The Great Shift of Globalization: From the Transatlantic Axis towards China and Emerging Asia

Since the mid-2010s, global economic integration, as measured by world trade, investment and migration, has come to a standstill. During the global crisis of 2008–2009, the negative demand shock in the advanced West and the drastic trade plunge in the emerging East highlighted the increasing inter-dependency in the global economy. Nevertheless, in the past few years, world trade has been falling; world investment continues to stagnate while slower migration has given rise to elevated global displacement and refugee crises, despite peace time conditions. In the Trump era, the eclipse of the U.S. postwar trading regime is accompanied with the rise of new protectionism that has a historical precedent. While China seeks to promote globalization, the White House is moving from multilateral free trade toward bilateral deficit targeting, despite its ongoing secular rebalancing and associated cyclical fluctuations. Although the first Trump-Xi Summit suggests that there may be more room for policy compromises than initially anticipated, the eclipse of U.S. globalism will make any reconciliation difficult. Nevertheless, the global economy is now amid a secular transition that is characterized by increasing South-to-South trade, investment and migration. In this new era, globalization, responsibility and accountability in the international community can no longer be subject mainly to the interests of major advanced economies. While global economic integration was initiated by advanced economies in the 20th century, it will be completed by emerging economies in the 21st century. The drivers of globalization are moving from the transatlantic axis to China and emerging Asia.