Often referred to as the world’s economic “canary in the coal mine”, South Korea has seen its economy tumble over the past year, impacted by external factors such as US interest rate hikes and signs of recession in key trade partners. The accumulation of domestic factors — currency crisis, tumbling stock market and rising inflation — is also hitting the South Korean economy hard. However, this industrial powerhouse has the domestic means to climb out of the doldrums.

Economics professor Zhang Rui identifies the main crises faced by global economies today, their various effects, and how they are interrelated. How will governments handle these challenges and work together to ease the impact of what seems to be a perfect storm of negative factors?

Economics professor Zhang Rui believes that Japan’s massive hoard of overseas assets, along with its ultra-loose monetary policy, has allowed its domestic economy to thrive even amid a weakening currency. In addition, the government’s fiscal policies have also made it easy for Japanese investors to venture overseas, adding to Japan’s financial prowess.

In 2022, as global supply chains normalise and inflation gradually decreases, there is room for cautious optimism in the global economic outlook, but much will depend on countries’ fiscal policies and the extent to which the US Federal Reserve adjusts its interest rates. Economics professor Zhang Rui predicts that if investments of economic giants such as the US, the EU, Japan and China continue to rise, the global economy will expand, but emerging countries will need to be wary of increasing their debt burdens.

Economics professor Zhang Rui notes that the US’s huge trade deficit cannot be looked upon in isolation from the dominance of the US dollar; when exporting countries hold more US dollars, they are more able to purchase US debt and support the US in issuing national debt and get US dollars to flow back to the US. This suggests that looking beyond the surface of its large trade deficit, the US's fundamentals remain strong and with the advantages it has in the capital account and services trade, there is little chance that its leading position in global trade can be usurped.

Zhang Rui analyses that there are more pros than cons to China’s entry to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) whether one looks at it from China’s individual economy, regional industrial chains or global income gains. However, sizeable obstacles stand in the way of its entry, not least US-led political roadblocks, even if the latter is not currently a member of the reconfigured CPTPP. China’s internal system and regulations will also have to change to meet the rigours of the high-standard CPTPP. Can China play the long game and will the world truly move closer towards Asia-Pacific economic integration?

Professor Zhang Rui takes stock of the government’s high-priority rural revitalisation project in villages, warning of cases of resource misallocation and misplaced priorities. He says while much manpower and resources have been mobilised to build new infrastructure, Chinese villages continue to be afflicted by poor sanitary facilities, lousy roads and a lack of clean water. The problem cannot be solved by simply building more of the same. 

Chinese companies listed on US stock exchanges such as Luckin Coffee and iQiyi have been embroiled in accounting scandals of late, causing investors to eye Chinese concept stocks with doubt. What can Chinese companies with hopes of gaining access to foreign investment do to improve their bad reputations by association?

The investment is low, the focus is flawed, the mindset needs changing... For Chinese economics professor Zhang Rui, it is evident that China's public healthcare system is not robust enough. He says that long-term public health capacity building, particularly in disease prevention and emergency preparedness, should be at the top of the Chinese agenda.