COVID-19 and the End of Globalization: True or Not So Much?

Author Name: Maham S Gillani      03 Nov 2020     COVID-19

COVID-19 has taken the world by storm, emerging in China in late 2019, the virus has infected more than 10 million people worldwide and has upended our way of life as we know it. It has also had a marked impact on how people communicate, conduct business, shop and pursue education. In the same vein, it has transformed the way businesses and governments carry out trade, forge alliances, frame policies and participate in international organizations, with many moving away from multilateralism. These seismic changes have led many to postulate that the world has reached the end of globalization. 
While it is true that the Coronavirus has slowed the pace of globalization – ‘slowbalization’ as many now call it – the global economy, businesses and people are too intimately intertwined to disintegrate from each other and work in silos. 
International trade – a chief component of globalization – has taken a serious hit from the spread of the Coronavirus. Many countries have been compelled to restrict trade of nonessential items as they grapple with the virus. The World Trade Organization (WTO) has estimated that nearly all regions suffered double digit declines in trade volume in 2020. However, the downswing in trade volume can be attributed to disruption of normal routine and economic upheaval, and not necessarily to economic disintegration. 
Additionally, there was an upsurge in trade of medical supplies, personal protective gear, face masks and hand sanitizers. Countries came together to help each other during this global health crisis by sending medical supplies and medical staff to those in need. For instance, China and Russia sent planeloads of medical supplies to Europe and Africa at the height of the pandemic. These developments reaffirm that globalization is not in retreat. 
Another reason given by those sounding the death knell of ‘globalization’ is disruption of supply chains during the pandemic, and consequently, decisions by numerous major firms to relocate nearer to home. However, while it is true that many leading companies have been overwhelmingly reliant upon production in China, the outbreak of the virus has not had as much of an impact on GVCs as the Sino-US trade war. In this context, DW – a leading German media channel – pointed out that instead of relocating to the US or Europe, companies are diversifying away from China to other countries with cheap labour such as Vietnam, Malaysia and the Philippines. Therefore, it can be safely concluded that firms are merely relocating in pursuit of business and political interests.  The reconfiguration of global supply chains does not constitute a direct threat to globalization. 
Furthermore, deterioration of US-China ties and the ensuing acrimonious trade war have had a ripple effect on various facets of globalization. Both countries have imposed tariffs on each other’s products. President Trump has also attacked two of the most popular Chinese apps – TikTok and WeChat – and has threatened to shut down their operations in the US. Hence, the trade war has also metamorphosed into a tech war. Indubitably, the rancorous hostility between US and China has been a set-back for globalization. 
Ironically, China remains the largest trade partner of the US: US trade with China was approximately USD 559 billion in 2019. But the figure was even higher in 2018, amounting to USD 659.8 billion.  Therefore, while the volume of trade between China and the US may have declined, the economies of the two countries are too interdependent to completely disengage and permanently dent the process of globalization.
On the other hand, travel restrictions dovetailed with lockdowns and economic uncertainty in the pandemic era, have exacted a heavy toll on the global tourism industry. Substantial decline in tourism combined with the impacts of international trade have provided fodder to the debate on ‘deglobalization.’ The global tourism industry has been flourishing in the past few decades. Research indicates that value of the global travel and tourism industry reached USD 2.9 trillion in 2019. 
However, globalization isn’t just about physical mobility or exchange. While freedom of movement may have been curtailed and travel barriers erected, the online space saw an unprecedented spike. So, even though people could not travel, they continued to interact, exchange ideas and explored novel ways to be part of the global society through technology.
Moreover, the pandemic era travel restrictions are temporary in nature. Transnational organizations, information and technology, nongovernmental organizations and exchange programs are the hallmarks of the modern age. In today’s world, people, businesses, and even educational institutions fuel globalization. Different parts of the world are interdependent upon each other in order to function smoothly. 
Undeniably, COVID-19 has generated a debate on ‘deglobalization’ and has led people to become skeptical of interdependence, but has it led to the end of globalization? This does not seem to ring very true.

 

- Maham S. Gillani is a researcher at Centre for Aerospace and Security Studies (CASS). She can be reached at cass.thinkers@gmail.com

 

Image source; https://foreignpolicy.com/2020/03/12/coronavirus-killing-globalization-nationalism-protectionism-trump/