Publisher’s Note

Opportunity & Risk
in a “Connected” WorldBy Kazumasa Kusaka
Last December, JEF hosted the 6th CJK (China, Japan, andSouth Korea) Cooperation Dialogue in Tokyo whose objectives
are to mutually learn from success and failures in addressing theso-called common agenda. In addition to the regular agenda
focusing on how to cope with collateral domestic challenges ofFTAs or how to deal effectively with environmental issues, we
added the urgent common challenge of “declining and aging
populations – their socio-economic impacts and how to cope”.
Given that we expect Northeast Asia to face demographic
constraints, the Trans-Pacific Partnership (TPP) encompassing
half a billion people will certainly play a critical role in changing
the prevailing deflationary mindset. China and South Korea
understand the strategic importance of the TPP and seem to havea strong interest in joining it.
The ASEAN economic community’s keyword is “connectivity”– being connected through Asia, which along with evolving
globalization and value supply-chains across borders help create afreer flow of goods, people and money. Institutional arrangements
such as the TPP and the Regional Comprehensive Economic
Partnership which cover wide areas are vehicles to secure a
predictable and friendly business/investment environment,
intellectual property protection and transparency in domestic
policy making.
While this progressive integration of economies expands
frontiers beyond national boundaries, the developing US-China
tech cold war could trap private businesses whose cyber, financial
and security-related technologies are major weapons in this newrivalry. If private business is forced to choose between China or
the United States, the level of investment needed to realize global
economic growth would not materialize.
This was basically the picture at the end of 2019. Then thecoronavirus outbreak in Wuhan occurred in December, andbelatedly in January the WHO declared a global emergency. By
the time the Chinese New Year holidays ended, the coronavirus
looked increasingly like a pandemic, making its way across theglobe. The number of infection cases has already topped that ofglobal SARS cases in 2003. If the period of eight months between
the outbreak of SARS and its containment can be taken as abenchmark, the timeline for the new coronavirus is to aim forcontainment in July this year. However, two decades have passed
since SARS. China has become deeply integrated to global
supply chains of goods, but also the number of Chinese outboundtravelers now exceeds 150 million annually. Many countries
chartered flights to extract their nationals from China and haveadvised their citizens not to travel there. The Chinese government
imposed a travel ban, but just like the tech cold war, this cannot
isolate China from the rest of the world. It is impossible to reduce
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infections through human contact in today’s globalized world.
As an economic consequence of pandemics, SARS caused a
2% decline in the global GDP growth rate over a quarter of ayear. This time it translates into a potential drop from 6% to 4%.
However, it should be noted that in 2003 Chinese GDP accounted
for 4% of global GDP, but this time it is 17% and its contribution
to world growth is 30%. It is a center of value chains and thebiggest consumer market in the world.
In the SARS outbreak, Japan worked together with neighboring
East Asian countries to strengthen quarantine measures in a
network of international collaboration. But one economy withmore than 20 million people and one of the closest to mainland
China was excluded – Taiwan. International efforts were made toinclude Taiwan as a WHO observer in order not to create avacuum zone, but China’s policy of seeing Taiwan excluded from
United Nations organizations prevailed.
Afterward, from 2009 to 2016, Taiwan was allowed toparticipate with observer status until China decided to kickTaiwan out when Tsai Ing-wen was elected president. So now
only Taiwan was not invited to an emergency WHO meeting
when the coronavirus infection was confirmed. When publichealth and the lives of many people are at risk, can the policy ofexcluding an important player from the network be supported by
the rest of the world and non-state actors? Though I believe that
all the important players are to be invited to an emergency WHO
meeting, Taiwan is now being encouraged not to take up observer
status at the WHO meeting as a stepping stone for application toother UN-affiliated organizations.
Increasingly in today’s integrated and connected world, disastermanagement and human security require the skills and dedicationof regional governments, regional institutions and non-profitorganizations. Therefore it is essential to pursue solutions tocommon crises by forming ad hoc multi-layered and functionalalliances and partnerships.
An old Chinese maxim says “Turn a misfortune into ablessing.” The empowerment of regional cooperation in disastermanagement could lead to the development of more permanentinstitutions. I am optimistic that cooperation in coping with thiscoronavirus pandemic, especially among China, Japan and South
Korea, will open the way to regional cooperation on othercommon issues, such as how to cope with declining and aging
populations.
Kazumasa Kusaka is chairman and CEO of the Japan Economic Foundation(JEF), as well as being a professor of public policy at the University of Tokyo. He
previously served as special advisor to the prime minister on global warming
after having been vice minister for international affairs at the Ministry of
Economy, Trade and Industry.
Japan SPOTLIGHT • March / April 20201