DecryptionThe challenges of relocation 4/5. Weakened by trade tensions and the health crisis, the development model on which Southeast Asia has been built in recent decades has broken down. In the post-Covid-19 world, China could take full advantage of intra-regionalization of trade and increase its domination of the continent.
On the poster, a pilot fires a submachine gun aboard a bullet-ridden fighter plane, with this slogan: “It is in difficult times that we recognize those who have courage. “ The image was carefully placed by the Chinese telecommunications giant Huawei in the background of a conference given by its staff, Monday, May 18, in Shenzen.
Rarely has the war metaphor been so supported and explicit. A few days earlier, the United States had decided to block the company’s access to American semiconductor technology. Behind the attack on this technological flagship, all of China felt targeted. Beijing immediately warned Washington that it would take the necessary measures to “Defend” his businesses.
After five decades of almost uninterrupted ascent, here is the Middle Kingdom halted in its tracks by trade tensions with the United States and the coronavirus pandemic. At the start of 2020, the Chinese economy is not far from resembling the smoking carcass of a fighter plane that has just crashed. Its gross domestic product contracted by 6.8% in one year in the first quarter, after a year 2019 where it had experienced only 6.1% growth, the worst performance of the last three decades. In the rest of Asia, the situation is hardly better.
Beyond the bad times, it’s a whole development model that seems seized, as worn. Moody’s rating agency sees this as a “Structural downturn” which she attributes, in a note published in February, to four main causes.
First, the threats to the multilateral system governing world trade. This governance has fostered increased trade on the planet, from which the Asian continent has benefited so much in recent decades. Twenty-five years after its creation in 1995, the World Trade Organization is almost defunct. Its director, Roberto Azevêdo, recently announced that he would step down in September 2020, and the dispute settlement body has been paralyzed since the United States blocked the appointment of new judges. The weakening of multilateralism, coupled with US disengagement from Asia, has sparked diplomatic tensions and protectionist skirmishes in the region, particularly between Japan and South Korea.
Then, Asia suffers, still according to Moody’s, from “The structural decline in growth in China”, the main export outlet for the region. “The model that has worked so well in recent decades in Asia and which consists of subcontracting at a lower cost and then going up the value added chain and integrating into the world economy is broken”, says Françoise Nicolas, researcher at the French Institute for International Relations.
You have 65.03% of this article to read. The suite is reserved for subscribers.