According to Standard Life Aberdeen’s chairman, Douglas Flint, there is still the continuous need for China’s role in the world economy despite the rising geopolitical tensions.
“I think China is hugely important to the global economy and global trade… Seven months ago, every single company in the world virtually saw its growth opportunities in Asia, led by China. I don’t think that’s changed.”
Flint also said a robust middle class and the will to consume in various ways will continue to power the economy.
With businesses operating under the aspect of a tense geopolitical relationship, it is increasingly difficult to manage such businesses. Flint acknowledged the geopolitical tensions that can give new challenges for companies and emphasized the difference between political rhetoric and actual actions on the ground.
“Business operates under the umbrella of a geopolitical relationship, and when that relationship is tense, it is more difficult for a business to operate. Having said that, at the business level, our relationships with our counterparts and clients in China continues to be very strong. It does not have impacts at that level, but obviously, there’s an overriding political relationship that makes things difficult.”
According to Flint, many economies are now reliant on government support due to the pandemic crisis. Because of such dependence, it might be increasingly harder to let go of fiscal aid.
“I think the challenge for governments across the world is how to wean the economy off governmental support. That then has sort of a multiplier effect on what happens, in terms of people’s willingness to go out and spend, and do the things that would bring the economy back… How to get the economy functioning independently again… is going to be very important, and how to use the firepower that the central banks and governments may have left, to target that very specifically and efficiently to the sectors that need it.”
It will be a “significant” challenge because confidence will fall as people start losing their jobs. Flint also said that the need for resilience in many sectors is an essential lesson from the pandemic crisis. The banking system reinforced the post-global financial crisis, aided it to withstand an “extraordinary stress test” this 2020.