A worldwide calamity brings out the best and worst in both people and… well, nations as geopolitical actors. Unfortunately, the COVID-19 pandemic has done quite a bit when it comes to the latter in both cases, with nations acting in such an adversarial manner in many instances that the very foundation of international trade risks being affected.
At the origin of these developments lies… of course, China. Right off the bat, we would like to make it clear that we are not trying to paint a picture of China as a geopolitical actor that deliberately caused and causes problems but rather a picture involving a series of unintentional as well as unfortunate circumstances which each chipped away at the proverbial foundation bit by bit. In aggregate, they caused changes which make it clear that the international relations system countries have returned to after extensive quarantine periods is in a bit of a “new paradigm” situation.
The problems, at their core, revolve around unintended consequences pertaining to supply chain complexity and over-optimization, which have proven to be a literally deadly duo:
- On the one hand, globalization inevitably brought about an increase in supply chain complexity which cannot be ignored, with a very fragile equation being involved in the production of most goods: components which need to be imported from various countries, the manufacturing process which takes place in yet another jurisdiction, just like the customer support dimension and the list could go on and on. Needless to say, all it takes is for one cog to stop spinning and the activity of the supply chain as a whole grinds to a halt. This became painfully obvious in early 2020, when China was the epicenter of the coronavirus pandemic (before it was labeled a pandemic) and companies that were dependent on Chinese imports found themselves unable to keep functioning
- On the other hand, a valid case could be made that had enough inventory existed around the world, the temporary disruption of economic activity in China or anywhere else would not have represented such a literally deadly scenario. Unfortunately, the exact opposite trend has manifested itself over the years, with companies doing their best to avoid a “bulky” inventory strategy and instead, keeping the business as “lean” as possible by only keeping a carefully calculated quantity of supplies within reach (needless to say, a low one). As such, the minute disruptions appeared, many overly-optimized businesses found themselves in a blockage situation
To make matters worse, the previously mentioned duo did not just manifest itself when it came to let’s call them “expendable” products but rather as far as the exact opposite was concerned: crucial medical equipment. As the epicenter of the COVID-19 pandemic moved to Europe and later on to the American continent, healthcare system after healthcare system found itself forced to deal with a severe shortage of masks and other essentials due to the fact that they were either dependent on Chinese imports of the actual product or at the very least on imports of various components. Regardless, the end result remained the same: a severe shortage of medical equipment precisely when it was needed the most.
This state of affairs, as mentioned at the beginning of our article, brought out the best in people as well as governments in certain cases: international cooperation, with for example both China and other European Union nations helping the gravely-affected Italy with much-needed equipment and medical expertise (Germany, for example, even agreed to accept Italian patients and relieve the especially Northern Italian healthcare system of a serious burden).
Unfortunately, it also brought out the worst, with for example the United States engaging in behavior one can consider less than ethical, even when allies were involved. Whether we are referring to the Donald Trump administration essentially trying to bribe German biotech companies that were working on vaccines or US officials outbidding their French counterparts to the tune of offering three times more for medical equipment as well as instant payments, it has become clear that in many instances, the worldwide international relations framework revolved around a more than obvious adversarial approach.
It will most likely take years upon years for the many ramifications of this adversarial attitude to manifest themselves but the bottom line is this: trust, especially among Western nations, has been lost to a significant degree. Even within the European Union, leaving positive examples such as the previously mentioned ones aside, tensions kept appearing with respect to how to tackle the economic implications of the 2020 crisis, with debtor nations such as Italy and Spain demanding extremely aggressive and decisive measures, whereas Northern European creditor nations such as Germany and the Netherlands hesitated.
To make matters worse, 2020’s realities didn’t exactly come after an extremely rosy period in terms of international relations, especially after the (in)famous 2016 developments, with the Brexit vote kicking off a trend of increasing isolationism and the US elections which resulted in the victory of Donald Trump sealing the deal. Therefore, a more than compelling case could be made that the 2020 developments did not just come as a short-term hiccup in a longer-term trend of increased international cooperation but on the contrary, essentially made an already volatile geopolitical landscape worse.
Can China take advantage of this state of affairs? Let’s just say that even if logic dictates that this might be the case, the situation tends to be more complex than meets the eye because despite there being increasing tensions among Western nations, the temptation to simply point to China as the main cause of everything that is going wrong both economically and geopolitically might be too great to resist, especially in the United States and other countries where leaders on the isolationist side have been or will be elected. No matter what happens, the ChinaFund.com team will continue keeping its fingers on the pulse of not just China but the broad international relations landscape as well.