Be Alert to Division ‘Headwinds’ at Economic Recovery Juncture: Global Times Editorial

By Global Times

Feb 27, 2023 12:18 AM

Illustration: Chen Xia/GT

Has the global economy survived the winter? Almost everyone hopes to get a positive answer to this question. Given the good momentum of China's economic recovery, the improved growth prospects for regional emerging economies such as Asia, and the rebound in business activities in the US, Eurozone and the UK in February, which were previously predicted to decline by various institutions, it should be concluded that the current global economic situation is better than it was projected a few months ago. However, uncertainty remains concerning whether the global economy can reduce the risk of recession, and embark on the road to recovery. In other words, where it goes still depends on the choices of various actors.

Over the past weekend, thousands of protesters took to the streets of Berlin, London, Paris and other major European cities, calling for an end to the war in Ukraine and urging Western governments to stop sending weapons to the battlefield and "negotiate [with Russia], not escalate." A similar scene appeared a few days ago before the Lincoln Memorial in Washington, where protesters demanded that the US stop inciting the Russia-Ukraine conflict, promote talks between the two sides, disband NATO, and reduce military spending. According to the organizers, this may be the largest anti-war protest in the US since the Iraq War.

These anti-war demonstrations have coincided with the one-year anniversary of the Russia-Ukraine conflict. The deeper background is that many countries in the West haven't gotten rid of inflation risks, but in general they are hovering on the edge of recession, which severely hampers the prospects for the world economy. However, the West's attention on reducing the risk of recession seems to be far less than their enthusiasm for geopolitical confrontation. On Saturday the G20 Finance Ministers and Central Bank Governors closed in Bengaluru, India. Although India as the host put more emphasis on the threats facing the global economy, the Western media paid little attention to the global economy that G20 is supposed to be concerned about, and instead focused on the Russia-Ukraine conflict. Since last year, similar reasons have led to the failures of a joint statement at meetings of G20 and other important international cooperation mechanisms.

There are many risks facing the global economy today, such as accelerating inflation, energy and food shortage, US Fed interest rate hikes, debt crises, and other specific factors that affect the prospects for the global economy. However, compared with these factors, the biggest threat to the world economy's path to recovery is that some countries insist on using political and so-called "ideological" lines to deal with economic and trade issues for their own strategic purposes, which is pushing the world economy toward "division." It is precisely because of this that UN Secretary-General António Guterres has warned of the risk of world division, and the World Economic Forum has called for "strengthening cooperation in a divided world." Kristalina Georgieva, managing director of the International Monetary Fund, warned that once a "great division" occurs, global GDP will shrink by 1.5 percent, or more than $1.4 trillion in annual terms. This means prices will rise across the board, and the supply of global public goods will seriously decrease.

In this regard, as the country with a GDP that accounts for nearly a quarter of the world's total, the US especially needs to restrain its geopolitical impulses and invest more energy into matters that are beneficial to its own people and the world at large. In fact, not only the escalation of the Russia-Ukraine conflict but also many of the difficulties and uncertainties currently faced by the global economy are related to Washington's extreme selfish foreign policies. For example, the US' Inflation Reduction Act is seen as "dividing Europe," and the CHIPS Alliance Washington is trying to build is shaking the foundation of the global technology industry chain. Furthermore, Washington's narrative of "democracy VS authoritarianism" and its camp confrontation have played a destructive role in hindering international cooperation in combating risks.

Recently, several international organizations have raised their expectations for the world economy in 2023. This is mainly due to the positive outlook for China and the Asian economy. According to the latest report by the OECD, as the European and US economies slow down significantly, Asian emerging-market economies are expected to account for close to three-quarters of global GDP growth in 2023. However, what is also worrying is that the shadow of camp confrontation is looming. Washington, holding the playbook of the Russia-Ukraine conflict in its hand, is creating panic in the Asia-Pacific region, touting the so-called "security protection," and trying to turn this hotbed of cooperation and development into a chessboard for major power games. This has already aroused the vigilance of many countries.

Development is the eternal theme of human society and a just goal that can never be abandoned at any time. No country or organization can restore the world economy quickly on its own, it is a process of global cooperation. In this process, it is far from enough if only developing countries are taking the lead. The US and other Western countries, whose economies account for more than half of the world's total, should not simply shrug off warnings that "nine out of the 10 developed economies may slow down." There are actually many things that they can and should do.