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Unified effort will be crucial to recovery

By Peter Williamson | China Daily Global | Updated: 2020-08-27 08:50
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Commenting on the challenge of the coronavirus, German President Frank-Walter Steinmeier summed up the new reality perfectly: "No single entity covers the medical, economic and political elements required to produce a vaccine for all."

The same will be true of post-COVID-19 economic recovery: Cooperation between countries will be crucial if a vibrant economy that delivers widespread prosperity is to be rebuilt.

A number of geopolitical forces in the current environment threaten to thwart the kind of international cooperation that is sorely needed: protectionism, isolationism and a destructive idea that the future is a zero-sum game in which if there are to be winners, there need to be losers.

Some populist politicians are peddling easy solutions, forgetting that, as H.L. Mencken, an American professor born in 1880, put it, "For every complex problem, there is an answer that is clear, simple and wrong."

One of those misguided answers to post-COVID-19 recovery is the idea that the way forward lies in reshoring, localization and abandoning international cooperation. It is understandable that people jump to the conclusion that after COVID-19, it is time to think local, to think national, and depend less on others.

But this would be the wrong response. It would cripple manufacturing efficiency. The prices consumers pay would rise. Innovation and productivity growth, already under threat, would slow down.

The reality is that our globally interconnected economy has helped us in dealing with the epidemic. Vital raw materials, such as testing reagents, have moved across borders to where they were in short supply.

Personal protective equipment and even ventilators from across the globe helped to alleviate shortages in many of the worst-hit countries. Contrary to dire predictions, global supply chains, even for perishables such as food, held up pretty well.

Similarly, international cooperation and trade can also help economic recovery from the COVID-19 crisis. Here, cooperation between Europe and China can play an important role because, despite differences on some issues, there is also a great deal of complementarity between the needs and capabilities of the two global players.

One fruitful area of cooperation is in dealing with the challenges of climate change, biodiversity loss, pollution and the unsustainable use of resources. We have a once-in-a-generation opportunity not just to build back, but to build better. We need a recovery strategy that helps transition to a sustainable, resilient, climate-neutral future.

Both Europe and China have technologies, experience and manufacturing capacity in different areas needed to promote sustainability ranging from renewable energy and clean mobility solutions, through to new materials, recycling and waste recovery.

There are also opportunities to cooperate in developing institutional and financial innovations such as "green bonds" and carbon trading. China has a huge need to secure a sustainable development path that dramatically reduces its carbon emissions, while Europe needs to progress rapidly to reach its 2030 and 2050 climate goals.

The first step will be to ensure the robust implementation and further extension of the Paris Agreement on climate change. By working together, Europe and China can reshape their economies and generate green growth for the 21st century.

Another key area is digitalization. There is a real danger that a digitally divided world will undermine innovation and the speed with which new technologies help improve everyday life.

Much of the attention has been focused on digital consumer services, but perhaps even more important is the role of new digital and communications technologies in helping build the Internet of Things and deliver Manufacturing 4.0(smart manufacturing), advances that will enable the next jump in efficiency and productivity.

Both Europe and China have strong and complementary capabilities in embedding digital technology in machinery and infrastructure, making this a fruitful area in which to work together to build strong new ecosystems.

Making cooperation work in practice is not always easy. As Josep Borrell, the European Union's high representative for foreign affairs and security policy, has reminded us, China is simultaneously, in different areas, a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, and sometimes an economic competitor in the pursuit of technological leadership, and each has different models of governance.

But the opportunity for Europe and China to cooperate in areas critical to recovering from the pandemic, from environmental sustainability to digital connectivity, should not be missed.

The author is a professor of international management at the Cambridge Judge Business School, University of Cambridge. The views do not necessarily reflect those of China Daily.

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