Editor's Note: The article is composed by keynote speech of Trends Research & Advisory, Abu Dhabi, United Arab Emirates “Covid-19: The Short- and Medium-Term Impact on the Global Economy”. Wang Wen, the executive dean of Chongyang Institute for Financial Studies, Renmin University of China, delivered a keynote speech on "Without unity, the world might be in a "Dark Age".
Speeched on June 30,2020
Thank you for having me to share my views. As a leading think tank in China, my institute Chongyang Institute for Financial studies, Renmin University of China (RDCY) is concentrating on providing decision-making advice and thoughts service for the global governance and China's development. I hope that some of my thoughts can be helpful for you.
Actually facing this unknown, unexpected disease, China launched a very big battle to COVID-19 for five months and control basically COVID-19 spreading since the end of the February. But the problem is that in the past four months, there are no infections in most parts of China. But most of people who live in China still wear masks to prevent the transmission of COVID-19. On June 15th, Beijing, my living city, the capital of China, reported new domestically transmitted COVID-19 cases, there are about 10 daily new confirmed cases now, since the middle of this month. And this further makes us realize that the pandemic is turning into a protracted war. No one can relax. Even, as you may know, in China totally in the last five months only below 9000 cases.
In my aspect, COVID-19 now is putting humanity in an unprecedented crisis.
Firstly, the global crisis of life. By the end of June this month, 10 million people were infected by COVID-19 worldwide and 500,000 died because of it. A second relapse has occurred as a result of the premature opening of the economy in some countries, you know those countries. Currently, there are more than 200 kinds of vaccines under development globally. But the scientists have discovered that 40 variants of the COVID-19 have appeared. The development of vaccines may have difficulty keeping up with the rate of change. The most optimistic estimate is that it might would still need to take at least half a year to wait for the vaccine to be successfully developed. Affected by economic and medical conditions, the most pessimistic estimate is that if humans cannot produce vaccines and special drugs for the COVID-19 in the short term, more than one billion people will be infected from the 7.7 billion people in the world, so about nearly 70 million people will die because of the COVID-19. It’s terrible estimate, I mean it’s very pessimistic estimate. So if that, the deaths will far exceed the scale of the 50 million deaths caused by the Spanish flu in 1918, and even exceed the number of deaths in the World War II. That means, the COVID-19 virus may cause unprecedented damage to human life, since the 15th century.
Secondly, the global economic crisis. The pandemic has had a devastating impact on the catering, retail, tourism, film, air transport and other industries. The global travel market is freezing, a total of 17 airlines companies around the world have bankrupted now, and many well-known brands have suspended store or gone bankrupt due to the pandemic. IMF forecasts last week the global growth in 2020 to be -4.9%, the World Bank forecasts two weeks ago 5.2% decline, and OCED estimates it at -6% by 2020. But all of these are based on the premise that there is a vaccine and no secondary recurrence. So in any case, the global economy is facing its worst recession since World War II, and far worse than the 2008 international financial crisis. It is estimated that the economic recession will lead to a decline in international trade and cross-border investment of at least 30% in 2020, triggering the next round of debt, financial, energy and other secondary disasters, such as the food crisis. In fact, as early as mid-March, I wrote an article about it. I said in middle March the impact of COVID-19 pandemic should be measured by the Great Depression of 1930.
Thirdly, the global social crisis. The impact of the pandemic is intensifying the structural reshaping of relations among countries, such as localization and regionalization of industrial chain. Travel bans, immigration controls and even border closures are becoming a "new normal" for many countries. As a result, the flow of factors is more difficult, international exchanges are limited, and production and trade activities are declining or stagnating, all of these fragile globalisation even worse than before. More than 200 million people around the world are at risk of unemployment and income plummeting by 2020. The soaring unemployment rate has caused serious social disorder and disruption in some countries. For example, racial conflicts in the United States nowadays, in the past some weeks. At present, the wave of anti-racist protests has spread to many western countries. Pandemic, unemployment rate and civil rights movement hit an already fragile world society. The biggest fear now is that unemployment and social instability may lead to local wars and geopolitical conflicts. The most serious disorder of human society since the end of World War II may be under way.
