A world of free-flowing trade, with America at the helm.
For decades, we have taken the principle of US-powered globalization as a given.
But recent events have called that into question.
"It is striking not only how much has happened over the last five, six years, but also how
much of it has been directed against the globalization of the economy."
From rising populism to a global pandemic and war in Europe.
The consequences are already biting.
"We've got stagflation, trade autarchy, war in Ukraine.
It's a difficult Never before has the post-war economic order
been on such shaky ground.
"Putin, he wants to get rid of the status quo."
In this video, we'll unravel some of the threads of what is an increasingly tangled story.
We'll look at the complicated relationship between the United States and China:
When China says win-win, it often means China wants to win twice."
How geopolitical conflicts and crises are reforging alliances…
"Beijing, under Xi Jinping, has seen Putin as allied in their common resentment of the
United States" And how some countries are finding themselves
in a tricky balancing act between friends and foes.
"This is a big, big issue for India.
It's a survival issue."
That's all coming up on Business Beyond.
So if we are on the brink of a major shift in the global economic order, it's worth taking
a look at the system many want to leave behind: For the best part of a century, the United
States has been the world's undisputed economic superpower.
After World War 2, it experienced enormous growth - driven by rampant consumerism and
a growing faith in free enterprise.
The fall of communism in 1989 further solidified faith in a western-led system.
Economic barriers fell as countries rushed to fill demand in an ever-more connected global
marketplace.
The effect on world trade was dramatic.
In 1950 it stood at 63 billion dollars.
Within ten years that figure had more than doubled.
And by 1990, it had multiplied thirtyfold to 3.5 trillion dollars.
In 2020, it stood at more than 17 trillion.
But in recent years, we've seen a backlash against globalization.
And many economists think the global financial crisis set the stage for the shift we're seeing
today.
"The whole model, our capitalist model, maybe with more social characteristics in Europe,
but still was tested.
And the reading of this global south, certainly China, but even Russia, was that our model
was fragile, very fragile.
The financial crisis was followed a few years later by a rise in both populism and authoritarianism
around the world: "When you look at Trump especially, and not
only the rise of China, but China under Xi being more aggressive abroad and aggressive
internally, you've got a very different context now than we had even ten years ago.
When it comes to shifting power dynamics on the global economic stage, no story can rival
that of the United States and China.
In 1980, China's GDP accounted for less than three percent of total global output, with
the US accounting for more than a third.
Since then, it's played an extraordinary game of catchup.
The US share of global GDP has fallen to less than 25%, with China now accounting for over
18 %. With the gap between China and the United
States getting ever smaller, it's worth asking: what does Beijing actually want?
"China would like to be in the position that it has been historically, way back in the
day, where it was the center of the world, and others interacted with China in a way
that gave China deference, and China could keep everything under control and have it
go their way."
Claire Reade negotiated for the US on trade with China from 2006 to 2014.
She says China's long term goal is to dominate future-proof industries like Artificial Intelligence,
semiconductor chips and pharmaceuticals.
"All of those sectors have been flagged as critical priorities for the Chinese, where
they would like to become globally dominant.
And if they have dominance in a number of industries so that they can set the terms
with their neighbors and trading partners, that's perfect."
China's economic strategy has also become global through its Belt and Road program,
a major infrastructure investment drive worth several trillion dollars.
But economic influence is about more than raw numbers:
"China has not acquired the structural power.
United States still has the structural power across the globe.
And I'm not very sure whether China is crossing the Rubicon on this front."
For China to acquire the kind of international influence the US has had for decades, it will
need to deepen its relationships.
Although not a formal alliance, the BRICS - that's Brazil, Russia, India, China and
South Africa - has attracted some attention.
The group brings together five emerging economies that team up to support each other's economic
interests.
And when it comes to challenging US dominance, clubbing together does make a difference - symbolically
at least: "Well, it's a marriage of convenience.
It's a useful alternative body.
All the individual countries have got their own kind of problems.
The Bricks is a good forum to talk about stuff, but in the end it's not, I think, an alternative
to the global economy, the global trading system.
It's not an alternative to trading and doing business with developed Western markets, really."
While the United States alone is still the world's largest economy with 24% of global
GDP, China, India, Brazil, Russia and South Africa now together account for about the
same share.
In China, the state-run media has praised the BRICS alliance for boosting what it calls
"non-Western" styles of multilateralism.
At the group's most recent meeting in Beijing in June 2022, President Xi Jinping talked
up its collective strength: "Human history, like a river, will keep surging
forward, with moments of both calm waters and huge waves.
Despite changes in an evolving global environment, the historical trend of openness and development
will not reverse course, and our shared desire to meet challenges together through cooperation
will remain as strong as ever."
But alliances don't guarantee harmony.
The relationship between China and India - both BRICS members - is a good case in point.
Home to 1.4 billion people, India is the world's fastest growing big economy.
But its relationship with China is currently overshadowed by a fractious border dispute.
Tens of thousands of soldiers from both sides are stationed on the more than 3,000 kilometer-long
border: hardly a solid foundation for an ever deepening economic union:
So we should say that this is actually an armed stalemate at the moment, and this is
also spilling over in political, economic, strategic issues as well."
To make things even more complicated, India's relationship with the United States has warmed
considerably in recent years.
The US recently overtook China as India's biggest trade partner.
It also buys more from the country than it sells - a rare example of a trade surplus
for India.
No surprise then that India has been courted by the US as part of its own trade standoff
with China.
