![]() The COVID-19 outbreak has exposed the need for Beijing’s decision-makers to focus on domestic development and China will have to reconcile two competing priorities: avoiding the middle-income trap, while at the same time posturing as a superpower abroad. While Xi’s grip on power remains unchallenged, there is a perception that he may have jumped the gun with an overly ambitious and assertive foreign policy agenda, including the BRI. The political imperative of ensuring social stability will require much-needed resources, at the expense of what many Chinese citizens view as a waste of money overseas. Therefore, Beijing’s utmost priority will be preserving low levels of unemployment, while it will probably postpone the vaunted goal of doubling the country’s 2010 GDP by the end of this year. Some 5 million jobs in urban China have reportedly been lost to date because of the lockdown and that number may go up to 9 million by the end of 2020. Last February, China’s official urban unemployment jumped to an unprecedented 6.2 percent, though the real rate may be even higher. At home, Beijing is faced with limited room to stimulate the country’s highly leveraged economy, with persistently bad news coming in. With the United States and Europe reeling from the pandemic, Chinese exports will take a big hit. Three months after disaster struck in Wuhan, the country appears to be coming round, but a V-shaped rebound is not a given and analysts continue to slash their forecasts. The Chinese Communist Party (CCP) leadership is facing a daunting task revitalizing an economy that is up against serious structural challenges. So far, President Xi Jinping’s signature project has been powered primarily by China, whose growth rates were decreasing even before the outbreak. In the bad scenario, a snag that BRI is likely to hit is a funding shortfall. Get the NewsletterĮnjoying this article? Click here to subscribe for full access. Get briefed on the story of the week, and developing stories to watch across the Asia-Pacific. In this case, several key questions about the future of BRI stand out. The first scenario seems to be a pie in the sky and the third one is simply impossible to grasp in its entirety, which is why the only somewhat credible conjectures for the time being could be made in relation to the bad scenario. It’ll take some time before the impact of the COVID-19 calamity can be gauged with a sufficient degree of precision. Interestingly, the pandemic has exposed the risks and weaknesses of global interconnectedness, which cannot but affect China’s BRI. The oft-repeated assertion that we’ll be living in a different world once the pandemic has been contained certainly applies to China’s emblematic Belt and Road Initiative (BRI), too. The worst-case scenario will be really ugly: it includes a devastating economic collapse of potentially historic proportions, leading to social and political turmoil in a number of countries, a sea change as to configuration of the world order, and curtailed connectivity. A much more likely scenario, which qualifies as bad, foresees severe economic damage necessitating a massive demand for reconstruction, even if it cannot be met through available resources and by the shaky global institutional architecture. The best case envisages a moderate economic disturbance, which can hopefully be dealt with by the existing world order and through the mobilization of existing financial tools. While it is too early for authoritative forecasts, three scenarios are possible at this stage. ![]() Everything will depend on the severity of the coming socioeconomic shock and the resilience of the world order. The world is poised to change dramatically as a result of the novel coronavirus and many of the assumptions that seem plausible today may have to be revisited a few months down the road. The COVID-19 pandemic is increasingly looking like a watershed, one of those moments in history that mark the end of an era and usher in a new one.
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