A worker wearing a protective suit stands in front of an electronic display board in the lobby of the Shanghai Stock Exchange. Photo / AP
A worker wearing a protective suit stands in front of an electronic display board in the lobby of the Shanghai Stock Exchange. Photo / AP
COMMENT:
New Zealand has a huge challenge ahead of it as it prepares to host Apec in November 2021 at a time when 21 regional economies will be still recovering from the impact of coronavirus-fuelled economic contagion.
They will be looking to this country to provide leadership as the 21Apec member countries — which range from China and the US, through to other heavyweights like Japan, Russia, South Korea, Mexico, Canada and Australia — will be weighing the true value but also some unfortunate risks through the level of economic interdependency we now enjoy in our fast-growing region.
This will need to go far further than delivering on the mantra of "inclusive growth" which remains central if Apec leaders are to ensure their people will give future support to trade liberalisation and not put up walls against economic integration.
Events over the past two weeks — and more to come — where China has both "self-isolated" its country as it fights the coronavirus (and to a degree has also been isolated) throw into stark relief questions over global resilience and the degree of redundancy that needs to be built into global supply chains to cover what happens when or if China suddenly stops producing the gear US corporates need for their products.
These questions ought to be to the fore when NZ hosts Apec in 2021.
Since the Global Financial Crisis — where a US-style form of crony capitalism brought credit markets to a standstill (and High Street bailed out Wall Street) — there has been an increasing economic dependence on China. China's internal stimulus focus kept its economy humming — and by inference ours and others. And there have been many positives from that.
To me it is as if we've been living through the opening salvos of the movie Contagion in real life. But the reality is economic cardiac arrest.
It's not quite the gripping movie of the same name (Who hasn't had their fill of similar blockblusters?). Or Netflix's Pandemic series — which I flicked through in Houston airport a fortnight ago while waiting to catch a plane to Washington DC.
"Contagion 2020" is much more complex and infinitely more dangerous.
It has at once given rise to a potential global pandemic. But it has also reignited economic contagion of the kind we have not seen since the East Asian currency crisis which punctured the success of the "Asian tiger" economies and with it the fortunes of other Asia-Pacific economies as the ramifications spread. It is at once frightening and dire.
Back in 1997 — as now — New Zealand was preparing to host the Asia-Pacific Economic Cooperation (Apec) Leaders meeting which took place in 1990 just prior to NZ's general election. It was a proud moment for a small country which rose to its task admirably.
Not only were we competent hosts. But — due to skilful diplomacy led by former National Prime Minister Dame Jenny Shipley — the leaders of the East Asia majors came. Not just their political leaders but also business leaders who were still stitching their companies' fortunes together after a punishing time. Tensions between the US and what it name-called Asia's "crony capitalists" were lessened.
As Paul Kelly wrote in the Australian this week, "Large parts of the world's major growth economy are being shut down.
"Uncertainty and panic are on the march. Three issues are fused in a dangerous domino effect: the spread of the virus, the China economic closures to halt the escalation of infection, and the transmission impact across global markets in finance, investment, tourism and education."
New Zealand has this in common with Australia — but we also have a major impact because of our degree of market dependence for food exports.
New Zealand and China have together set — and achieved — some heroic goals for bilateral trade and investment.
But the process of economic integration within the Asia-Pacific, in particular, over the past two decades means China's problems have become ours.
The worst scenario would be for China to turn its "self isolating" fortress into a self-defeating economic one.
This is a time for cool heads and warmer hearts. And some smart strategising by our political leaders and diplomats as we endeavour to do our part in a common challenge.
