The Virus, the Dollar, and the Global Order: The COVID-19 Crisis in Comparative Perspective

Abstract

In 2003, the SARS pandemic led to a framework of global public health governance which was characterized by cooperation between the USA and China, and China's increasing influence in the World Health Organization. In the wake of the global financial crisis of 2008, major economies of the world, above all the USA, established the standard of aggressive fiscal and monetary expansion to mitigate any major crisis of the global economy. The effectiveness of such expansions in bringing global economic recovery without fuelling out-of-control inflation hinged on the deepening of US-China economic integration. These global health and economic governance frameworks, which emerged from two previous crises, conditioned the global response to the COVID-19 pandemic in 2020. Ironically, the COVID-19 crisis and the global responses to it undermined the legitimacy of the global public health governing institutions and further aggravated US-China rivalry, which had started before the pandemic. On the other hand, the crisis sustained economic integration between the two countries, despite the US-China trade war that began on the eve of the pandemic. This contradictory geopolitical and geo-economic fallout of the COVID-19 crisis will bring more uncertainty and instability to the global order in the wake of the pandemic.

Figure 1

Economic Stimulus Response of Major Economies as % of GDP (2008 Financial Crisis and COVID‐19 Crisis) Source: McKinsey & Co. (2020)

Figure 2

US Trade Balance in Goods with China (in billion US$) Source: US Census Bureau (www.census.gov/foreign‐trade/balance/c5700.html)