Large-scale epidemics are an integral part of human life. The epidemic is a magnifying glass, magnifying the existing imbalances and unfairness in the operation of society; the epidemic is an accelerator, accelerating the established long-term trend of social development. Remember, it is amplifying and accelerating, not creating out of nothing, creating a new world full of new contradictions and trends.
We are eager to change, eager to see the shadow of the future world from the changes in social, political and economic life during the epidemic. This is especially true of intellectuals. They hope that the epidemic will bring about major changes, which coincides with the theories they believe in, and verifies their previously unsuccessful judgment. After the previous epidemics, we have been able to observe the advancement of prevention, control and treatment technologies, the renewal of public health concepts, the improvement of disaster prevention and mitigation organizations, and the improvement of material reserves. But nothing more. Human life has not changed, and the advantages and disadvantages of human nature remain the same. Syphilis can once become fashionable in the upper class of Europe. AIDS has not made human beings more clean and self-conscious. Ebola has never prevented people from going to Africa. The same is true for this epidemic. After the epidemic, people will forget the epidemic as quickly as possible. This is human nature.
Symmetric shock does not change the geopolitical situation
it is easy to counter example to refute the above-mentioned negative static point of view. Such as the pivotal impact of the Black Death on the development of Europe in the Middle Ages, and the destruction of the regional civilization of South America by smallpox. However, it must be understood that the premise of these major changes is that the epidemic has led to a massive decrease in the population, and there are significant differences in the degree of impact suffered by different regions and different ethnic groups. The fatality rate of this epidemic has been kept at a low level, and a large number of people have not been wiped out; the spread is widespread and rapid, and there is no place outside the world for several months.
The Spanish flu lasted for about two years and affected the Allied and Allied countries in a symmetrical manner, and therefore did not change the course and outcome of the war. Technology can shorten the duration of this epidemic. Two years is just a moment in history. Looking around our neighbours, countries are among each other, and the epidemic has not brought about changes in the balance of power worthy of attention.
So far, no country has shown weakness in geopolitical struggles, and no country has made even reciprocal policy adjustments. All previous bottom lines are not to be touched. On the one hand, countries are cautious and exchange the availability of anti-epidemic materials and data based on humanitarian principles; on the other hand, they try to avoid linking related measures with politics, lest they be given authority and blackmailed in the fall. Dr. Kissinger issued a post stating that “the epidemic will permanently change the world order”. Stealing through the Chinese and English manuscripts, there is no change, and what I see is still defending the universal value of Western democratic systems.
Countries with various political systems are full of energy, confident that they have effectively chosen the anti-epidemic path that suits their national conditions. The differentiated infection rates and mortality rates of various countries are all attributed to the unknown nature of the virus and to the difference in material power determined by the level of development. Even the obvious misjudgments of some leaders regarding the epidemic have been ignored by the public consciously or unconsciously, and the “Pallyroundtheflageffect” (Pallyroundtheflageffect) has actually increased the support rate of politicians.
People living in developed countries and developed regions within the country are undoubtedly lucky. This kind of fortune is a natural extension of the benefits enjoyed by related residents before. Infections and deaths in developing countries and underdeveloped areas within countries are not even counted. If infection and death are not even numbers, how can they change?
Inverse of accelerated globalization judgment worthy of careful study of
the industrial age, there are more than forty countries around the completion of the industrialization process, spread on all continents, globalization can call it that. This is not the case with this round of digitization and new-generation communication technology. Except for a few countries in East Asia, the United States, and Western Europe, Russia, Central and Eastern Europe, the Islamic world, and even the entire southern hemisphere have withdrawn from the related software and hardware manufacturing fields. This is not globalization at all, it is a dual world where “digital islands” are opposed to the sales market. The consequences of the technological divide that split the world are similar to swords and guns in modern history. In this process, the most embarrassing thing is that Russia, a great nation that has experienced many great revolutions, now has to compete with the dynasty and maintain the country’s cash flow through oil prices. How can politicians feel so embarrassed?
