Globalization has resulted in the interdependence of nations through the largely unimpeded transmission of investment capital and information, and integrated business operations. The leading beneficiaries have been the global 1%, and China. While it is too late and not possible to roll back an interconnected world order, globalization as we know it will recede, as will China’s standing in the world.
decades, the world has been enamored with globalization, a term that conveys a
tapestry of symbols. As noted in the Kent News years ago, supply chains
integrated with point of sale technology at check out counters, in-depth news
coverage of distant crises, foreign students in American universities,
projection of global corporate might, displaced factory workers and damaged
manufacturing industries, social media to reach friends everywhere by
electromagnetic waves, merchandise and services exports, and foreign direct
investment may be seen as parts of it. Also part of it is the general
perception of the rise of the global 1%, resulting in societal disparities as
well as some countries left behind. Globalization
has resulted in the interdependence of nations through the largely unimpeded
transmission of investment capital and information, and integrated business
operations. Besides the global 1%, a leading beneficiary of globalization has
been the Peoples Republic of China.
the gushing over the word “globalization” will abate, after several body blows
to the world. The first shot, although then not suggestive of a pattern, was
the Arab oil embargo declared in 1973 during the Arab-Israeli War by the
Organization of Arab Petroleum Exporting Countries. The embargo was imposed against the United
States and other countries for military support of Israel. This action
underscored the dependence and vulnerability of the U.S. to foreign sources of
second shot was the Iranian Revolution of 1979.While this began as a social
revolution that stoked religious fervor, it put an abrupt halt to the
increasing Western influence in Iran, and the dependence of the Iranian
monarchy on the United States. Fashion,
cinema, beauty products, and the use of alcohol were viewed as instruments of
the U.S., “the Great Satan,” indeed viewed as a so-called godless society. The Revolution also broke apart the Middle
East along historical, cultural, sectarian, and geopolitical fault lines. The
source of the world’s oil was no longer cohesive or predictable, and it became
a theater where proxies could make mischief.
third shot was the rise of Al-Qaeda in the 1990s. It is fair to say that lack
of an industrial revolution, dependence on only one product (oil), and no
separation of church and state have left many Islamic countries out of the
integrated world mainstream, both West and East.With exceptions such as Turkey
and Dubai, most of the Islamic world has not benefitted from globalization,
adding to a resentment that was fueled by U.S. support for monarchies seen as
oppressive, and its ongoing special relationship with Israel. By this time, it became clear that globalization
had the power to incite radicalism.
fourth shot is COVID-19. There is an overwhelming consensus that it was
released either from a government laboratory in Wuhan, China or from wet
markets in that city where fresh meat, fish and produce are sold. Although the
origin and nature of transmission are disputed, certain facts have been
established: the Chinese government knowingly delayed disclosure of this
spreading pathogen; it also said that human to human transmission was not
possible; it shut down domestic flights but not international ones in and
out of Wuhan; and it intimidated members of the medical profession who issued
principal management objective of the U.S. has been to control the surge of
COVID-19 so that it does not crush the health care system, which is almost
18% of GDP. The economic and political implications of COVIDF-19 are yet to
play out in full, but certain observations may be made.
much of the world – the U.S., Europe, India and Japan – see the need to dilute
their commitments in China and to restructure manufacturing and
distribution. Indeed, it was mainly the
West that made China a success story through massive direct investment and
re-export of product, resulting in a so-called economic miracle that started in
the 1970s with Deng Xiaoping’s economic deregulation and embrace of
quasi-capitalism. Remedies against China will not succeed if they are limited
to action by the U.S., as they will be seen as yet another issue of
divisiveness between the U.S. and China. Fortunately, it appears that Europe,
which has long favored commerce over security considerations, is slowly
becoming more like-minded with the U.S., and the Japanese government is now
willing to subsidize Japanese companies that leave China.
efforts to write the rules of trade and investment for its half of the world,
challenging the U.S. and Europe, will meet with resistance. Further, China’s aspirations for economic
hegemony will be diminished, as countries now subscribing to its Belt and Road
Initiative become skeptical of both resulting indebtedness to China, as well as
the wisdom of having thousands of Chinese constructions workers in their
Chinese influence and credibility will be an opportunity for some Asian
countries to attract foreign direct investment. The most likely destinations
will be those that can move quickly in this regard, and those with
transparency, protection of intellectual property, a respected legal system,
and a commitment to free markets. This
is an opportunity for India to enhance the “Make In India” strategic initiative
of the Modi government.
