Harvard's political economist, Dani Rodrick, recently posted some new thoughts regarding 2009. In his entry named "Looking Forward To 2009", Rodrick detailed four major determinative tickets that may make the world better or worse in the upcoming year:
1. Will the U.S. policy response be “bold” enough?
2. Will Europe get its act together?
3. Will China hold together?
4. Will there be enough global economic cooperation?
Other than the first item, the other big three have been major and on going issues being discussed across disciplines in the past couple of years. Yet, during this historical and transitional period, they become ever apparently crucial.
Much of the deliberations in the past months revolved around whether the U.S. is heading toward a Second Great Depression, which may drastically increase the existing international economic, political and social instability. Fortunately, the concern is negated by most economists going from most unlikely to nil. Social scientists are hoping that for as much as we understand how the world functions today, much more than our grandparents did during the Great Depression, we will save ourselves from repeating history. My hunches are followed.
First of all, the Obama administration will response boldly to the current crisis; although, such responses are facing uncertainty as to whether the action manages to gather enough supports from Americans and abroad as well as if the developed countries (most notably Western Europe and Asia) react consistent with the U.S. policy.
Secondly, the global financial crisis will not cure the division among European countries. In fact, it is appeared worsening, as the “European governments are observing one another with growing distrust,” especially when the European Union cannot continue to prove its necessary existence and leadership to its skeptical members.
As for global cooperation, I suspect that this transitional period will force an increase in global cooperation (can we afford not to?); although, there seemingly exists growing local and regional tensions. Why? I don't know, I just intuitively feel that it is the case. However, with the most recent world events, once may agree that such intuition has validity- Israel arm force attack on the Gaza strip, the India-Pakistani turmoil, reunion set back between North and South Korea. Over all, the Asia Pacific is probably the least unstable region at the moment, which may explain why it has been holding up relatively well during the global financial breakdown.
In regards to China , the Communist Party has now put aside its strategic sustainable development focus to concentrate on maintaining its growth rate. If China growth goes below 8% rate, it is arguable that social upheavals will arrive. Recently, a stimulus package has been announced to supplement job losses and exporting demand from the global market. Yet, the country has already seen a growing amount of social unrest mostly scatter around industrial zone where manufacturing jobs are being cut steadily. I have much hope that the Chinese government will be able to tame social uprising and minimize the impact of the current crisis. Here, the key solution is to create new jobs and stimulate domestic consumption to make up for the exporting decrease and to maintain growth rate. However, placing fiscal stimulus on performance of state owned enterprises (SOEs) as one of the party's major proposed strategies will create tremendous stress on sustainable development causing the issues such as degrading environment, resource shortage, social and regional polarization to explode further. China will face much more complicated setbacks once sustainable development topic comes around the next time, i.e. when the global crisis is resolved.
I am inclined to say that the current global financial meltdown certainly brings China closer to the inherent flaws of its “socialism with Chinese characteristic”, aka, a market system that is centrally planed and governed by one party. However, I don’t think the any political revision will come within the time span of the current financial crisis. Perhaps, not even within the next decade. The country has a huge amount of trade surplus, stable account balance and Asia Pacific has been holding onto the crisis relatively well in which, regional trade will not drastically reduced as it were the case for other regions. Speaking at the press conference during 07 National People’s Conference on March 07, Wen Jiabao asserts, “The Chinese economy still has some major problem, namely it is unstable, unbalanced, uncoordinated and unsustainable”. The communist party and its leaders know much about their internal weaknesses to curb them with external threats.
What the crisis will do is to reveal and to shepherd China closer to its systemic problems. Once the silver veil of a strong economic engine is taken away from the picture, the country’s social, political and sustainable shortcomings are all together unearthed and required to be addressed. I expect the dragon to once again make historians, economists and all of us startled on its next turn before the critical issue of a one party system stirs up the next civil unrest. There is much ahead awaiting this nation and us all.
At the moment, I am not only concern of the intensifying spread of the global crisis but also how we will come out of this after 2009. It is inevitable that this transitional period bears the golden key to our future fortune.