It is part of the new US led Indo-Pacific Economic Framework, a free trade pact of 14
mostly Asian nations which excludes China.
The Indian-Chinese relationship isn't the only complicated BRICS relationship.
India is also facing a tricky balancing act when it comes to its ties with Russia.
Its failure to take a clear stance on the war in Ukraine, and its decision to buy more
Russian energy have raised eyebrows.
But commentators point out that historically, sales of Russian gas to Europe have been far
more significant.
And that criticism of India's purchases this year are being taken out of context.
"This year is an exception.
But if you look at the last 70 years, the total imports is no more than a billion or
two at the most, while India imports something like $100 billion from the Middle East.
So nowhere in proportion as when we say the Russian energy component in the Indian energy
basket.
So I think it is an exaggeration, probably lack of information."
Questions of energy reliance have come to the fore for many countries since Russia's
invasion of Ukraine.
As European countries rush to lessen their dependence on Russian gas and Western sanctions
aim to exclude Moscow from the financial system, it's no wonder that Vladmir Putin has talked
up the potential of an alternative global order.
"Over the past decades, new powerful centers have been formed on the planet and are declaring
themselves louder and louder.
Each of them develops its own political systems and public institutions, implements its own
models of economic growth and of course has the right to protect them, to ensure national
sovereignty."
But the war in Ukraine has put pressure on countries that may have been ready to align
themselves with Russia.
Shortly before the war, China and Russia declared that there were "no limits" to their strategic
partnership.
But so far, there is little evidence that China is willing to break western sanctions
on Russia.
"The Chinese are an interesting one.
Russia made a lot about that relationship.
They're continuing to buy energy and commodities and where they can negotiate a good deal from
the Russians that are doing it, but they're not going out of the way to help the Russians
through financing or provision of arms, et cetera."
But Russia and China's growing bond under the leadership of Putin and Xi does appear
to have one watertight element - joint opposition to a US-led global order.
"Beijing, under Xi Jinping, has seen Putin as allied in their common resentment of the
United States and the US global leadership as a superpower and what they see as interference
in their domestic internal affairs, criticism of their political systems, pressure to change
their economies, fix human rights, et cetera.
And so that alignment has probably gone further than most expected."
China may want the United States to stay out of its business.
But the reality is the two countries' economies are deeply entangled.
Despite the tensions of recent years - which saw the countries slap tariffs on each other's
goods - China and the US remain each other's biggest individual trading partners.
US trade with China has grown dramatically in recent decades.
But as you can see here - it's an uneven relationship- with the United States importing far more
from China than it exports.
That has led to calls for the United States to "decouple" - in other words - disentangle
- itself from China.
But how realistic is that?
"If the United States tried to decouple entirely from China, it would be very harmful to our
economy.
It would probably be harmful to our innovation.
It would just have other economies, industries step in where the United States stepped out
so it wouldn't work."
Decoupling probably wouldn't be a very good idea for China, either.
"China also knows that its larger economic fate lies with the rest of the world.
And even though it has this tense relationship with the United States and others, most of
its economic growth has been dependent on globalization with the rest of the world needs
to find a way to balance those things.
And so they are struggling.
I think that is why China has, I think, for the most part, as far as we can tell, abided
by Western sanctions on Russia."
At the beginning of this video, we asked if we were at the dawn of a new global economic
age.
All of the experts we spoke to believe we are at an inflection point.
But they emphasized this may not necessarily lead to the emergence of one system over another.
If it's a case of a US versus a Chinese-led system, the differences are major.
The market-led system of the US favors a lack of government intervention.
The Chinese system favors heavy state involvement.
They have reinvigorated support for state owned enterprises, really focused on indigenous
technology, achieving, trying to achieve self-reliance, not done what previous leaders have done in
trying to manage and maintain a healthier, constructive relationship with the United
States and the west.
And so what I'm talking about what China would like.
It's really what kind of order a Xi Jinping led China would like, which is a world safe
for state, capitalist, authoritarian systems."
But that system is always likely to have powerful enemies.
"I think China's presence on the scene definitely pulverizes the old post-Cold War landscape
and chessboard for sure.
But the question is really how does the rebalancing occur and how does it take place?
And I would say that China has through its very strong authoritarian actions and its
actions visa vis the Uighurs in Xinjiang and its actions visa vis Hong Kong has demonstrated
political viewpoints and sense of what it believes is the way to go, that is not appealing
to large segments of liberal market economies across the world."
So could opposition to a Chinese-inspired protectionist order be strong enough to push
back the tide?
"I think it's a realistic hope that there could be a backlash to the backlash, that
large numbers of people, maybe even a clear majority in many countries, will realize that
nationalism and protectionism and rivalry and closing this is all worse for them than
being more open, more engaged with the world around them, and having political bullies
is worse than signing up the global rules."
As for the people making those rules, this is a critical moment:
"If one part of the world, and I think we've been told loud and clear, wants to change
the global order.
And this is not only Russia, this is China too.
We need to listen."
The turmoil unleashed by the global financial crisis of 2008 and 9 - and more recently the
pandemic and war in Ukraine - has laid bare a new truth: blind faith in globalization
has come to an end.
We'd love to know whether you think the economic order is changing.
Let us know in the comments.
And if you like what we do and want to see more, do check out the Business Beyond playlist.
A good place to start would be our recent video on the global food crisis.
Thanks for watching and until next time, take care.