At present, people's knowledge of the virus is still very limited. If the virus can be likened to an alien invasion, then the new World War has come to the height of defending human civilization. If the human race does not unite, it will encounter the worst "dark age" in the history of human modern civilization.
Human disunity concurrent with the crisis
My second part is that I think I feel very sad because unfortunately, not everyone is as aware of the dangers of the global pandemic as I am, as I said right now. We feel that the human pandemic is facing three obstacles:
The first obstacle is anti-scientism. Some people don't believe in medicine and they think freedom is more important than life. They are reluctant to wear masks and just regard the COVID-19 as a flu. At present, a considerable number of people are infected for dine together, gathering, party carnival. Many people still take chances that the probability of infection is very low and that they will not get infected. It has been proved however that wearing masks, washing hands frequently, and staying home can slowed down the infection curve in various countries. To despise science is to despise human civilization. There is no point in talking about freedom without respecting science, without respecting life.
The second obstacle is anti-globalism. Nowadays I call it the shock of globalization, which is in line with the ideas of some anti- globalists. Some governments not only decide to support the domestic populism within their country, adopt protectionist trade policies and placing restrictions on immigration and visa, but also withdraw from many international organizations and agreements, you know what I want to say, which country I want to point that. But the truth is different. As human beings are closely connected with each other, no country can ignore global problems such as refugees, climate change, pandemic and so on, we all know.
The third obstacle is anti-cooperation. The first is anti-scentism, the second is anti-globalism, third is anti-cooperation. As long as there are confirmed cases in any country, it is impossible to declare the end of the pandemic, as well as restart the economy. Nowadays in China, we have no relax, because in Beijing every day we have around ten new cases. In order to transfer domestic contradictions, some countries attempted to blame other countries and attack other countries. They also cut off funding for the WHO, indirectly putting countries in need of support from the WHO in a more dangerous situation. The countries, which unilaterally believe in supremacism or the priority of their nation, ignore the common interests of mankind. This is very sad. So, my opinion is that international cooperation is the only way to solve global problems.
What should humans do?
Finally, how can we do? Today's meeting is very important. So I have three practical suggestions:
Firstly, life is the priority. In the face of the disaster, it is the basic responsibility of governments and the human’s essential nature to protect the lives of citizens. We should protect women and children, the elderly, weak groups to ensure the basic livelihood of people. Behind the loss of a single life is the breakdown of a family. It is our highest priority to attach great importance to the lives of human beings in the face of disasters.
Secondly, share medical information and jointly develop vaccines with each other. For the past four decades, we have not yet developed the successful treatment for AIDS, and we can not afford to do the same thing again. 40 years passed and we still don’t have any vaccine for AIDS, this is a very tragic historical lesson. Most of the achievements of the science community are the result of cooperation, and every breakthrough is based on the achievements of predecessors. In the face of such a wide variety of viruses, no country can develop vaccine independently. Therefore, the only way for people to defeat the virus is to share medical information and achievements unreservedly and work together to develop vaccines save lives.
Thirdly, coordinate efforts to increase the momentum of macro policies and prevent the world economy from falling into great recession. This includes, but is not limited to, implementing of effective fiscal and monetary policies to maintain the basic stability of the currency exchange rate of all countries; strengthening the coordination of financial supervision to maintain the stability of the global financial market; jointly maintaining the stability of the global industrial supply chain, as well as jointly expanding cooperation in new industries such as digital economy, smart city, clean energy and 5G network. Avoiding the world financial crisis again and the great depression of the post-pandemic is just as important as fighting the disease.
Last but not least, in such a highly globalized world today, no one person or country is an isolated island. Mankind now has reached an unprecedented critical stage that we must cooperate and unite to get ourselves out of this crisis.