The Great Fragmentation
After decades of economic integration, the growing tensions between the West and China are fragmenting global trade. In the midst of a climate emergency that demands unprecedented international cooperation, this trend threatens to undermine our ability to address climate change effectively.
LONDON – Geopolitical pressures and other non-economic factors have put the global economy on a path toward fragmentation. Beyond its inherent risks, this trend will not only have profound implications for economic stability and growth but also could jeopardize efforts to combat climate change.
Heightened geopolitical tensions, especially the escalating rivalry between the United States and China, are the primary catalyst of fragmentation. China, which emerged as the world’s largest exporter more than a decade ago, overtook the US as the world’s largest economy (in purchasing-power-parity terms) around 2016. At the same time, the decline in US manufacturing jobs, partly attributed to the surge in Chinese imports, has fueled Americans’ discontent with globalization and reshaped their views on China.
Contrary to many Western analysts’ expectation that increased trade would put China on a path to democratization, the country has gone in the opposite direction under President Xi Jinping. Instead of liberalizing and pursuing pro-market reforms, Xi has gravitated toward a state-centric system controlled by the Communist Party of China.