David Chao

Opinion | Globalisation isn’t going away. It’s getting a multipolar makeover

From service exports growth to green energy transitions, economies can still prosper from trade amid changes in the global economy

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A worker checks LED lights meant to be exported from a factory in Ruichang, Jiangxi province on January 3. Photo: AFP

David Chao

Published: 4:30pm, 28 Jun 2024Updated: 6:13pm, 28 Jun 2024

Threats to globalisation seem to be everywhere these days. The most recent high-profile dispute is in the rapidly-emerging global market for electric vehicles (EVs). Technologically-advanced Chinese EVs have found themselves the target of tariffs and anti-dumping probes.

Tariffs hikes set to take effect in the European Union and potentially in Canada threaten to deny consumers in these markets access to competitive products, although there are signs that EU negotiators are eager to engage with their Chinese counterparts to find a solution.

We should remember that similar efforts in the 1980s to protect American carmakers from Japanese competition ultimately led to Japanese carmakers localising production within the US. Innovative products have a tendency to find their way to eager customers regardless of the regulatory environment.

Should we believe the world is stumbling towards a new era of “deglobalisation”, where isolationism, autarky and economic decoupling push countries apart into competing economic blocs? I don’t believe so. On the contrary, there is plenty of evidence to indicate the world is undergoing “re-globalisation” – a revamp of an integrated system towards a multipolar world economy.

Trade and investment patterns are realigning based on geography – primarily around climate change considerations and supply chain resilience – and geopolitics, around national security and ideological considerations. Put simply, these trends are about nearshoring and friendshoring, which will reconfigure global supply and value chains rather than eliminate them.

In the United States, despite rhetoric and policy efforts to reduce dependence on China, bilateral trade is still likely to grow. What has changed is that China is no longer the US’s largest foreign trade partner. That title returned to Mexico last year.