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Recap: Crisis Collaboration, 4.21.20
On April 21, China Institute hosted our third virtual program in the ‘Beyond COVID-19’ series on “Crisis Collaboration: Can the U.S. and China Save the Global Economy?,” exploring U.S. and Chinese efforts to boost the world economy. Addressing how the health crisis has slowed in China, and the impact of the pandemic on global supply chains, this conversation with President of Wanxiang America Corporation Pin Ni, Center for China and Globalization President Huiyao Wang, and President of the China Center and vice president for Greater China at the U.S. Chamber of Commerce Jeremie Waterman explored what China and the United States must do to mitigate the economic shock as a result of the coronavirus.
Selected Quotes From the Program
On COVID-19’s economic hit:
Huiyao WANG (HW): China is gradually back to functioning so to speak—but it depends which region you speak of. The private sector has gone back to production and working but there is the problem with the movement of people. Airlines are greatly reduced, and people still need to quarantine for 14 days when they come to Beijing. School isn’t open yet, and that is a big factor. Parents are stranded at home, which affects turn out rate of people in offices and factories.
Pin NI (PN): Now, both in China and the US, the challenge is not production, it is demand. US customers were saying I need supplies, then suddenly overnight they said, no, I don’t want it. The economy is not like a car you can start and stop quickly. There is no way you can see a quicker start of the business.
If you’re 20% down in sales, you can manage, but if you’re 80% down, there’s no way you can manage. The scary part is we just don’t know. Vehicle sales have gone down sharply. In March, sales were down 39%—we may not be able to even get to 2008/2009 levels. So the question is, are all the Big Three still going to be there? That’s the thing we don’t know today. It all depends on how quickly we can reopen the economy.
On health safety vs. economy:
HW: If China can find a way to contain the virus at a certain level but restore the production and working, that is ideal…China is still trying to find that balance…Opening schools will be a symbolic landmark to being as normal as they can. It will be another month or two before it is back to normal.
China is trying to use big-data technology and mobile phone technology. They really can pinpoint where the cases are and alert people in that area. There are whole sectors that are still shut down. The demand is disappearing, so if we do not act quickly, we may have big consequences down the road. Let’s use the tech we have and use our test kits appropriately to get the whole society back to normal. That is the future for China and other countries as well.
PN: There’s no perfect solution here. There is a balance you have to strike… The worries about the economy are a lot bigger today than two weeks ago. Can we use a canon to shoot a mosquito? Probably not. You shoot the canon and the mosquito is still there…we need to be more precise.
This may seem morally all wrong, but you have to face the challenge and make decisions for all people. Let’s test people, take care of the people who are infected, make sure there are hospital beds, but let’s not have everyone stuck in homes. Otherwise there’s no economy left.
On the future of supply chains:
Jeremie Waterman (JW): 70 percent of survey respondents have no plans to relocate supply chains outside of China based on COVID-19. This confirms the reason many companies are in China: to serve the domestic market in China. The idea of reorienting doesn’t make a lot of sense.
PN: Water always flows to lower ground. If China is still competitive—not just based on labor—companies still will go to China. We (Wanxiang of America) were trying to move our production outside of China. The problem is that costs are still much higher than China…and so China is still the destination if you want to make money for your shareholders.
On the need for US-China collaboration:
JW: At a time of global crisis, the finger pointing we’ve seen on both sides clearly is not helpful for the two largest economies in terms of needing to find ways to coordinate and cooperate where possible to address the twin health and economic challenges. We’re in the same boat together in terms of supply chains, addressing demand challenges for the world, and for our own economies. We think there’s more that can be done in a constructive way between the two sides.
HW: Really, we should stop these finger pointing gestures from both sides. We’ve seen some good moves from business, from society, and from the private sectors. We see nationalism and populism rising in China, that really is no good. We should really stabilize the economy. If we are working on opposite directions, we will deepen the crisis and we will have (a) prolonged recession. That will hurt both of us—and the rest of the world.
PN: The (question is), can (policymakers) foresee what is really to the benefit of the people of these two countries? This is the perfect time for the leaders of these two countries to show they are rational, they are forward thinking, they will not put their own agenda ahead of the people’s welfare. As long as that is happening, we will come through this together.
Full Video of the Virtual Program
The Beyond COVID-19 series presents expert perspectives on the impact of COVID-19 on the global order, the restaurant business, and the world economy.
Wednesday, May 6 from 11:00 AM- 12:00 PM.
The teachings of Confucius have made a comeback in China, and, according to Daniel Bell, it has the potential to be a beneficial force in the rest of the world. Bell’s writing on what he describes as China’s meritocracy has stirred heated debate among academic circles. Drawing on a new book Just Hierarchy: Why Social Hierarchies Matter in China and the World, Bell and co-author Wang Pei argue that Confucian-inspired hierarchies can help deal with the ongoing health crisis and other modern global challenges. Sign up for this free, virtual program >>