Published on Monday, September 4, 2023

Global | Less China? More globalization

The growing mistrust between the East and the West is creating a geopolitical scenario that for many is reminiscent of the Cold War era; a time when domestic markets advanced under the weight of interventionist policies, and relations between countries were belligerent and highly volatile.

Key points

  • Key points:
  • Were this volatility to re-emerge now, it would have to co-exist with three complex challenges unprecedented in human history: human-driven climate change, an increasingly aging population, and the potential disruption of artificial intelligence in the political, economic and social realms.
  • Against this backdrop, several analysts in the West have welcomed the gradual slowdown of the Chinese economy, which is showing signs of a structural cooling that undermines its economic model and should help ease tensions.
  • However, it would be a mistake to think that China’s slowdown will benefit the West. Quite the opposite, in fact, for let us not forget that the country has played a key role in building global value chains in recent decades, directly benefiting both consumers in developed nations and producers of raw materials in emerging countries.
  • And lest we forget, during the decade prior to Covid-19, China accounted for more than 40% of global growth, an economic miracle that was largely responsible for the low inflation enjoyed by the developed countries of the world and the historic decoupling that enabled emerging nations to weather the worst of the Great Financial Crisis of 2008.
  • An end to the Chinese miracle would only increase global economic volatility, bringing us one step closer to a more inflationary world in which a cold for the United States would mean pneumonia for everyone else.

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