China is seizing up over coronavirus so we must seize the day
IN Chinese eyes, every crisis brings both danger and opportunity.
For China, the danger is clear. The Covid-19 crisis was born in Wuhan and raises red-flag warnings over the country’s future prosperity and stability.
Coronavirus is no joke but I am glad to say the opportunity is all ours. It gives us cover to do things we might never have otherwise dared.
New Chancellor Rishi Sunak will use his first Budget on Wednesday to seize that chance with both hands.
“We go into this in a very strong position,” he told the BBC’s Andrew Marr. “We need to make sure we respond at scale to whatever scenario comes our way.”
This will be no “safety first” Budget. The coronavirus health emergency provides an option to be bold.
It unlocks the Treasury stranglehold on spending, borrowing, infrastructure and, crucially, tax reform.
Cash will be unleashed first into the NHS, with food and medical supplies a priority for the sick and elderly, plus emergency welfare for those whose earnings suddenly dry up.
'SPREAD OPPORTUNITY'
But there will also be money for big projects — schools, roads and railways and, with another deluge of rain on its way, a welcome doubling of spending on flood defences to £5.2BILLION.
There will be both tax cuts and rises, but plans for a hike in fuel duty will be ditched, I gather.
“Our public finances are in good shape,” the Chancellor insists. “I will lay the foundations for future growth and prosperity, level up the country and spread opportunity.”
In other words, what is good for Britain’s physical health is also good for economic well-being.
The way the world does business changed abruptly when Beijing celebrated Chinese New Year by shutting down most of the country.
Today the “workshop of the world” is silent — with alarming implications for a regime whose authority depends on feeding nearly a fifth of the planet’s population.
Global giants including Volkswagen and Mercedes in Germany, and Apple in the USA, whose vital supply lines have been severed, are weighing their options.
Thanks to Donald Trump’s trade wars, they were already reassessing their reliance on cheap but now unreliable overseas labour. The revival of “Rust Belt” cities and recruitment of local workers back home will accelerate.
Others with no interest in capitalism are also finding opportunities.
'END OF GLOBALISATION'
We may look back on those “before and after” satellite images of noxious nitrogen- dioxide clouds over China, and the clear blue skies today, as a turning point.
Extinction Rebellion protesters might start digging up turf outside the Chinese Embassy, instead of vandalising Cambridge University.
We will also notice a drop in air pollution after the collapse of shipping and plane travel.
Ships carry 90 per cent of world trade but burn the heaviest oil, from the dirtiest dregs of a barrel of crude.
Greta Thunberg and her “climate emergency” apostles will pounce on this evidence that we can live on fresh air.
More seriously, we may be witnessing the end of globalisation — the spread of interlocking world trade which has raised living standards and spread prosperity for millions.
It leaves Britain with the opportunity to pick up some of the slack.
Ministers are already encouraging firms to raise productivity by swapping cheap migrant labour for expensive but efficient robot technology.
The crisis will also have an impact on negotiations with the European Union.
Britain is well placed, as a nimble sovereign nation with its own floating currency, to take advantage of fast-moving developments.
We have low inflation, low unemployment, a near-record number in work and strong public finances.
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For the European Union, with its straitjacket single currency and paralysing regulation, the coronavirus crisis has no upside.
Hundreds of firms and zombie banks are near collapse — including German giant Deutsche Bank. A downturn will hit firms and raise unemployment, already double the UK rate.
EU negotiator Michel Barnier will soon have to choose — between the danger of a No Deal Brexit in December and the opportunity of a Canada-style arrangement which benefits all sides.
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