The View | World economic divide blurs as US, Europe step up state aid and China optimises market efficiency

With all the talk on decoupling and reshoring, is the globalised world fragmenting? Despite the rhetoric, we may be witnessing a convergence of economic policies in responding to Covid-19. While nations may be distancing from one another, their policy practices may be getting closer on the ideological spectrum.

Initially, the world watched the Wuhan lockdown with a mixture of revulsion and amazement. But after their cavalier and tardy responses, missing the window in which they could have adopted the South Korean approach of testing and tracing, Italy and Spain had no choice but to adopt the “Chinese model” of lockdown.

In economic responses to mitigate the pain on livelihoods, some Western economies have been decidedly “socialistic”. Through wage subsidies, payroll has been “nationalised” in some European countries to save jobs. Even the United States has resorted to universal basic income, and with Trump’s signature on the cheques.

In contrast, China has offered modest support beyond its limited unemployment safety net. China’s many migrant workers who do not have work contracts or contribute to the unemployment insurance scheme are essentially self-insured. Beyond drawing on their savings, those who still have land in their home villages can live on the land. Such is the reality of a developing country at a self-professed early stage of socialism.