If we have to make conventions and apply the concept of globalization, during the epidemic, we have seen globalization in certain areas accelerate rather than regress. In the information field, countries have more frequent information exchanges, data sharing has become smoother, and mutual concerns have become more practical. In terms of capital flow, a large amount of funds switched to hedge among various markets, and the linkage of financial markets rose to a new height. In terms of trade, the trade of anti-epidemic materials has increased significantly.
The freezing of the movement of people caused by the epidemic, the sharp decline in trade in non-essential goods, and the ban on food exports are more likely to be a suspension and a shock. The movement of FDI after the epidemic has stalled is crucial. In the past few years, the United States and Japan have been committed to the return of industries. What we need to pay attention to is the marginal variable, to what extent the epidemic has strengthened the original trend. The epidemic is equivalent to adding a new decision variable to the original FDI theory. The weight of this variable is unknown, and whether it will play a decisive role is also unknown.
In the past few decades, the industrial agglomeration formed by China in the Yangtze River Delta and the Pearl River Delta is world-class, and its internal organizational relationships and upstream and downstream connections are close beyond common understanding. I don’t believe that these industrial linkages, which are endogenous based on the market’s own factors, will be greatly changed due to the epidemic. Taking ten thousand steps back, if an epidemic or a policy attempt by a certain country can change the development of this industry, its value itself is limited.
The international monetary and financial situation will be more curable
masks can not quickly produce, but money can instantly create. The new monetary theory, which has been brewing for a long time, has played a major counter-cyclical role in the response to the epidemic. Otherwise, the consequences of the break of the credit chain of the whole society will be unimaginable. There are people in China who are frivolous about the Fed’s policies. I don’t know where their confidence comes from. Do they know better than the Fed about what policies the US needs?
Economic theories are all growth theories, and “economic shrinkage” and “economic shock” seem to have not been systematically explained. Imagine: in normal operation, the huge fiscal and money supply can only support single-digit economic growth; when the double-digit economy shrinks at every turn, what level of fiscal and currency hedging is needed. This is like a person who loses blood while transfusing blood to continue his life. The amount of input required depends on the amount of loss, and does not depend on the amount of blood that the body needs under normal circumstances.
If deficits and money supply are used to fill the current output gap, it may not necessarily lead to a soaring price of commodities and assets in the next step, and it may not necessarily lead to the collapse of the US dollar and US debt. To put it further, if the US dollar and US financial markets withstand the unprecedented impact of this round of liquidity, their status will receive new blessings.
The financial market is like a mirror image of the real economy: the market responds quickly to the outbreak of the epidemic, which certainly adds fuel to the fire; but then responds to the epidemic in advance and is under control. During the crisis, the linkage between the financial markets of various countries rose to a level not reached before. For example, since February 21, the correlation coefficient between the Dow and the Shanghai Composite Index has exceeded 0.9, while the previous correlation between each other was negligible. Sometimes, we emphasize the “safe haven”, hoping that funds will come in to hedge against risks in the domestic market. As time delays, it may be necessary to accept more domestic and foreign market linkages.
The same goes for interest rates. The Chinese economy, hit hard by the epidemic, cannot afford such high financing costs. The current Chinese economy is unable to maintain such a high positive interest rate differential with the outside world. Lowering interest rates is an inevitable trend.
New progress has been made in the cooperation between the monetary authorities of various countries in the US dollar system. For example, the Federal Reserve has established new currency swap arrangements with some central banks, and opened up new repurchase channels for central banks’ US debt assets.
The yuan’s performance in this epidemic was flat. The exchange rate basically changes in the opposite direction of the US dollar index, but the magnitude is smaller than other currencies. There is no noteworthy change in international status. This is in line with common sense. The confirmation of the status of the US dollar after the war was based on the fact that as a “great arsenal of democratic countries” during the war, countries were eager for the US dollar as a means of payment. In this fight against the epidemic, China’s supply of relevant materials has not reached the level of the sky, and it has not considered allowing RMB payments to play a special role in it.
