China, COVID-19 and the new order

By Prof. Wasswa Balunya

The United States (US) has been ruling the world for the past 130 years. The US is the perfect representation of capitalism and indeed capitalism was the reason why it took this leadership taking over from the UK from about 1890. Incidentally, the Spanish flue was the last nail in the British Empire coffin. The United States in its history has had only one parastatal, the “Tennessee Valley Authority”! Every other activity in the country is owned and managed by the private sector except for regulatory and some research activities. Even when you look at the Health sector, right now one of the challenges is if you don’t have medical insurance you will not be tested for the Coronavirus! This is the epitome of capitalism in the United States. 

Coronavirus appears to be the change maker for capitalism. Starting with the United States President, Donald Trump who appears to have messed up the management of the Coronavirus challenge. And now he has announced withdrawing of support to the World Health Organization (WHO), one of the organs of the United Nations (UN)! The United Nations was formed after World War II with a view to bringing together different countries in the world so as to have a commonness in approach on various issues, to ensure world peace and prevent conflict among nations. The World Health Organization (WHO) is one of the organs of the United Nations which is responsible for health.

Through the United Nations organizations, the countries all over the world small or big, are able to have a common approach over topical issues. They generate common solutions to address problems. And this has been going on since 1945 when the United Nations was formed. Various subsidiaries were formed including WHO. At the moment, the global coronavirus challenge has been addressed through WHO. The WHO appears now to be the source of conflict!

WHO, US and China

Of course, the United Nations has not been perfect, it has had challenges but it has achieved a lot in different fields. The United States has been the biggest funder of the UN and its subsidiaries and withdrawing funding right now from the WHO means that the activities of the WHO are going to stop. But will they stop?  The new kid on the block China with all the bank balances it has may be the new funder! Indeed China has promised US $800 million to WHO. The US has been contributing US $ 400 million! A close US ally Saudi Arabia has promised US $ 500 million after the US has withdrawn!! Whatever that means??

This may have been a big mistake by the United States to give space to China to take up a responsibility that the US has been shouldering. But this may be a pointer to some of the changes that are happening around the world which are leading to the end of the leadership of the US in Global Affairs. As this happens there has been a feeling that there is no unified action especially by the developed countries (commonly referred to as the international community) on the Coronavirus pandemic. This unified action means these countries would have come together, discussed the issues together and agreed on what they need to do together. While UN organs do their work, it common for the “international community” to also do their thing! However, as I write today it appears each country is looking inward within itself, generating its own policies of handling the pandemic. This means the existing world order is collapsing. Is coronavirus nail in the USs’ coffin?

Coronavirus and the end of EU?

The Italian Prime Minister was very clear when he recently came out remarking Europe may not be the same again. You could interpret it as Italy would leave the European Union! This follows the departure of Britain earlier on this year (January).  Why does the Italian Prime Minister say so? There is a feeling that Europe didn’t assist Italy when the coronavirus pandemic got out of hand in that country. So Italy feels that many of its decisions may be done as a country rather than as a region!

What holds the European Union (EU) together is the fear by small European countries of Germany’s might and domination, France knows this very well. By being part of the group, Germany cannot intimidate individual countries. Instead it is generous to all. Not supporting Italy, a country with its own pride and abilities was a may cost the EU’s destiny.

The rising inward-looking sentiments and decisions by countries are being seen even in this post economic coronavirus stimulus efforts. Germany has announced its own package of US $ 814 billion, France has announced about US $70 billion, Italy has announced its own. These countries would have been doing this together!  But they appear to be doing it on their own, meaning that the state of affairs as it has been known are no longer the same. The European Union (EU) President Ursula Von Der Leyen extended a heartfelt apology to Italy for not being there for it during the pandemic challenge. This was an initiative to mend fences. While Germany has announced US $ 814 billion, EU as a group has announced a much smaller package of US $ 550 billion! It came after realizing there was need to act as Europe, not individual countries. Is this a sign to the end of Europe? (Too proud to unite, I wrote in 1992)

US, India and the New Order

As this happened in the US and Europe, India was threatened by the American President Donald Trump about the supply of the Hydroxychloroquine drug and India had the guts to respond saying ” look here Donald Trump you can’t dictate to India” something, maybe, they would have not done or said before. Donald Trump wanted the drugs from India and he said if they don’t give the drugs the US would retaliate! India was very clear, “why do you preach to us? Why do you dictate to us?” No country, especially India, would have done this to the US. India has been very good at balancing relationships between Russia and the US. Traditionally India has hostilities with China, as a result they usually go into alliance with anybody who is against China and in this case, India would ally with the US. But this kind of statement tells you about India’s position and India’s changing view about the US. The US can no longer call the shots. India just needs to assert itself like China, not lick any other country’s boots. These, therefore, are indicators that there’s a new world order emerging. There are new rules as to how the world is going to be run.

China buys the world

In my earlier article, on stock I talked about China buying American companies on the America stock markets. While I cannot verify this, it is now reported (www.wio news) that China has been scouting around the world to buy companies in the Europe that are in financial difficulties, companies that need money now. As the companies go through the coronavirus crisis, they are short of cash. China has the money!

