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Fragmentation – the big threat facing the global economy
It’s not just decoupling. Trade and investment flows are already being hit as the three major economic engines – US, EU and China – put up fences while pursuing national security-driven industrial policies. It could get worse.
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We have entered an era of “geo-economics” as geopolitics reshapes the global economy, says the writer.
PHOTO: REUTERS
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Bert Hofman
In his latest tour to Europe this May, China’s Foreign Minister Qin Gang was on a mission. He had a clear aim: to prevent Europe joining the United States in its endeavour to limit China’s access to advanced technology. He called on his German counterpart to “stick to the right path, jointly oppose the new cold war, and decoupling economies or severing supply chains”.
He faces an uphill struggle. But beyond that, the world economy is confronting more than the already fraught effects of US-China decoupling. As all three major engines of the global economy – the US, China and the European Union – go about trying to balance national security with trade and investment, the world economy is at risk of fragmentation.
