The n-Cov-SARS-2 virus or the Novel Corona Virus has already wreaked a lot of mayhem across the world. A lot of pain is yet to be realised by a number of countries. It is a very surreal situation albeit in a dark way. Day after day, one can see the number of deaths being ratcheted up at few of the most developed countries in the world. Be it the United States, Italy, Great Britain, Spain, France or Germany – most of these countries have proven health care facilities and abilities, not to mention the amount they spent on their healthcare (8-18% of GDP for the developed nations) and yet each one of them is found seriously wanting. It goes without saying that health care system of almost all of these countries were thoroughly un-prepared and neither did they take the ‘over-reaction’ route of a complete lockdown, ensuring that there is maximum social distancing and thus containment of the virus. But then, nobody had anticipated the ferocity and the tenacity of the contagion.
Again it is a fait accompli that once the world has seen the back of this ghastly virus, China will have to do some truthful answering. One report suggested that the first death from the virus happened as early as November 2019, long before the now revered ophthalmologist working at the Wuhan Central Hospital – Dr. Li Wenliang secretly notified his fellow doctors about the virus, which was sometime in late December 2019. WHO was notified on the 31st December 2019 and till about the first week of January 2020, China was as yet narrating the same oft-line ‘no human-to-human transmission’. Not to mentioned the culpable abetting role WHO played in parroting China narrative of ‘no human-to-human transmission’. There are ways to deal with WHO (it is an organisation that survives on the grants of countries, US has already stopped its grant to WHO) but then dealing with China is not going to be a piece of cake. Already China has unleashed its twitter trolls and PR machinery to ensure that the virus blame is summarily deflected off it. Not to mention its Overseas Embassies working overtime to spin a positive narrative on the issue. Along with China is trying to act as a saviour to the world – providing PPE’s, masks and the testing kits, in turn trying to gain some brownie points. And yet the world isn’t amused at all. There is a bound to be a clear re-think on the part of the world with respect to China. Some of the possible upshots in the after-math of Covid will lead to in turn perhaps the re-aligning of the world order.
Re-alignment of Global Manufacturing
China is the manufacturing hub of the world. According to UN Statistics Division, China accounted for about 28% of the Global Manufacturing Output in 2018. In short for every 10 products that anybody purchased, anywhere in the world about a third were manufactured in China. United States is a distant second. Manufacturing sector contributed about $4T to the Chinese economy which is about 30% of the total output, with nearly 85 million Chinese working in the sector. All in all the sector that is extremely important for China. A sector on which the export surplus, the high GDP growth, and in turn its hegemony is dependent upon. Nearly all global companies in various industries like Computer/Mobile Hardware (Apple, HP), Motor Vehicles (General Motors, Ford, Jaguar) Industrial Goods (3M, Siemens), etc. have their manufacturing units in China. All of these companies are linked to the various big and small production chains within China, manufacturing intermediaries. China pays these workers a measly wage thus enabling a low cost of final product for the global behemoths. It is a like a well-oiled machine which enabled a low cost of production and ready market for its products and thus every product brand of note has its manufacturing base in China. And yet Covid-19 has put a serious spanner in the works. It is never prudent to put all the eggs in one basket and there is clear merit in diversification. The world manufacturing juggernaut was stumped for a better part of January/February 2020 though there was a seemingly ready market for the products. Even before the contagion hit the world, the US-China trade spat had raised interest of many a global manufacturing behemoths on diversifying their manufacturing strategy. Once a post-facto analysis of Covid-19 is done – and it is a foregone conclusion that China is going to be found culpable – a gentle but firm push from their respective Governments will finally bell the cat. Most of these manufacturing firms would look to re-base their manufacturing units out of China. Apropos, China’s export income is going to be grievously impacted.
