Commentary on Political Economy

Monday 16 November 2020


Covid Is Increasing America’s Lead Over China

As the post-pandemic world order takes shape, it’s clear that the U.S. still has huge advantages.

Preparing the CoronaVac vaccine in Beijing.
Preparing the CoronaVac vaccine in Beijing. Photographer: Kevin Frayer/Getty Images AsiaPac

With good vaccines apparently on the way, it’s now possible to imagine a new post-pandemic world order. One question is whether China has overtaken the U.S., and on that there is good news: In terms of ideas and relative influence, America may have opened up its lead.

Start with the vaccines themselves. China has done surprisingly well, and some of its vaccines are likely to prove sufficiently effective and safe. But the U.S., working with the German BioNTech company, has produced an entirely new kind of vaccine platform, namely mRNA vaccines. They can be quickly manufactured and hold the promise of combating many future viruses. The China vaccines are mostly based on older methods, with the Chinese doing their utmost to scale up production quickly.

That difference in products might represent an efficient international division of labor. But it hardly shows China at the forefront of progress.

The point stands in other areas of technology as well. If you are wondering whether China or the U.S. with its allies is more likely to make a big breakthrough, in, say, quantum computing, ask yourself a simple question: Which network will better attract talented immigrants? The more that talent and innovation are found around the world, the more that helps the U.S.

Note that the German vaccine company was founded by two children of Turkish immigrants, reflecting that the West pulls in the top scientific and other talent from around the world. The U.S. will likely resume a more open immigration policy under President-elect Joe Biden, and China remains a somewhat unattractive destination. Why go to a country where freedom of speech is weakening and political freedom is never secure?

The recent voiding of the pending Ant IPO — it would have been the world’s largest ever — occurred because Jack Ma criticized the Chinese regulatory authorities. The discussion has rapidly changed from “Trump is going after Chinese technology companies” to “China is going after its own tech companies.” No one should expect a vigorous Chinese debate over deregulation.

The broader question of allies is central for understanding the relative balance of power moving forward. China is likely to overtake the U.S. in terms of GDP, yet China has performed poorly in cultivating and developing reliable allies. The infrastructure emphasis of the “One Belt, One Road” plan no longer seems like such a great investment, with so many nations strapped for cash and the drop in travel and commuting. The notion of East Africa as a China’s sphere of influence now seems like a distant dream. In Pakistan Baloch separatists have attacked Chinese projects, due to fears of resource theft and encroaching influence.

Perhaps most important, the European Union has evolved from seeing China primarily as a customer to seeing China primarily as a rival. Even Germany, a longstanding advocate for closer ties with China, has become more skeptical. Furthermore, most European nations have ended up agreeing with the U.S. that Chinese telecom giant Huawei be kept out of the critical parts of their communications infrastructure.

Add to all this China’s policies in Hong Kong and Xinjiang, which are not popular in many parts of the world, especially in the wealthier democracies and among many Muslims. A kind of reputational hardening has set in.

The U.S., in contrast, just conducted a very peaceful and orderly election, and the U.S. president-elect is much more popular than the U.S. president in most of the world’s democracies. In economic terms, the U.S. bounced back from major declines in GDP and employment more quickly than most economists had been forecasting, reflecting an underlying resilience in the economy.

There is one other factor that people are loathe to discuss (with one exception). Yes, the U.S. has botched its response to Covid-19. At the same time, its experience shows that America as a nation can in fact tolerate casualties, too many in fact. It had long been standard Chinese doctrine that Americans are “soft” and unwilling to take on much risk. If you were a Chinese war game planner, might you now reconsider that assumption?

Overall, it would be a mistake to be pessimistic about China. Its on-the-ground campaign against Covid-19 was very effective, its leadership pays great heed to science, it just signed on to a large Asia-Pacific trade deal, and its economic growth has resumed. Chinese supply chains proved remarkably robust through the major global crisis of the pandemic.

Still and all, the fact remains: When it comes to the ideas and the people that matter, America and the West are not losing the lead.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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