The global economy is undergoing a far-reaching transformation. Change is being driven by shifts in countries’ populations, productivity, wealth, power, and ambitions, and accelerated by US President Donald Trump’s moves to reshape supply-chain structures, alter cross-border investment incentives, and limit the movement of people and technology across borders.
“We reject the ideology of globalism” in favor of the “ideology of patriotism.” So spoke the American president from the pulpit, in the high church of the first ideology, before a congregation nominally convened in a spirit of global cooperation. Ahead of his address at the annual gathering of the United Nations General Assembly, the buzz around the building was not about whether the world would witness a confrontational Donald Trump, but rather about who specifically the president would single out for attack.
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The modern economy depends on bilateral trade deficits; it would collapse without them. In an age of advanced technologies and accelerating specialisation, attempting to manufacture everything domestically or bilaterally would be prohibitively costly.
In the epilogue to the first volume of his biography of Henry Kissinger, The Idealist, historian Niall Fergusson notes that he asked Yale university professor, John Gaddis, whether he agreed with his designation of Dr K. as a foreign policy “idealist.” That assessment contrasted with the conventional view of the former U.S. Secretary of State as archetypal national security “realist,” the kind who hangs a picture of Otto von Bismarck in his study.
Confidence in globalisation saw massive amounts of Western capital and intellectual property flow to emerging markets, above all to China. But few in the West registered the geopolitical significance of this at the time. Instead, they praised the economic growth story. And not without good reason: the integration of China into global markets lifted a billion people out of poverty. It remains a testament to the material benefits of removing geopolitical obstructions from the development of global business.
What’s clear is that almost overnight the US has transformed from a pre-eminent advocate of free trade into a protectionist villain in the eyes of both friends and foes. The bigger threat, however, is trade war turning into hot war, as the nationalist fervour extinguishes the fruits of globalisation.
It was only a few decades ago that globalisation was held by many, even by some critics, to be an inevitable, unstoppable force. “Rejecting globalisation,” the American journalist George Packer has written, “was like rejecting the sunrise.” Globalisation could take place in services, capital and ideas, making it a notoriously imprecise term; but what it meant most often was making it cheaper to trade across borders – something that seemed to many at the time to be an unquestionable good.
Globalisation is supposed to be in retreat. How, then, do you reconcile the following? Since 2005, the number of travellers crossing international borders each year has risen by around half, to 1.2 billion. The number of people using the internet has soared from 900,000 to more than 3 billion. By 2020, their ranks are projected to exceed 4 billion, while the number of connected digital devices is forecast to more than triple, to nearly 21 billion. Global data flows, which have exploded by tenfold over the past decade, to 20,000 gigabits per second, are also projected to triple by 2020.
For better or for worse, the globalization train has long since left the station, and the idea that one can turn it back is utterly naive. Whatever might have been done differently before US President Richard Nixon visited China in 1972 is no longer possible. The fate of China, and its role in the world, is now in the hands of the Chinese and their leaders.