Bro-mance Brewing
It is fait accompli that Trump is going to have another 4-year stint as POTUS till 2024. Modi has another 4 years till LS 2024 and there is a clear bromance brewing between the two. Post the contagion is harked back in the past, we would be seeing a strong uptick to the relationship between US and India. A major reason for this re-orient in their relationship is to perch up India as a potential counter-weight to China. India is the only country in Asia which can reasonably counter China in terms of land mass, population, GDP growth and other economic indicators. Not to mention, India is a thriving democracy where in the transfer of power is peaceful and total. A thoroughly transparent media, independent judiciary and an able and experienced executive brings about the tri-fecta support to the ruling regime. Agreed the factors of production in India i.e. land, labour, infrastructure, finance, approvals need a complete overhaul but nevertheless there is bound to be a beeline for the country. A large, young and readily skilled labour, a welcoming right-of-the-centre Government at the helm which believes in governance than governing and above all a massive push from the United States. Thus, India is poised to be a clear contender to bag a large part of this manufacturing value chains. Alternatively, the bromance would also make US up the investments done by the cutting-edge research companies in India and bring it upto speed in manufacturing processes and excellence. US is bound to double-down on making India a clear counter-weight to China in terms of economic heft, demographic dividend and global position.
String of Pearls
There is another upshot of the bromance between US and India. In time, US would be looking to create a South Korea-Japan-India-Australia-US axis. There is going to be a thought-through techno-economic-defence co-ordination between these 5 countries. Already the ‘quad’ was in the works with India, Australia, Japan and the United States closely collaborating with each other against a common adversary – China. Though India was a bit shy of being openly supportive of the ‘quad’ earlier, it now would be egged on to play an active part and be a vocal supporter of this conclave. Moreover, the ‘quad’ is going to be expanded to be come a ‘penta’ by addition of South Korea to the mix. Each of these countries barring India is a developed nation having a high per-capita income and a thriving economy. All are strong, transparent democracies and as cherry on the top are also manufacturing powerhouses (having large manufacturing industries) – an area which when pinched at the right place is going to be a raw nerve for China. Most other nations within the vicinity don’t muster enough political or global heft to exert any kind of pressure on the Chinese. Each of these ‘penta’ would then look to collaborate, help, aid each other under the active leadership of US to contain the adversarial rise of China.
Security Council Expansion
As a rejoinder to the above, India’s stock is going to abruptly rise within the world – a biggish part due to the way Modi conducts himself globally, a small part due to the push from the developed nations and the ‘penta’ and large-ish part due to the way India has been able to manage the Covid-19 crises. The tough, timely and pertinent decisions taken by the Government is going to stand India in good stead. This will eventually, in all probability much before the Trump/Modi 2024 reign ends, culminate in India getting a seat at the high table i.e. a permanent membership in UN Security Council. China at that point of time would have been heavily emasculated or would be in the process of being emasculated due to the post-Covid analyses through out the world. With China on the back foot, it will just about provide a perfunctory whimper of opposition to the proposal, though it has a veto over it. This will in all earnestness also help burnish India’s counter-weight credentials – the primary aim of the US.
End of Euro
Spain, Italy, France, Belgium are going through throes of deaths and lockdowns. Their economies are taking a massive hit. Across the straits, UK is in a similar situation, going through the same hell. Post the contagion, when it is time to focus and mend the broken economy, we are more likely to find UK first of the blocks and taking bold decisions. It would use all the fiscal as well as the monetary stimulus’ at its command to ramp up growth. It would not mind using any extra-fiscal or innovative monetary measures to backstop companies/MSME against bankruptcies. UK might just go ahead and provide sovereign guarantees to all and sundry, without any pre-conditions, just to keep people employed and the cash registers at the companies ringing. Not that UK would be doing any different than any other large economies in the world i.e. US, India, South Korea or Japan. Yet, the block is going to falter to ensure the same for its constituents in Euro. The contagion hasn’t similarly affected all countries within Euro and thus the economic response to the contagion post would be expected to be disproportionate. Well, that was the logic that was always applied within Euro – be it fiscal deficit, populist measures or Government finances. There are bound to be serious disagreements in the kind of economic/monetary response that the Euro should take to support the countries ravaged by the virus. The local population would be witness to the farce playing out within Euro leading to the right-wing parties in each of these badly affected countries taking hold of the local Government. It won’t be long before each of these countries look to opt out of the monetary union, with the explicit view of ‘being wholly responsible for one’s own economic future’
China Aggression
All of this is going to rile China up no end. The loss of face, heft and economic power within the world is going to irreparably dent the confidence of the CCP (China Communist Party). China knows only way to counter the situation – come out all guns blazing. China’s response, in all likelihood is going to be – militarily – be it more aggressive incursions within the South China Sea against the minnows like Vietnam, Philippines Taiwan and Brunei or for that matter a tough, muscular approach towards it’s favourite punching bag – India. This will also bring about a strange and heightened cohesion between Pakistan and China. Pakistan in general is always itching to needle India, at every given situation and it would be emboldened with the Big Brother providing the requisite support. Pakistan is going to greatly up the ante on the long standing proxy war i.e. bleeding India through a thousand cuts, with China providing the cover fire in all the regional and global summits.
