By Toumert AI (Global Times, 12 August 2019) – All world economic indicators, international agencies, and major economic blocs point to the same conclusion: There is slow economic growth, free trade is under pressure and investment is less likely.
The numbers are clear. With an expected 2.6 percent global growth, room to maneuver is limited and skepticism is the norm, with warnings of financial losses, a jobless market and trade wars in every media outlet and international conference.
This begs the question: Are we economically doomed? Is there nothing in motion globally to rectify the downturn?
It is important to point out that our world economies have moved from expansion to sustainability, and that is what the 2.6 percent global growth figure reflects. The double digit era is over as the world’s major market places have matured.
Within this new context, unfortunately, we still measure our economies using an obsolete GDP analysis. We are not experiencing a World War II aftermath, when most nations were bankrupt, markets were non-existent, and the worldwide population was living in poverty.
Seventy years on, we went from one major standing economy to three blocs, namely North America, the EU and South Asia. Emerging economies are taking the lead in investment and trade growth, and account for more than 40 percent of global economic output. Thanks to China, a great many people were lifted from extreme poverty to become drivers of economic consumption.
As a result, our markets have simply matured, we now have more stable industrial output, and consumers in developing and emerging markets have fulfilled their needs. They shifted their focus to quality and socially responsible purchases. This change of emphasis in market demand has helped create a new business environment that focuses on sustaining economic growth using innovation to maximize production efficiency and maintain economic gains.
An analysis of the three cited blocs’ GDPs reflects this perfectly: an average 3 percent growth, though with more wealth generation than the double digit percentage of the last century.
Today, scholars and a few economists use the Human Development Index (HDI), where policy makers around the globe are encouraged to gauge many factors before reflecting on how sustainable the growth is in their local economies.
They are urged to compile statistical factors including but not exclusive to GDP, such as the standard of living, technological advancement, opportunities, per capita income and industrial development.
Having said that, many nations have not yet reached the status of an emerging market. Some still suffer from poverty, slow industrial economic growth and a lack of basic infrastructure to integrate world trade opportunities, thereby missing out on social advancement and key technological breakthroughs.
By the end of World War II, the current EU nations had the luck to receive investment from their ally, the US. This influx of finance did not reach underdeveloped nations and, purposefully or not, “third world countries” did not emerge from this negative status.
The gap simply grew from there as we crossed the millennia; underdeveloped countries found themselves in desperate situations with no industrial infrastructure, debt, and no market to integrate.
This bleak view changed dramatically as China moved to become the second-largest world economy. Embracing its economic and social success, having transitioned from an underdeveloped nation to a leading economy, China decided in 2013 to support developing nations in their quest for economic growth and integration through the Belt and Road Initiative (BRI).
In a matter of a few months, the BRI grew to include more than 32 economies and today, there are more than 72 nations and organizations taking part in the project, covering 65 percent of the world population and representing roughly 40 percent of global GDP.
The BRI premise is linking economies through smart investment in infrastructure, finance and logistics hubs, and what this will result in is real trade and real, sustainable growth.
Once the first stage of the BRI, infrastructure build-up, is set, economies will have the chance to sustain their economic growth, consumers will be able to move goods and money easily via the BRI marketplace, and markets will not only be connected but also integrated.
The BRI marks a new paradigm shift in how developing nations can take the lead, invest and succeed. As with any major civilization project, there will be always shortcomings. However, there is something unique about a 21st-century silk road: It is made of consensus rather than a charter to adhere to.
This means that every local economy will be able to see fit how to engage and take appropriate measures that protect its sovereign rights, while connecting to other economies.
China’s economic policymakers are keen to offer alternatives, options to diversify and render our global economy more resilient and able to overcome any crisis in the future. They seek to stabilize market access, a safety net to the US, polarized economic view of the world. They offer harmony, a win-win, shared future instead of a desire to become “great again.”
This economic transition from unchecked expansion to sustainable growth, and the appearance of new economic forces with solid policies, saw a rather shameful response from certain international actors.
This response was translated into trade disputes as a way to stall the giant leaps emerging nations such China, Brazil and Mexico have made, but also to counter traditional players such as Russia, Germany, Japan, France and the UK.
The truth is that the US’ newfound nationalism is fake; the world is being bullied into accepting US terms. International Institutions such as the WTO and the UNDP are finding their missions threatened. The world economy is being weaponized to limit any progress toward fair and equitable global trade.
The next two years could be marked by a correction in the way the global economy is being threatened and subjected to extreme pressure, via an opening-up to new alternatives to safeguard global trade. Or there could be a dive into chaos fueled by economic standoffs that will trigger new conflicts with a dangerous outcome for all. And this time there would be no nation or economy left undamaged.
The author is the director of education with the International Bachelor Program at the International School under the China Foreign Affairs University. [email protected]