, the world will completely change. But as I write now there are reports of countries bringing down masts of 5G network! No clear reason but some pundits associate it with the Coronavirus and the vaccine. There are rumors that the proposed vaccine may contain a chip that will be placed in people’s bodies and thus control them forever. These are not confirmed though, but worth mentioning.
The financial markets will also emerge different. We may see an end to the domination of markets by the Dow Jones and FTSE are both wall street and London Stock Exchange loose their leading position. By getting out of Europe, the London stock exchange may have dug its grave. The virus may push it in and China will cover the grave. The Chinese currency is likely to be accepted alongside the dollar as a currency to trade in/with. Better still a crypto currency controlled not by Americans, but Chinese. China may be consolidated in the market as leaders. The markets may change completely but we cannot tell how! Either the World Bank or IMF and many UN organizations will be headed by Chinese or people from countries with Chinese preference.
The World Bank headquarters may move to Hong Kong. China may be the largest contributor to all multilateral organizations very soon. Let’s watch the space.
In the market, America or Europe or Japanese leading brands may slowly be replaced. Most American companies that will survive may be owned by Chinese. With the sheer numbers of a wealthy population. China will lead the world. The West may come together to collaborate and offer stiff competition. But the different races and traditional hatred among them will work against it. Italy may be the next country after Britain to opt out of the European Union. This only severs to strengthen China.
Africa may have a fresh opening to change its fortunes. China has relied on state enterprises to develop contrary to the West. If China is the world leading and agree to .. African countries grow their countries with a strong government role. Africa may benefit from the changes. As for now, Africa awaits it’s like share of the Coronavirus troublers before it finally maps out where to go after 130 years of US leadership. It looks it’s time for China to lead the world.
Prof. Waswa Balunywa is Principal of Makerere University Business School in Uganda