Along with, there is a strong possibility of many Doklam’s that will be surreptitiously and purposely repeated by the Chinese – in one way just to annoy India and secondly somehow look to counter balance its loss of economic heft.
Taiwan/Hongkong Push
At every given opportunity, US is going to mention Taiwan and Hong Kong in the same breath. The ‘One-China’ policy that is raw-est of all nerves for the CCP (China Communist Party) is going to be fiddled with at every instance. Do expect every developed nation – be it in the Euro, US, Japan or Australia to rake up the atrocities that are being committed in Hong Kong, Xinjiang and also the raw deal that Taiwan is being meted out with. The struggle within Hong Kong and Taiwan is going to get massive support across the world, putting China right in the corner. China is going to get exasperated – admonishing, berating, cajoling, coaxing – the entire world to keep off Hong Kong & Taiwan. And yet those mentions & reprimands will continue unabated. This in turn is going to bring about a fill up to the people of Hong Kong and Taiwan to fight for their freedom struggle. What will happen next is anybody’s guess. In all likelihood, China is going to bring about its entire military power in to play and look to crush the uprising. There is bound to be a lot of blood shed with poor people bearing the brunt of the totalitarian regime. It is bound to be Hong Kong protests all over again – but this time it would be amplified numerous times over – brutal, bloody and played out in the total view of the world
China Asunder
The heavy hand used in Hong Kong, Taiwan or even Xinjiang is going to provoke the local population. Already, there is a simmering discontent within the Chinese citizen on the way the contagion was mishandled. Most of them feel that the CCP (China Communist Party) was being cavalier with regards to the severity of the contagion. It slacked in giving out information on the ferocity of the virus and thus millions within the country (no matter, other countries as well) were lulled in to complacency. Moreover, it is obvious that the number of people who have been consumed by the virus have been deflated within China, which is another grouse for the Chinese. There is little information on the people yet infected, dying or the spread of the virus. All this is going to come to a boil, with China losing its economic heft and income adding the instigating oil in the proverbial fire. The GDP growth in China is squarely based on its export potential which would be seriously curtailed in the near future leading to large scale unemployment and unrest. This is going to bring about a heady concoction of revolution, freedom struggle and democracy in the Chinese to the fore. The West with its constituents are going to add a bit of spice to catalyse the entire mixture. Now again, it is anybody’s guess how the event pans out. Again China as China is, will look to address the issue muscularly. It will bring out its might in big numbers. It might be the June 4th incident all over again, but this time it is going to be in full media view. There are bound to be leaks of videos, stories and images of the crackdown that the PLA (People’s Liberation Army) might wreak on the citizenry. It will gory, bloody and brutal and yet the citizens will feel that it is needed to be done with a fight to the finish. The idea of democracy was once stifled in June 1989 and very many people lost lives for nothing. This shouldn’t happen again is what the common refrain would be.
And yet this might just turn out to be a bloodless coup – if the military chooses to revolt along with the people. There is a good chance that the PLA itself will choose to sit out and refute the orders of the Supreme Commander (as it is there are very many detractors of Xi Jingping within the system). The eventual outcome would be a severely depleted CCP with various provinces in China being their own masters. It would be Russia all over again – with a few provinces breaking away from the Central rule and establishing their own democratic/autocratic Government. CCP as yet would still rule China but with a reduced land mass, reduced number of people, reduced economic heft and with a total loss of face.
inintuitu 