China and the US is also facing economic recession and long-term risk of
current US bail-out programs and policies of the previous similarities, are considered “fight against SARS relief,” the goal is to avoid an important industry, SME cash flow break, ischemic necrosis. These policies will not have much effect on economic growth, because isolation has a huge impact on both ends of supply and demand. Under the “flag-gathering effect,” President Trump’s approval rating has increased, but it is still far below the level of President Truman, Bush Sr. and Bush Jr. during the war. After the second quarter, the election will enter a white-hot stage. The time rhythm of the epidemic is more favorable to the current president, and it is difficult for competitors to challenge success.
The US economy, which has gone through a complete cycle and continued to prosper through large-scale tax cuts, is threatened with a long-term recession due to the severe blow of the epidemic. We don’t know whether the stock market has gone out of the storm zone, whether the debt after the Fed’s takeover and rollover can return to the market smoothly, or how the huge liquidity will be recovered in the future. Big infrastructure is the only promise Trump has not fulfilled since the campaign four years ago. No matter how the plan is written on paper, it at least shows that the United States has considered the possibility of a mid-to-long-term recession after the epidemic and is planning a plan for this. The dilemma facing US infrastructure is generally the same. The only important change is the financing environment. The zero interest rate environment has greatly reduced financing costs. If negative interest rates occur, the scenario is more optimistic. Just imagine: 23 trillion stocks of federal debt, rolling with negative interest rates, can achieve a natural reduction in debt; one third of which is held by foreign investors, how “fair” this is to the United States.
It now appears that it is basically unrealistic to imagine a “V-shaped” rebound after China’s economic epidemic. It should be noted that the medium and long-term economic growth of our country is in a downward channel. The trend of factor changes determines that the economy will return to the general growth level of developed economies in accordance with the law of growth. The epidemic may cause the medium and long-term growth rate to rapidly drop to a lower growth platform. (Figure 1)
More importantly, since 2018, the quarterly economic growth rate has shown new signs of rapid decline. This is obviously not caused by slow variables in the medium and long term. The underlying institutional mechanism and policy reasons are profound and complex: the original incentive mechanism has been shelved, local, state-owned enterprises, and private enterprises and other power sources have weakened at the same time, while the new mechanism has not been established for a while and has worked. If there is no systematic policy adjustment and no new resources are injected, how can the economy be improved after the epidemic? (2)
the current Sino-US relations to noise-based public opinion
on China-US relations, I am still the same: “see the nature and context of bilateral conflicts, there is no knowledge; adhere these contradictions and problems, there is no wisdom ; History is created, and relations between major powers have no fate.”
After the baptism of the epidemic, China and the United States will have a clearer understanding of each other. The United States will really feel China’s organizational and mobilization capabilities, as well as the progress in material strength and technological capabilities. China will also feel the gap in the hard power of the two countries more clearly. For example, in terms of detection technology, specific drug research and development, and RNA vaccines, multiple technological routes in the United States are advancing at the same time, and progress is rapid; even if the production of ventilators, which was originally thought to have great potential, domestic production capacity accounts for only one-fifth of the world’s population, and my country’s global population The ratio is comparable, and the core components rely on imports.
Looking at the economic recovery after the epidemic, mutual demand is clearly rising rather than falling. For the US, lowering the tariffs imposed on China is conducive to economic recovery and improving people’s livelihood; for China, it is not impossible to increase the purchase of important commodities under the new price conditions.
The new crown virus does not recognize the powerful and the race. Apart from science, there is no prophet. When the virus is raging, it is humble and contemptible to fight for power in the name of defending national interests; it is even more human evil to put blame on others. Certain external formal and informal remarks are certainly madness and abomination, but if we take madness and abomination as the basis and object of decision-making, we can only be on the same level as madness and abomination.
In the face of the epidemic, we need virtue. Because I am convinced that Song Xianggong will no longer be a nation that has experienced countless sufferings in modern history.