While the economy looks gloomy at home, I’ve been cheered up by the broader trend reported last week by the World Bank.
The global economy, it said, is expanding this year at the fastest post-recession pace in eight decades. The bank’s forecast of 5.6% world gross domestic product growth in 2021 reflects the strong rebound in major economies including the US and China, although many emerging economies are still struggling with Covid and its aftermath.
The US economy is projected to expand by 6.8% after a contraction of 3.5% in 2020, buoyed by large-scale fiscal support and the easing of pandemic restrictions, the World Bank said last Thursday. In China, pent-up demand will boost consumption along with recovering public investments to push economic growth to 8.5% this year. In Southeast Asia, Vietnam stands out with targeted growth of 6.6%, surpassing even its pre-pandemic level.
Also on Thursday, the world welcomed a positive sign in US-China relations as commerce ministers of the world’s two largest economies “agreed to promote the healthy development of pragmatic cooperation in trade and investment”, as a Chinese government statement put it.
In their first call since President Joe Biden took office, US Commerce Secretary Gina Raimondo and her Chinese counterpart Wang Wentao “exchanged views frankly and pragmatically”, vowing to push forward trade and investment links.
The call was the third between senior officials in Beijing and Washington in recent weeks. Beijing has consistently emphasised a much more positive view of the relationship with Washington since Mr Biden took office. And while there are still issues, “the essence of trade and economic relations is mutually beneficial and win-win”, Commerce Ministry spokesman Gao Feng said. “Problems can be resolved through discussions conducted on the basis of mutual respect and equality.”
The US, meanwhile, last Wednesday withdrew a series of Trump-era executive orders that sought to ban new downloads of the Chinese-owned apps TikTok and WeChat on security grounds. Federal judges had earlier blocked the measures, saying the former administration hadn’t shown how the apps posed a national security threat.
Even so, the executive order from Mr Biden leaves the door open to take action against any apps that do present a security risk.
It should also be noted that Mr Biden believes China still poses challenges to his country on many levels. The White House on Tuesday announced plans for a “strike force” to fight unfair Chinese trade practices and to halt the erosion of American critical supply chains for products such as semiconductors and medicines.
The measures were contained in a review released on the same day the US Senate passed a sweeping US$250-billion bill to boost US competitiveness in the face of mounting geopolitical tension with China.
The task force will look for specific violations that have contributed to a “hollowing out” of supply chains and recommend actions such as trade remedies.
National Security Adviser Jake Sullivan also noted that US trade policy toward China should include examining how existing trade agreements and future measures can help make domestic supply chains more resilient.
Mr Biden ordered the review in February, asking key federal agencies to look into how much America depends on imports for semiconductors, pharmaceuticals, automobile batteries and rare earth elements crucial to technology development and defence.
Across all four sectors, the report said, “China stands out for its aggressive use of measures — many of which are well outside globally accepted fair trading practices”.
Washington also issued a directive aimed at reorienting America’s military to better compete with Beijing. The Pentagon said last Wednesday it was ready to contribute to “whole-of-government efforts to address the challenge from China”.
“The efforts I am directing today will improve the Department’s ability to revitalise our network of allies and partners, bolster deterrence and accelerate the development of new operational concepts, emerging capabilities, future force posture and a modernised civilian and military workforce,” said Secretary of Defense Lloyd Austin.
Clearly, many issues remain between the US and China, and unhealthy and imbalanced relations need to be addressed. Yet, recent developments are positive in the sense that both are stepping up economic and trade communication amid improving global economic conditions.
Hopefully, this is not just political gesturing and the relationship can continue to develop in a way that could benefit the world economy overall.