LHeightened geopolitical tensions, particularly the growing rivalry between the United States and China, are the main catalyst for the fragmentation of the global economy. China, which established itself as the world’s leading exporter more than ten years ago, has overtook the United States as the world’s largest economy (in terms of purchasing power parity) around 2016.
At the same time, the decline of U.S. manufacturing jobs, attributed in part to increased imports from China, has fueled Americans’ dissatisfaction with globalization and changed their views on their great Asian rival.
While many Western analysts expected increased trade to put China on the path to democratization, the country has moved in the opposite direction under President Xi Jinping. Instead of liberalizing and pursuing market-friendly reforms, Mr. Xi has moved toward a state-centered system controlled by the Chinese Communist Party.
Former US President Donald Trump’s administration responded to these developments by launching a trade war with China, a move widely seen outside the United States as a protectionist aberration that reflected the “America First” agenda. America First) by Trump. Still, President Joe Biden’s administration has kept the tariffs in place.
Technological decoupling
This shouldn’t come as a surprise. The new American consensus on China seems to be: “The more we trade with them, the more they use it against us.” » The US-China trade war has become part of a broader US geopolitical strategy, supported by both Democrats and Republicans in Congress. Technology decoupling, which involves reducing high-tech exports to China and restricting the use of Chinese equipment in the United States, is at the heart of this strategy.
Meanwhile, the European Union (EU) has adopted the vision of“strategic autonomy” of French President, Emmanuel Macron. By securing access to essential inputs and raw materials, the EU could deter hostile countries from weaponizing trade. Russia’s use of its oil and natural gas exports as a strategic tool against the European Union, following its invasion of Ukraine, as well as deepening ties between the Kremlin and China have intensified the EU’s efforts to protect key sectors by reducing its dependence on these two countries.
You have 55% of this article left to read. The rest is reserved for subscribers.