observation is the dichotomy between science and political objectives in an
election year. Some frame the challenge as lives versus livelihoods, but the
truth is more nuanced. The real
question, understandably not easily answered, is what rate of infections can be
sustained by a moderately well-functioning economy, until such time as a
vaccine and treatments are available?
many industries are threatened, as the consequences of a global pandemic eat
their way through the economy and the prospect of a severe recession looms.
Bank capital ratios, stronger than in late 2008, will come under pressure from
numerous personal and corporate bankruptcies.
Retail companies, some of which have already filed for bankruptcy
protection, will need to restructure themselves with more on line emphasis. The
fate of major airlines is not clear, however the decline of the stock of
American Airlines, about 80% over the past five years, puts it just above a
small cap firm. Commercial real estate will likely suffer, as ingrained
telecommuting habits become the norm.
And it is hard to imagine how the consumer economy, about 70% of GDP,
can recover when many people are afraid to associate in restaurants and bars.
tighter immigration policies, particularly vis-à-vis China, the education and
tourism sectors will also be affected. There are nearly 370,000 Chinese
students in the U.S., constituting one-thirdof the foreign student
population. And Chinese tourists to the U.S., already on the decline during a
trade war, are said to be the highest spending of all international
resentment of China increases, corporate boardrooms will consider how to reduce
dependency on that country. The slogan “America First” will likely gain more
traction, especially among conservatives, as people come to contemplate what
the Chinese Politburo has perpetrated on the planet Earth.
It is too
late and not possible to rollback an interconnected world order, and countries
need allies. China, the world’s second
largest economy, is not going away. But globalisation as we know it will
recede, as will China’s standing in the world, such that we will eventually be
able to say, “Good-bye to all that hype.”
 Schell, Frank, ‘China and the sound of silence’, Spectator, 17 April 2020, https://spectator.org/china-and-the-sound-of-silence/
 Bostock, Bill, ‘China knew the coronavirus would become a pandemic in mid-January, but for 6 days claimed publicly there was ‘no evidence’ it could spread between humans’, Business Insider, 15 April 2020, https://www.businessinsider.com/coronavirus-china-hid-pandemic-news-six-days-2020-4
 ‘China didn’t warn public of likely pandemic for 6 key days’, The Associated Press, 15 April 2020,
 Center for Medicare and Medicaid Services, ‘Historical’, Government of United States, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical
 Maçães, Bruno, ‘How Europe learned to fear China’, Politico, 4 September 2019,
 Textor, C., ‘Number of Chinese students in the U.S. 2008/09-2018/19′, Statista, 28 Novermber 2019,
 Reality Check Team, ‘Trade war: How reliant are US colleges on Chinese students?’, BBC, 12 June 2019, https://www.bbc.com/news/world-asia-48542913
 Selyukh, Amy; Scott, Amy & Jingnan, Huo, ‘Chinese Tourism To U.S. Is Down After Years Of Booming Growth’, NPR, 31 May 2019, https://www.npr.org/2019/05/31/728590535/chinese-tourism-to-u-s-is-down-after-years-of-booming-growth
the author: Frank Schell is a business strategy consultant and former senior
vice president of the First National Bank of Chicago. He was a Lecturer at the
Harris School of Public Policy, University of Chicago and is a contributor of
opinion pieces to various journals.
This article was written for Gateway House: Indian Council on Global Relations.
House: Indian Council on Global Relations is a foreign policy think-tank
established in 2009, to engage India’s leading corporations and individuals in
debate and scholarship on India’s foreign policy and its role in global
affairs. Gateway House’s studies programme will be at the heart of the
institute’s scholarship, with original research by global and local scholars in
Geo-economics, Geopolitics, Foreign Policy analysis, Bilateral relations,
Democracy and nation-building, National security, ethnic conflict and
terrorism, Science, technology and innovation, and Energy and Environment.