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The World Ahead

Tech gaps and a pushy China pose challenges for the world

Pandemic has made clear need for urgent changes over next five years

China has gotten ahead of the game by containing the disease through technology and authoritarian rule.

TOKYO -- The scourge of the coronavirus has exposed glaring weaknesses in capitalism and democracy all over the world.

On the one hand, the pandemic has shone a limelight on changing job markets and widening societal gaps due to digitization. With wages for some mired in the doldrums, divisions in societies have never been starker and gaps between the haves and have-nots have been highlighted like never before.

But while countries in the West are still floundering over their own pandemic responses and facing challenges to their democracies, China has gotten ahead of the game by containing the disease through technology and authoritarian rule.

Given these trends, it is not hard to see that in five years' time, technological progress, particularly in climate change, and China's ambitions will determine the state of the world.

The travels of the 2020 Beaujolais Nouveau foretell the future perhaps. The sales of the red wine started around the world on Nov. 19. In Japan, where the first product of the season is celebrated, consumption grew explosively 30 years ago, when the country was gripped by euphoria in the midst of the bubble economy.

Compared with that time, the volume of imports has dropped to less than half, but Japan is still the biggest importer of Beaujolais Nouveau amid the coronavirus pandemic.

Japanese media outlets usually report the arrival of aircraft loaded with Beaujolais Nouveau from France every year. But this year's topic of conversation was slightly different.

The wine was shipped from France to Shanghai by train, an approximately 10,000 km journey, before being transported to Japan by ship. The labels on the bottles included a sticker pointing to its environmentally friendly credentials. Carbon dioxide emissions by rail transport are one-twentieth of those by air, while the cost of rail is one-third that of air transport.

China is already a big wine-consuming country, with the value of its bottled wine imports the third-largest in the world. The "eco-Nouveau" brought through the Chinese market and growing interest in ESG -- environmental, social and governance -- reduce the environmental burden. China has a hand even in what was previously simply a France-Japan business arrangement.

Furthermore, the coronavirus crisis is forcing a review of societies and economies, a situation labeled the Great Reset by the World Economic Forum. The acceleration of technological progress as businesses make the transition online will reduce the burden on the environment.

Among major developed countries, excluding the U.S., Japan has been bringing up the rear in terms of commitment to the Paris climate pact. But Prime Minister Yoshihide Suga declared in October that Japan will be carbon-neutral by 2050.

As Japan can no longer rely on nuclear power in the wake of the 2011 Great East Japan Earthquake, innovation will be crucial to turning renewable energy into stable power sources to achieve the 2050 target.

Makers of automobiles, the biggest consumer durable of 20th century civilization, also have no choice but to adapt.

The transition from gasoline-fueled vehicles to electric and hydrogen power, which will drastically reduce CO2 emissions, is fast approaching. The current leaders will not necessarily be winners in the future.

Changes in employment will also see rapid change.

Carl B. Frey of Oxford University once said that half of current jobs will disappear due to artificial intelligence.

He points out in his recent book, "The Technology Trap: Capital, Labor, and Power in the Age of Automation," that innovation has two aspects -- substitution of labor and complementation of labor, which creates new jobs.

History bears this out. Spinning and weaving machinery in the early stage of the Industrial Revolution drew rural home manufacturing into factories in urban areas, leading to the machine-breaking Luddite revolt.

On the other hand, the invention of the steam engine and the era of the Ford Model T brought mass production and mass employment, creating an affluent middle class typified by the Golden Fifties in the U.S.

What about the computer revolution of the second half of the 20th century? Massachusetts Institute of Technology in the U.S. compiled a report, "The Work of the Future," in November.

The report cites the importance of education and investment in human resources and warns that in the absence of a strategy, jobs will be lost and divisions in society will widen.

Its analysis clearly explains why so many poor whites support U.S. President Donald Trump. With the evaporation of manufacturing jobs in the U.S. Rust Belt, workers have been driven into low-paying jobs. On the other end of the spectrum, those who work for tech companies like the GAFAM group -- Google, Apple, Facebook, Amazon and Microsoft -- are highly paid. The gap between the technologically advanced in the cities and the rural poor is continuing to widen in the U.S.

The MIT report also explains Japan's long-term stagnation.

Ryosuke Harada, Nikkei senior executive editor (Photo by Nikkei)

Japan stuck to the employment and tax system suitable for mass production in its high-growth period. Even now, 30 years later, the country has yet to fully climb aboard the digital train, although concerns about employment are small compared with elsewhere. The coronavirus pandemic could accelerate change in Japan.

Against such an unstable global environment, China is growing as a superpower. Even after Joe Biden of the Democratic Party is sworn in as president in January, tensions between the U.S. and China will continue as the two countries struggle for dominance. Donald Trump's tenure as president has seen the U.S. recede from its position as leader of the free world. Whether it can regain that under Biden remains to be seen.

The military balance between the U.S. and China in the Taiwan Strait is also significantly different from the 1990s, when it was overwhelmingly favorable for the U.S.

As the U.S. struggles to rebuild its reputation and unite the country after the chaotic and disruptive rule of Trump, Japan and Europe must step in to protect the global order and the trade.

Japan is a central member of the Trans-Pacific Partnership trade agreement, of which the U.S. and China are not members, and the Regional Comprehensive Economic Partnership trade pact in East Asia, of which the U.S. is not a member. The fortress of free trade cannot be protected without the active involvement of Japan and Europe.

Five years have passed since Nikkei Inc. and the Financial Times of the U.K. formed a groundbreaking global media partnership. Over that period, they have deepened their alliance and provided a range of unique viewpoints to readers around the world though both digital and print editions. Their joint feature marking the fifth anniversary takes a look at "The World Ahead" while also reflecting on a period of global transformation.

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