Geopolitical Consequences of the Corona Disaster

The third wave of the new corona is blowing up. Vaccine development is progressing with expectations for vaccine distribution and termination of vaccination by the end-2021 rising in Japan. Yet, it will still take time for the economy to recover.

China has seen a remarkable recovery from the corona wreck. By the end-2021, China will exceed the pre-Corona economic activity level by about 10%. On the other hand, the United States will remain at the same level as before Corona at that time. Considering that the potential growth rate of the United States is about half of that of China, the economic scales of both countries will reverse at the end of the 2020s. The Japan Center for Economic Research’s long-term forecast released at the end of 2019 predicted that the US-China reversal would take place in the early 2030s, but that timing will be front-loaded.

Regional Comprehensive Economic Partnership (RCEP) signed in November, resulted in strengthening China’s “One Belt, One Road Initiative” strategy with the dropout of India. President Xi Jinping referred to the accession to the Trans-Pacific Strategic Economic Partnership Agreement (TPP) and flaunted the growing influence in the Pacific Ocean region. At the “Japan-China-ROK Wise Men’s Conference”, a China’s WTO accession negotiator has consistently insisted on China’s accession to the TPP, but it seems difficult for China to complete the transition to a market economy under the current political regime. China’s TPP accession statement reminded me of the fact that the PLA commander in a military dialogue between the United States and China drew a line near the Hawaiian Islands on the world map and proposed to divide the Pacific Ocean into two (“the 3rd island line”).

Japan needs to not only encourage the United States to join the TPP, but also accelerate the supply chain restructuring agreed at the Japan-Australia-India Economic Ministers’ Meeting in September. Aiming to improve the efficiency of international digital trade, it is also required to strengthen the framework that enables data interoperability in cooperation with Singapore’s digital economy agreements with Australia and Chile.

China’s catch-up in science and technology is indeed remarkable. The Chinese government has invested about 10 trillion yuan in the development of advanced technologies such as artificial intelligence (AI), 5G (5th generation mobile communication system), and quantum computers; it aims to move out from the trap of middle-income countries by establishing self-sustained technology, thus entering a middle-class developed country.

China is thinning out to the leading Google with quantum computers using the optical technology. The ecosystem development of AI-related technology venture companies is also remarkable. In the field of perception AI, it overtook the United States and spurred the development of autonomous AI in the process of the deepening of digital transformation enhanced by the corona disaster.

The problem is that autonomous AI technology will be applied not only to self-driving cars but also to weapons. War changes its form with technology. Modern warfare is the “hybrid-war”, which combines military means with not only conventional weapons but also non-military means such as cyber-attacks, economic sanctions, and disinformation. Furthermore, it is being developed into “hyper-war” by autonomous weapons.

The risk here is that the war will be automated because the speed of AI’s data collection and judgment will exceed the capabilities of humans. The risk of accidental war will increase if China recognizes that it has surpassed the United States in terms of economic and military power.

(The english translation of the article was published in the Nikkei morning edition 2020/12/25.)