In fact, since the start of the U.S.-China trade war in 2019, the world has started 3D, i.e. Deglobalization, Decentralization, and Decoupling; however, the process is very slow, although economists have begun to analyze the 3D, it has not attracted the attention of mainstream media. However, the global outbreak of the century pandemic COVID-19 in 2020 does not only accelerate the 3D process, but it also pushes small and medium-sized enterprises and almost all people to join the 3D, or to accelerate the localization work!
In the past 50 years, especially since China’s entry into the WTO in 2000, the speed of globalization has been unprecedented, and trade has been highly concentrated in several economies, and an unprecedented world monopoly in trading has emerged. Coupling is highly dependent on mutual capital flow, human flow, information and technology flow, as well as goods and services, flow. Figure 1 shows the globalization index for the past 50 years, it grows from about 40 in 1970 to nearly 60 in 2019, an increase of about 50%.
Singapore and Hong Kong are highly internationalized economies. During this period, Singapore’s globalization index rose higher than the global average, and it also rose faster than Hong Kong. Therefore, it achieved higher economic growth from globalization. Hong Kong has always participated in global matters in the capacity of an international city (Stand News, 2018), but in recent years, it has seen a setback and regionalized, which can be reflected in the recent drop in the globalization index.
Before the pandemic, globalization brought a long period of economic growth to the world. Samimi and Jenatabadi (2014), for example, found that globalization brings economic growth to middle- and high-income economies. But at the same time, globalization has also brought new risks and injustices to the world, including the risk of over-concentration, which has been exposed in the current efforts in fighting against the pandemic.
Figure 3 is a Global Trade Map before the pandemic. Figure 4 is the top 18 economies that account for the highest shares of the world’s exports. The top four are China, the United States, Germany and Japan. Just the sum of the top 4 has accounted for 1/3 of the global exports. Their export values were US$ 2,498.6 billion, 1,645.2 billion, 1,486.5 billion and 705.8 billion respectively. It shows the high concentration of world trade on a few economies. HOng Kong and Singapore ranked the 10th and 16th, respectively, with exports of US$ 535.7 billion and 390.4 billion in 2019. Singapore and Hong Kong also rank among the world ’s 2nd and the 3rd highest export-to-GDP ratio economies in 2017 (188%, 173%, see Wikipedia Trade-to-GDP Ratio List). They reflect a high dependence on the globalized economy, and imply a more difficult economic transformation is required in case of a crackdown in globalization.
The pandemic has caused many countries to restrict the inflow of visitors. The tourist industry has been frozen, the logistics and information flows have begun to change, many countries start restricting the export of certain types of products. Although these measures may only be short-term, the over-reliance on the globalization of the production chain exposed by the pandemic poses a huge risk to the pandemic-prevention tasks, such as the supply of medical products and food.
Therefore, the United States and Japan have provided national finance to assist their manufacturers to move certain production bases back to their home countries, or elsewhere; or to ensure more than one supply base in the procurement policies, etc. It kick-starts the first wave of decentralization and deglobalization trend.
With the allegations of concealment of the pandemic, it seems that the world is moving towards a new Cold War. If the world is finally divided into two opposing camps, the decoupling process will be inevitable. As China is in the epicenter of this dispute, if the Cold War comes true, then the past 30-year trends in globalization and coupling relationships may be reversed. Even if globalization can be continued in their respective semi-globes of the two camps, it will inevitably reshuffle the global economy.
Singapore and Hong Kong may also bear the brunt. The current roles in fund-raising may urgently need to be transformed. How will the governments of the two cities choose to manage the changes is critical to the future of the two cities. Hong Kong, in particular, stands in the cross-road, because it was originally positioned as a leading role in bringing the region to connect with the world in the Outline Plan of the Greater Bay Area (Yiu, 2019). It is doubtful whether it can be continued.
Samimi, P. and Jenatabadi, H.S. (2014) Globalization and Economic Growth: Empirical Evidence on the Role of Complementarities, April 10. https://doi.org/10.1371/journal.pone.0087824
Stand News 立場新聞 (2018) 選舉主任昨晚提4問題 包括是否認同「時代力量」政治主張 姚松炎：對問題感奇怪 希望對方解釋法律理據，立場新聞 1月27日。(Chinese) https://www.thestandnews.com/politics/%E9%81%B8%E8%88%89%E4%B8%BB%E4%BB%BB%E6%98%A8%E6%99%9A%E6%8F%904%E5%95%8F%E9%A1%8C-%E5%8C%85%E6%8B%AC%E6%98%AF%E5%90%A6%E8%AA%8D%E5%90%8C-%E6%99%82%E4%BB%A3%E5%8A%9B%E9%87%8F-%E6%94%BF%E6%B2%BB%E4%B8%BB%E5%BC%B5-%E5%A7%9A%E6%9D%BE%E7%82%8E-%E5%B0%8D%E5%95%8F%E9%A1%8C%E6%84%9F%E5%A5%87%E6%80%AA-%E5%B8%8C%E6%9C%9B%E5%B0%8D%E6%96%B9%E8%A7%A3%E9%87%8B%E6%B3%95%E5%BE%8B%E7%90%86%E6%93%9A/
Yiu, C.Y. 姚松炎 (2019) 大灣區發展規劃綱要中的香港定位，獨媒，2月21日。https://www.inmediahk.net/node/1062476 (Chinese)