Macroscope | De-risking from China? That way lies economic disaster
- Amid shifts in geopolitics, supply chains and global trade, companies have been scared into rethinking how they operate and invest
- Government officials who are reshaping the world economy without a sound understanding of the consequences could well break the system
Reshaping the world economy is a sound idea if it is done in pursuit of a sound global polity, improved efficiency, reduced inequality and a gain in the general good. But financial markets, along with production and trade systems, are about to find out what a bad design looks like.
A bad design is one drawn with political and strategic advantage in mind and which is willing to sacrifice economic well-being to that end. This is about where we are now as production systems prepare to adapt to ideological divisions and consequent logistical demands.
The global investment landscape will change, in line with shifting production and trade patterns, and money will need to be redirected accordingly. But to where? The answer is far from clear at this point.
The supposed aim was to achieve “security” but it was really all about protectionism. What is clear now that these measures have scared the corporate world – multinationals especially – into a state of mind where they need to replan the architecture of business and industrial investment so they cannot be caught out by future shifts in political ideology.