Opinion |

Globalization Isn’t Dying From the Coronavirus, It’s Becoming More Chinese

That’s not good news for Israel, which won’t have the economic flexibility it enjoyed under American-style globalization

David Rosenberg
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People wearing face masks arrive at the railway station in Wuhan, in China's central Hubei province on April 6, 2020. - Wuhan, the central Chinese city where the coronavirus first emerged last year, partly reopened on March 28 after more than two months of near total isolation for its population of 11 million
People wearing masks arrive at the railway station in Wuhan, China, on April 6. Wuhan partially reopened on March 28Credit: Hector Retamel, AFP
David Rosenberg

The coronavirus pandemic is far from over, but there’s no shortage of people already writing eulogies for what they are sure will count as its single biggest fatality: globalization.

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Taken on its own, the logic is persuasive. The globalized economy of free and easy travel enabled the coronavirus to spread quickly. The business sector’s reliance on lengthy multinational supply chains exposed the risks of interdependency. Conversely, it exposed the lack of essential manufacturing capacity in even the most advanced countries, which find themselves short of masks and testing kits.

Not a few people in Israel and the world would be happy to see the end of globalization, though they might regard the coronavirus as an unfortunately high price to pay. The problem is that globalization's critics tend to think that the new way would mean dispensing with the parts they abhor while the parts they like would stay.

I’ll give two examples – one global and one Israeli.

In the United States and Europe, globalization has been blamed for the disappearance of good working-class jobs as manufacturing moved to low-cost countries like China and Mexico. But the other side of that coin is that people in the countries where these jobs moved to benefited enormously.

Of course, not every country has shared in the bounties of a global economy, but it was enough that two giants (China and India) did to tip the balance in globalization's favor.

In Israel, globalization has been such a boon that it’s hard to find anyone who would attack it on a purely economic basis. Since we had no industry to hollow out, the economic downside was small, while our comparative advantage in high-tech innovation has created once unimaginable opportunity and wealth.

Instead, globalization’s enemies in Israel rage against the European Union, the United Nations and African migrants as global forces bent on Israel’s destruction. They love Donald Trump not just for moving the embassy to Jerusalem but for disparaging the EU and the UN. The enemy of my enemy is my friend.

However, the news of globalization’s death is premature. It's here to stay, although it's likely to take on a less welcoming face.

Globalization’s economic logic is too powerful for something like the coronavirus to destroy it. It not only lowers costs but lets countries find their niche (for Israel, it’s technology) and exploit it to its fullest.

Maybe if the world is struck by multiple pandemics or disasters, the benefits will eventually be offset by the costs of repeated disruptions, but we’re still far from that.

China ascendant

The less pleasant part of the new globalization is who stands to dominate the system and make the ground rules. In the old globalization, it was the United States and its junior partner the EU. The world order they created was based on liberal government, human rights and free markets.

As much as people of the left despise it as a colonial power and neo-imperialist in feathering its own nest, America was, as global hegemons go, a benign one. It carried the military costs of ensuring a stable world, most notably in the Middle East, and was willing to absorb trade deficits with Europe and China to foster their economic development and free markets.

The United States is no longer interested – indeed may not have the economic weight it once had – to be the world’s policeman and sugar daddy rolled into one. In his own barely articulate manner, this is exactly what Trump has been saying and doing.

Unfortunately, world leadership may be slipping through America’s fingers not just through trade wars with China and withdrawal from Middle East intrigues but through sheer incompetence. We’ll see how it all plays out, but if you had to score their respective handling of the coronavirus pandemic, Beijing comes out the winner. It’s another, very showy feather in China’s cap that its leaders aim to leverage for a bigger global leadership role.

Thus, globalization 2.0 may well be more Chinese-style than American. You can imagine what that may mean for the globalization of human and democratic rights that came hand in hand with the globalization of markets. Precautions against another pandemic are all an ascendant China need point at to demand more monitoring and more social controls, which a weakened Europe and a disinterested United States won’t easily resist.

Economically, the supply chains will be as strong as ever, but you can expect Beijing to use its dominance to ensure that it's in the center. The relatively benign reign of the United States will be replaced by an era led by a self-interested Chinese hegemon.

None of this looks good for Israel. We will have no choice but to move closer to China, but it won’t be a friendly relationship as it has been with America based on a mixture of interests and long-standing friendship. It will be cold and calculating. If China wants to buy or license a particular technological innovation, it won’t give Israel much of a choice about who gets it and under what terms. If Israel wants to build a railroad or a highway, it won’t be a level playing field when it comes time to award the contract.

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