How Geopolitical Tensions Reshape Trade Patterns: Geoeconomic Fragmentation, or China’s Big Manufacturing Push?
A data-based analysis shows that widespread geoeconomic fragmentation of world trade is not visible, at least so far. In contrast, the geopolitically-motivated challenges to international coordination are striking, notably in relation with China's surging surplus in manufactured goods trade.
It has become received wisdom to consider the world economy as increasingly shaped by forces of fragmentation, resulting from geopolitical tensions and strategic competition between great powers, including through trade and industrial policies. This Ifri Paper reconsiders this narrative using international trade data. It shows that, far from being a widespread trend, geoeconomic fragmentation of trade flows is only significant in “hotspots”; that is, for Russia’s foreign trade and for China-United States bilateral exchanges. Outside these hotspots, there is no tangible sign that geopolitical tensions have been shaping international trade blocs, nor is there any hint of a trend toward nearshoring – on the contrary, in fact. There is no evidence either that competing industrial policies have been reshaping trade patterns. The clearest trend is much more specific: it is the massive surge in China’s surplus in manufactured goods trade, up to 11% of the world’s total or these products since early 2023. Sudden and common to all main directions and all main sectors, this push has been policy-driven. As economic security concerns reinforce governments’ focus on manufacturing, this has become a major challenge to international coordination.
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How Geopolitical Tensions Reshape Trade Patterns: Geoeconomic Fragmentation, or China’s Big Manufacturing Push?
Author(s)
Sébastien JEAN
Associate Director of Ifri's Geoeconomics and Geofinance initiative
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Geoeconomics and Geofinance Initiative
To analyze the impact of power rivalries and tensions on globalization, this initiative combines economic and political expertise. In the face of growing geopolitical risk, the goal is to decipher the dynamics of reconfiguration: protectionist pressures, sanctions, restrictions, industrial policies, and economic security concerns are redefining the rules of international trade. These tensions are also transforming international financial relations by undermining the foundations of trust and reshaping the global monetary system. They raise questions about the role of several key players: sovereign wealth funds, central banks, digital platforms, multilateral institutions, and financial infrastructure operators. In a context of profound disruption, simply refining existing approaches is no longer sufficient. The initiative is designed as a flexible model, drawing on diverse expertise to offer both broad overviews and targeted analyses. It also provides a platform for stakeholders and experts from various backgrounds to debate these issues freely.
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