The impact of the COVID-19 in 2020 on world economy was unprecedent in history. Global industrial chain and supply chain witness poor circulation, international trade and investment see contraction, commodity market is turbulent, and the risks in fields like finance are prominent; with declining domestic consumption and investment in all countries, increasing employment pressure, and enterprises, striking challenges for micro, small and medium-sized enterprises. The panic and pessimistic expectation of market players are hard to ease completely in the short run.
The sweeping public health crisis is evolving into a world economy crisis, and no country will be immune to it. At the time when the epidemic outbroke, the world didn’t walk out of the shadow of the economic crisis caused by the financial turmoil in 2008, and many problems challenging world economy was not solved thoroughly. Even if COVID-19 didn’t happened, the world economy would still see countless problems in fundamentals with a faltering growth. The impact of the pandemic just deals another blow to the vulnerable world economy that faces sluggish demand, excessive debts, de-globalization and some other challenges and risks. So, the dilemma currently facing world economy can’t be totally attributed to the impact from COVID-19, but actually owed to the fact that the human society can neither effectively tackle the challenges from economic globalization nor advance the healthy development of economic globalization.
As the COVID-19 pandemic increased the instabilities and uncertainties in world economy, all countries need opening-up and cooperation than ever before. History tells us, no matter what risks, disasters or setbacks humans encountered, the society always moved on and is bound to move on. Cooperation for common opening-up is an important guarantee for humans to move forward. In the special period, efforts must be made to maximize the role of every player in global governance. With the development of economy and society, participants in global governance will cover not only sovereign states and international organizations, but also development institutions, multinational corporations and some other private sectors. In face of the current challenge, we shall focus on how to give play to the role of each country, particularly major powers, the role of international development financial institutions, World Bank, Asian Development Bank as well as the New Development Bank and Asian Infrastructure Investment Bank founded in recent years, so as to improve global governance and jointly advance the recovery of world economy.
Only by teaming up, increasing cooperation and communication and jointly enlarging opening-up can we meet risks and challenges together. Without global cooperation, we can’t thoroughly eliminate the COVID-19. The pandemic has not only shaken the health system and tested the governance system across the world, but also impacted world economy in an all-round way. Although economic globalization moves with difficulty and the industrial division of labor and trade chain face the risk of “degeneration” at present, the general trend in which all countries embrace opening-up and cooperation is not changed. As it deepens, economic globalization links the interests and fates of worldwide countries more closely than ever, forming a community of shared interests in which everyone is connected to each other. While many issues are not confined to a single country, many challenges can’t be addressed by any country alone but through worldwide cooperation. As one country shares weal and woe with another, no country can be immune when a major crisis takes place, and unity and cooperation shall be the inevitable choice in face of challenges. In the future, all countries across the world shall team up and advance common opening-up for win-win cooperation.
With major powers play a leading role, all countries shall join hands and advance the common development of the world through common opening-up and sharing of responsibilities. The world’s economic landscape and the system of division of labor among worldwide countries have taken shape, with EU, US, Japan and China comprising two thirds of the world’s total GDP and becoming the centers of the global industrial chain. Supported by the three major pillars, the global industrial chain also sees increasingly mature regional industrial clusters. Respectively as the centers of Asia, America and Europe, China, US and Germany have respective closed loops of the value chain, while China becomes the hub connecting the value chain in developed countries and that in emerging economies. However, the COVID-19 happened to break out first in these economic powers, which thus see frustrated or even halted social and economic activities. With more difficulties in production, the global industrial chain faces the risk of being broken. The danger was unseen in the financial turmoil in 2008, and must receive sufficient attention across the world. The increasingly severe epidemic situation worldwide will seriously hamper economic activities and slow the pace of recovery, which may put the sluggish economy in a vicious circle, trigger typical economic recession, cause double dip in economy and threaten global economy once again.
As the mainstay of global governance, development institutions shall give play to their role and promote the recovery of world economy. Global economic governance involves finance, trade and economic development, with the nature as providing international public products. As global or regional development institutions, development financial institutions play an important role in global economic governance, particularly in fields like development aid and poverty alleviation. In the current fight against the COVID-19 and the ongoing efforts to advance economic recovery, development financial institutions shall play a bigger role as they assume functions like coordinating various relations and stabilizing international or regional economic orders. Bilateral aid often causes scattered and chaotic situations, and involves high transaction expenses due to information asymmetry. Located at the core of global or regional aid systems, development financial institutions can use their multi-lateral aid platforms to concentrate resources and information and thus lower the trading cost of aid. Meanwhile, as the pandemic causes economic recession and inevitably adds to the debt burden on developing countries, development financial institutions shall actively coordinate debts between developed countries and developing countries, and help both sides reach a consensus. In all, every development financial institution, no matter World Bank, New Development Bank, Asian Development Bank or Asian Infrastructure Investment Bank, can take every step to help the developing countries heavily hit by the pandemic ease negative influence and accelerate the pickup of world economy.
In the future, each participant in global governance shall uphold the outlook on global governance known as achieving shared growth through discussion and collaboration, reform the global economic governance system with a constructive stance and advance the building of an open world economy. As global challenges grow, strengthening global governance and accelerating the reform in the global governance system have been a general trend. As more and more issues require solutions worked out by all through negotiation, establishing an international mechanism, following international rules and pursuing international justice have become the consensus of most countries. Where will the human society head for at this historically critical moment? Shall we allow unilateralism and protectionism to destroy international orders and rules and push the human society into darkness or shall we seek for a bright outlook by reforming the global economic governance system with a constructive stance to draw on advantages and avoid disadvantages? The answer is self-evident. We shall stand on the right side of the history. In the future, the world shall be united and move towards common opening-up characterized by cooperation and joint governance.
