The Coronavirus pandemic represents a crisis that is simultaneously biological, economic, and political. The struggle to contain a deadly virus has caused a gigantic economic collapse. Currently, 30 million unemployment claims have been made in the US since early March. This is further destabilising the global political order.
This is common in a global crisis. The first Great Depression—1873-96—accelerated the development of rival imperialisms whose rivalries sparked the First World war. The second Great Depression—1929-39—intensified economic competition among the Great Powers, creating the conditions for the Second World War.
It looks pretty clear now that the financial crash of 2007-8 ushered in the third Great Depression of industrial capitalism. The economist Nouriel Roubini—one of the few to have predicted the global financial crisis of 2007-9—is warning that the 2020s will be dominated by a “Greater Depression”.
One of the ten factors responsible for this trend is what Roubini calls “the geostrategic standoff between the US and China”. And on cue, we have Donald Trump sounding off about China’s “horrible mistake” and claiming that the Covid-19 virus was manufactured in a laboratory in Wuhan.
Trump has been contradicted by his director of national intelligence, Richard Grenfell, who says, “The intelligence community also concurs with the wide scientific consensus that the Covid-19 virus was not man-made or genetically modified.” This hasn’t stopped Trump or his secretary of state Mike Pompeo, who goes on about the “Wuhan virus” as if biological organisms arrive with national passports in their back pockets.
Trump and Pompeo are echoed by the Tory right in Britain. Charles Moore, Telegraph columnist and Margaret Thatcher’s official biographer, denounces “a system of governmental, scientific and intellectual control whose secretiveness and mendacity have created the most sudden and widespread health crisis in history”.
Now Trump is playing electoral politics. He was counting on a soaring stock market and low unemployment to get himself re-elected in November. Instead, he faces an economic collapse unprecedented in its speed and severity. He’s trying to fill the vacuum with more racism and China?bashing. And hapless Democratic candidate Joe Biden is playing the same game about China.
But the situation is much more serious than these party games. Trump’s policy of slapping tariffs on imports from China was unpopular with the big US corporations using supply chains that start in China. But his aim of blocking president Xi Jinping’s campaign of technologically upgrading Chinese industries has much wider support—and not just in the US. The normally cowardly European Union now describes China as a “strategic competitor” in some areas.
Moreover, China faces the same multidimensional crisis. Even according to the dodgy official figures, the economy shrank by a massive 6.8 percent in the first quarter of 2020.
The initial mishandling of the pandemic threatened the legitimacy of the regime, which then seized control of the situation in a highly authoritarian, but apparently effective way. Xi can’t be seen to take Trump’s attacks lying down.
Moreover, the cliché that we won’t be returning to the old pre-Covid “normal” is certainly true economically. Companies are waking up to how vulnerable dependence on just-in-time methods of production and China-centred supply chains makes them. Even before the pandemic, the Trump administration was pushing US firms to bring their supply chains back to the US.
The present crisis will reinforce this tendency. Japanese prime minister Shinzo Abe has called on his country’s companies to reduce their dependence on Chinese sites and set aside £2.6 billion to help them.
Although talk about “deglobalisation” is widespread, transnational production networks will survive because they are profitable. Trump’s trade war was already encouraging companies to shift assembly-line production from China to Vietnam, where labour costs are lower. And China’s manufacturing capacities are already too advanced to dispense with. But the global economy is fragmenting, and this will lead to more conflicts between competing imperialist powers.