Coronavirus: A great lesson for India and the world

Amitava Mukherjee

(Amitava Mukherjee is a senior journalist and commentator. He can be reached at amitavamukherjee253@gmail.com)

The outbreak of the COVID- 19 pandemic leaves many lessons for humanity. The lessons are succinct and do not leave motivated quarters to hedge around. Respect sovereign borders, don’t try to create and sustain an artificial globalized economy, go back to the time when most of the sovereign States remained happy with self-sufficient economic structure with an emphasis on import substitution, both human and material — these three are the principal messages that emerge from the disaster that has gripped the world now.

Reactions to the pandemic sway wildly. ShoiabAkhtar, the Pakistani cricketer, has squarely blamed the food habits of the Chinese people for the outbreak. This may be a bit too harsh. Some others think the strain might have been developed in laboratories for waging a biological warfare. Whatever may be the case China is badly mauled. Its GDP growth is likely to reduce by 2 to 4 percentage marks per quarter of the financial year. Manufacturing sectors like automobiles, chemicals, communication devices and precision equipments are next in the line for a slump.

Protagonists of globalization are, however, on the field to defend it. And what else can be its urgent job at hand than coming to China’s defence. China will soon bounce back as digital economy has taken a firm root in that country, they aver. Some say the reach of the digital world covers 35 per cent of the country’s economy while others opine that it is 25 per cent. Apologists for new China’s capitalist economy hope that unlike in 2003 when the country had to withstand Severe Acute Respiratory Syndrome (SARS), this time Beijing is not dependent on trade for its economic sustenance and can easily turn around relying on its manufacturing sector. If that is the case then the country of XI Jinping is faced with a real economic threat as many of its industrial units are sure to feel the corona menace. Digital world provides workers for doing jobs from home. But is it possible in manufacturing units? The answer is no. Then how can China hope to flood global markets with cheap goods?

Now let us peep into the losses that China has suffered due to the COVID- 19 outbreak. Retail sales have declined by 20.5 per cent in the first two months of this year than what it had been in the corresponding period of 2019. Industrial output is likely to fall by 13.5 per cent in the first quarter of this year. Fixed asset investment has declined by 25 percent. China’s economy is expected to contract by 6 per cent and unemployment rate has shot up to 6.3 per cent now from 5.2 per cent in November-December last.

1976 was a very bad year in Chinese history when the country was gripped by a massive recession in the wake of Mao Tse Tung’s death and social upheavals of preceding years. Even then China was not devastated as it has been shaken this time. But that was a totally different phase of Communist Party of China led misrule and it did not affect the world community as there was very little integration of production chain worldwide at that time.

Outbreak of COVID-19 has taught us that every nation must learn to live within itself and at the same time contribute towards humanitarian development all over the world in its own way and without integrating its society and economy too much with the world chain. Take for instance the social and economic catastrophe that India is now faced with for integration of its economy with that of China. According to the latest report prepared by the United Nations Conference on Trade and Development (UNCTAD) India happens to be one of those 15 economies which have been affected most due to the outbreak of COVID-19 and its trade impact on New Delhi amounts to USD 348 million.

A break-up of the affected industrial sectors indicates that Indian economy is faced with a real crisis. The loss suffered by the chemicals sector reaches up to USD 129 million, textiles and apparels USD 64 million, automotive sector USD 34 million, electrical machineries USD 12 million, leather goods USD 13 million and metals and metal products USD 27 million. The most crisis-ridden areas of the Indian economy are precision instruments, automobiles, communication equipment and machineries. It is to be noted that these four areas are most integrated to the Chinese production chain.

The world has gravely erred by accepting China as the central manufacturing hub. It is not just the case of selection of China, over concentration of manufacturing activities in any geographical location is bound to entail risks. Why the world leaders have failed to pick up this point is a mystery. But the result is there for everybody to see. Top economies of the world are now sinking. The European Union has suffered an adverse trade impact amounting to USD 15.6 billion, the US USD 5.8 billion, Japan USD 5.2 billion, South Korea USD 3.8 billion and Vietnam USD 2.3 billion.

The social cost of over dependence on China may be immense. About 18 per cent of India’s total imports come from China. A disruption in this chain might have impacts on India’s social equilibrium. Most important, India imports 85 per cent of its active pharmaceutical ingredients from China. This means that India’s pharmaceutical industry may soon run short of raw material supply as Chinese economy starts sinking, resulting in price escalation in the Indian market. Antibiotics and Vitamins are the groups of medicines that may face disruptions in their productions and supply.

Idea of a globalized human society is laudable. But the ground reality is not fit for ‘globalization’, a concept which has been forced on the world since the 1990s. The outbreak of COVID-19 and its results have made it crystal clear that the concept of sovereign nation states has to be nurtured more than the theory of globalization.