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Trade
OpinionComment
Stephen Roach
Stephen Roach

The View | China could have most to lose as crises end globalisation era

  • Globalisation’s defences are crumbling amid climate change, pandemics and the war in Ukraine
  • Mounting geostrategic tensions are the wild card, with ‘friend-shoring’ efforts and scrutiny of Sino-Russian ties raising the stakes for China

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A ship docks at Qinzhou Port’s container terminal in south China’s Guangxi Zhuang Autonomous Region on March 2. Disruptions to global supply chains and rising geopolitical tensions are just some of the forces working to reverse progress in globalisation. Photo: Xinhua
Stephen Roach
The widely acclaimed globalisation of the post-Cold-War era is now running in reverse. A protracted slowdown in global trade has been reinforced by persistent pandemic-related supply chain disruptions, ongoing pressures of the US-China trade war and efforts to align cross-border economic ties with geostrategic alliances, known as “friend-shoring”.
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These developments raise the pressure on China, arguably the country that has been the greatest beneficiary of modern globalisation.

Of the many metrics of globalisation – including financial, information and labour flows – the cross-border exchange of goods and services is most closely tied to economic growth. Largely for that reason, the slowdown in global trade, which began after the 2008 global financial crisis and intensified in the Covid-19 era, points to a sea change in globalisation.

While global exports went from 19 per cent of world GDP in 1990 to a peak of 31 per cent in 2008, they averaged just 28.7 per cent of world GDP in the 13 years that followed. Had world exports expanded on a 6.4 per cent trajectory – halfway between the 9.4 per cent pace of 1990-2008 and the post-2008 rate of 3.3 per cent – the export share of global GDP would have soared to 46 per cent by 2021, far above the actual share of 29 per cent.

China’s gains from the globalisation of trade have been extraordinary. In the decade before China’s 2001 accession to the World Trade Organization, Chinese exports averaged just 2 per cent of total world exports. By 2008, that share had risen to 7.5 per cent.
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China timed its WTO membership bid perfectly, just when the global trade cycle was on a major upswing. While the financial crisis took a brief toll on Chinese export momentum, the interruption was short-lived. By 2021, Chinese exports had surged to 12.7 per cent of world exports, well above the pre-2008 peak.

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