The World Waves Goodbye to the Era of Globalization

Post-pandemic order will be very different as many governments retreat from global economic integration
May 21, 2020 Updated: May 23, 2020

News Analysis

WASHINGTON—Globalization, which has shaped the world economic order over the past few decades, was already in trouble before the pandemic. And with the emergence of COVID-19, the retreat from global economic integration has gained momentum, setting in motion a global reordering that’s expected to play out over decades.

President Donald Trump said that the lessons learned from the pandemic vindicate his “America First” policies.

While he came under fire for his protectionist stance, which has caused a fundamental shift in the world trade order in the past few years, the pandemic has proven that he was right and globalists were wrong, he said.

“In many ways, we’ve learned a lot, and we’re going to bring back manufacturing that we could never have done without this,” he told Fox Business on May 14. “A lot of people are saying, ‘Trump was right.’ I’ve been talking about this for a long time.”

“Stupid supply chains” are all over the world, he said, noting that “one little piece of the world goes bad and the whole thing is messed up.”

Trump believes the era of “globalists” who wanted to “make the world wealthy” at Americans’ expense has also come to an end.

“I don’t even know where these people come from. But those days are over. And if nothing else, over the last two months, it’s been proven to be right.”

With the pandemic, public opinion has also shifted against globalization. People in the United States have been disturbed to find that their health depends on China, which is the dominant supplier of protective equipment and crucial drugs.

Overreliance on a single country for life-saving equipment and medicines during the pandemic has exposed the vulnerability of global supply chains. It’s also raised concerns about the purity and safety of thousands of drugs that are made in China.

A survey by Pew Research Center in March found that roughly two-thirds of Americans now have an unfavorable view of China. And over the recent weeks, more and more countries have been calling for Beijing to be held accountable for the regime’s initial response to the outbreak.

The World After the Pandemic

The post-pandemic order will be very different, as many governments across the world are also giving up on globalization and talking about decoupling from China.

Indian Prime Minister Narendra Modi took to national television on May 12 to announce his new stimulus package, with an ambition to create “a self-reliant India.” The plan is expected to boost the “Make in India” initiative and the country’s manufacturing capacity.

Last month, Japan’s prime minister, Shinzo Abe, announced that his government was setting aside more than $2 billion in funds to help Japanese firms shift production out of China.

President Emmanuel Macron of France told the Financial Times on April 16 that the pandemic “will change the nature of globalization, with which we have lived for the past 40 years,” adding that “it was clear that this kind of globalization was reaching the end of its cycle, it was undermining democracy.”

The economic recovery plan drafted by the European Union highlighted the importance of building “strategic autonomy” in vital supply chains and reducing reliance on third countries.

“We’ve effectively crushed globalization,” Michael O’Sullivan, author of the book “The Levelling: What’s Next After Globalization,” told The Epoch Times.

Normally, in this kind of crisis, he said, countries tend to create an international coordination group “to save the world.”

Instead, big powers are now at odds with each other, squabbling over medical supplies and racing to ban exports of ventilators, masks, and other personal protective gear, he said.

In the post-pandemic world, the whole idea of a multipolar world will come into more focus, he said.

O’Sullivan, in his book, describes the new world order in a post-globalization era, in which three major players will dominate geopolitics: China-centric Asia, the Americas, and Europe.

Reducing US Reliance on China

Similar to the manner in which different countries reacted to the supply chain disruptions, the Trump administration has ramped up efforts to make the United States “more independent, self-sufficient, and resilient.”

On May 14, Trump signed an executive order that gave the U.S. International Development Finance Corp. new powers to support manufacturers in the United States.

The overseas investment agency normally invests in economic development projects in other countries. With this new order, it will also help key industries producing vital goods and services in the United States.

On May 18, the Trump administration signed a $354 million contract with Phlow Corp., a Virginia-based company, to manufacture critical medicines and drug ingredients for use in the fight against the coronavirus.

Phlow will work with a team of private industry partners to manufacture at facilities in the United States, including a new facility to be built in Virginia.

Trump earlier predicted that the United States could be self-sufficient in medicine “within two years.”

The White House is also planning to release an executive order that will require federal agencies to purchase U.S.-made medical products. The order is expected to help create a market for manufacturers to invest and produce in the United States.

There is a strong bipartisan push to craft legislation to reduce U.S. reliance on Chinese products, which accounted for almost 18 percent of U.S. imports of goods in 2019.

The virus, which has sent shock waves through supply chains, has also forced company boards to rethink the risks associated with their business models.

In an apparent win for the Trump administration’s efforts to bring manufacturing to the United States, Taiwan Semiconductor, the world’s largest contract chipmaker, on May 14 announced plans to build a production factory in Arizona.

The company said it would invest roughly $12 billion for the plant, which is scheduled to open by 2024. It plans to employ about 1,600 people while indirectly generating thousands of other jobs.

Companies will face pressure from shareholders, regulators, and governments to make supply chains more local and resilient to prevent future shocks. However, moving supply chains may take longer than predicted, according to Jim Reid, a Deutsche Bank strategist.

“An unwinding of global value chains should strengthen the position of workers in Western economies,” he wrote in a report. “If Western workers have been the main victim of globalization, they stand to benefit from deglobalization. But this structural effect will take decades, not years, to feed through.”

Follow Emel on Twitter: @mlakan