To block this, the European countries have initiated laws to preserve Banks, Insurance, Health care, Energy, Transportation and cyber security sectors. Italy, Spain and Germany have strengthened the law that makes foreign takeover of companies harder. Before the coronavirus, companies from Western countries would scout for investments in other countries, this was okay as long as the West called the shots. Now that it’s China, it’s not okay! Restriction of buying or taking over of companies’ means restrictions in the financial markets and international transfer of capital. This spells doom for capitalism. 

Are we seeing the end of capitalism? Or simply the rise of China as the world leader. China has a big challenge. The latest act by the US Federal Reserve (The US Central Bank) has been to deny Chinas’ Central Bank dollars to allow Chinese companies operate outside China. The Fed (As it is fondly known) would like China to cash in its huge reserves to get dollars. By denying China dollars, China companies are restricted in their activities outside China. But this can only be temporary, China will find a solution. When Japanese imports were restricted in the US and Europe in the 1980’s, the Japanese found a solution and continued to sell! Important, China may press for its currency to join the dollar as a currency of international trade! True the west will not go down without a fight. Definitely not. The west controls the world media, China should be ready for negative publicity about it. China’s goods will be targeted for boycott, but with its market, will China care? Countries will try to get their companies out of producing in China, but this distorts free market and puts a nail in the coffin of capitalism. If capitalism pursues profit, consumers will prefer cheap products, producers will choose Chinas’, then China may prevail. 

The world is now in a recession. Excluding China, but who is more resilient, China, Japan, Germany are. For reasons of maintaining production facilities rather than making fortunes in financial markets. Still the west is at a disadvantage. One, they no longer have the money, two, they don’t control the technology (5G), three, they don’t have the numbers in population. Asia has about two thirds of the World’s population, four, these cycles in life are inevitable. Probably it’s time for change. Who ever knew the sun would set on the British Empire? It did.

Africa still lags behind

The biggest beneficiary in this struggle for power between aations should be Africa this time round, but will Africa be able to take advantage of this? Africa has been divided, Africa had been exploited. Africa has the Arab north, black South and the rich South Africa. Africa has a Francophone, Anglophone, and of course the Arabic languages speaking aations. All these are divisions within Africa that make Africa unable to work as one unit. While Africa’s population is growing and there is a belief that it could be the next economic flush point, the divisions cannot allow Africa to come together. Neither can they allow it to develop just like China has done. Nigeria which could play the lead role with all its oil and population but has failed to put its act together. South Africa does not represent Africa! African countries and leaders are set up against each other. No unity in sight.

Africa failed to progress scientifically and therefore economically!  They instead became slaves to the world.  They were prevented from progressing economically and this continues. Agree or not this is a fact. They were also enslaved in their own continent. Of course, as the world changes, it calls for cultural tolerance but the fact that Africa was a source of slaves tell you a story. The fact that there have been many instances of western governments trying to get rid of the African race tells you a story. The fact that the western government have been responsible for military coups in Africa tells you a story. The fact that Africa is manipulated tells you a story. It seems, race has been a disadvantage to Africa, being blacks has been a challenge.

What do these big nations want?  They are looking for raw materials and markets so as to make profits. The raw materials are in Africa, the markets are primarily in Europe in the developed countries. This is now changing; markets are now increasingly becoming China with its huge population and huge middle class. Markets will be India with its huge populations and a huge growing middle class. This change is affecting capitalism as it has been known. Africa will still be the source of raw materials. For those who want to rule the world, it is better if Africa is not developing!

So what is this race factor, black or white or other? This race factor creates hatred among races.  You can’t blame the black man for being black. God made them that way. But intolerance of black people that you find in different parts of the world is the challenge. So as China emerges the most powerful country in the world, what are the images that we are seeing? Mistreating of Africans, black Africans. The world has almost forgotten how Africans were treated as slaves. In fact, the majority of Africans, the youth, have no idea about slave trade neither do they have these stories of mistreatment. Instead they know the west for being a nice place!

China and the race question

Will China behave any different from the US denying Africans their rights? Is it true that China may also get involved in the race to eliminate the blacks? Is it true that China hates the blacks? There are various videos of Chinese beating up Africans. We have also watched on the news during this coronavirus pandemic that Africans were denied where to stay in China! If it is true, it is a mistake that China is making because Africa may be its ally in this emerging new world order.

So as it emerges as the biggest superpower in the world, it should pick lessons that this is a world where blacks had no choice on how it was created. Discrimination will lead to resentment. It should pick lessons from the US and indeed other countries that have lived with Africans for years. This is a world where there is a need for tolerance of race, of religion, of other beliefs and without it conflict will be the consequence.

I am not sure whether Africans can pick any lessons from this and be able to unite. But the fact that they are divided by the same people who are ruling them makes it very difficult for Africa to ever unite and have a common position on anything. The day African Unites, though no power in this world would allow them to do that, is the day Africa will start developing. Africa will wake up from slumber and claim its rightful position in the society. Is it the end of an era for the US? Are we seeing a new era by China?  The new kid on the block, Africa appears to remain the same old door Carpet in this change of “guard”.

Waswa Balunywa is Professor and Principal at Makerere University Business School, Uganda
Baobab Africa
Baobab Africa People and Economy reports the continent majorly from a positive slant. We celebrate the continent. Not for us the negatives that undermine the African real story of challenging but inspiring growth.

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