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Macroscope | Amid US-China contest, old world economic order has fallen apart
- The debate on deglobalisation has become much more complex than when Donald Trump started putting up tariff barriers
- But whether it’s global supply chains for chips or foreign investment flows, it seems there is no going back to the way world trade was
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If we see Humpty Dumpty’s great fall as an analogy for the current state of economic globalisation, the question is whether it can be put together again in recognisable form.
This is an open question as rival camps, led chiefly by the United States on the one hand and China on the other, battle for geoeconomic and geostrategic influence. But we should be aware that, at worst, this could result in physical – and not just commercial – conflict.
The days of trade and tariff assaults during the Donald Trump presidency seem innocent in retrospect, now that bitter technology and investment wars are being waged.
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These involve not just levies on goods crossing borders, but complex restrictions on exchange of products, materials and technologies and which thus affect global supply chains. Protecting national security has become as much the name of the game as protecting markets.
How far can this process of deglobalisation – decoupling, reshoring, call it what you will – go before it ends in a truly fragmented world economy? Or can the process be reversed by political change in major economies?
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According to speakers at a recent gathering of senior international officials in Singapore, things could get much worse before they get better – and even then it could be only after a conflagration or an economic slump. Hardly a comforting prospect.
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