The Great Economic War (GEW) (Part 9: Geopoliticisation of MNCs)

The Great Economic War (GEW) (Part 9: Geopoliticisation of MNCs)

Phuah Eng Chye (19 November 2022)

In the post-colonial era, MNCs supplanted the military as the main force battling for control of global resources and markets. Nisha Narayanan points out “MNCs are powerful global actors…benefited from and fostered globalization through access to new markets, new technology, and new sources of capital and labor. The role they play in global growth has evolved in the last fifty years, financially, operationally, and technologically”. “The combined market capitalization of the world’s top fifty companies was proportional to 27.6 percent of global gross domestic product (GDP) in 2020, up from just 4.7 percent of global GDP in 1990, with Big Tech carving out an increasingly large share of the pie in recent years…The Forbes 2022 list of the top two thousand MNCs consists of companies with a combined total revenue $47.6 trillion, profit close to $5 trillion, and assets and market capitalization at $233.7 trillion and $76.5 trillion, respectively”. “An analysis by Investment Monitoring reported that leading MNCs currently have more than 117,834 foreign subsidiaries, more than 54 percent of total subsidiaries, whose primary sectors focused on the financial services, technology and communications, and construction industries”. “With close to 200 companies on the Forbes top 2000 list from emerging and developing markets, including those located in the Middle East and North Africa, Sub-Saharan Africa, Central Asia, Latin America, and East and South Asia – and sixteen of the one hundred largest global MNCs located in Brazil, China, and India – the role of the developing world in global business is becoming more prominent”.

MNC-driven globalisation promoted competition, innovation and efficiency and underpinned a golden period of global economic growth. On one side, countries, states and cities aggressively courted MNCs, investors and talent and hoped to capture the vibrancy by transforming into a hub in the global village. On the other side, MNCs shed their national loyalties and positioned themselves as “global brands” seeking funding, talent and market opportunities around the world.

However, the mood has soured on globalisation, on markets and on MNCs. Widening inequality, polarisation and apprehension over the potential loss of economic leadership have prompted developed economies to prioritise addressing geopolitical threats. Prabir Purkayastha points out “the process of separating the sanctions regime and the global supply chain is not a new concept. The United States and its allies had a similar policy during and after the Cold War with the Soviet Union via the Coordinating Committee for Multilateral Export Controls, or COCOM (in 1996, it was replaced by the Wassenaar Arrangement), the Nuclear Suppliers Group, the Missile Control Regime, and other such groups. Their purpose was very similar to what the United States has now introduced for the semiconductor industry. In essence, they were technology-denial regimes that applied to any country that the United States considered an enemy, with its allies following – then as now – what the United States dictated. The targets on the export-ban list were not only the specific products but also the tools that could be used to manufacture them. Not only the socialist bloc countries but also countries such as India were barred from accessing advanced technology, including supercomputers, advanced materials, and precision machine tools. Under this policy, critical equipment required for India’s nuclear and space industries was placed under a complete ban. Though the Wassenaar Arrangement still exists, with countries like even Russia and India within the ambit of this arrangement now, it has no real teeth. The real threat comes from falling out with the US sanctions regime and the US interpretation of its laws superseding international laws, including WTO rules. The advantage the United States and its military allies – in the North Atlantic Treaty Organization, the Southeast Asia Treaty Organization, and the Central Treaty Organization – had before was that the US and its European allies were the biggest manufacturers in the world. The United States also controlled West Asia’s oil and gas, a vital resource for all economic activities. The current chip war is being waged at a time when China has become the biggest manufacturing hub of the world and the largest trade partner for 70% of countries in the world. With the Organization of the Petroleum Exporting Countries no longer obeying Washington’s diktats, the US has lost control of the global energy market”.

Prabir Purkayastha asks “so why has the United States started a chip war against China at a time that its ability to win such a war is limited? It can, at best, postpone China’s rise as a global peer military power and the world’s biggest economy. An explanation lies in what some military historians call the Thucydides trap: When a rising power rivals a dominant military power, most such cases lead to war… While such claims have been disputed by other historians, when a dominant military power confronts a rising one, it does increase the chance of either a physical or economic war. If the Thucydides trap between China and the United States restricts itself to only an economic war – the chip war – we should consider ourselves lucky. With the new series of sanctions by the United States, one issue has been settled: The neoliberal world of free trade is officially over”.

Governments are weaponising interdependencies and addressing supply chain vulnerabilities. In the GEW, governments unilaterally imposed sanctions, froze and expropriated assets, cut off access to the OECD financial system, and disrupted logistics (shipping, airspace). Tremendous pressure was brought to bear on MNCs to withdraw from countries, to halt supply to adversaries and on governments to reject investments or ban the operations of adversarial entities or technology. Countries and firms found themselves that they could be vulnerable due to the sudden withdrawal of foreign technologies (cloud services, software, spare parts, internet connectivity), employees and services. The message is clear: Countries and MNCs that befriend adversaries run the risk of being treated as a foe. The geopoliticisation of business is blurring the boundaries between competition and conflict, and turning the global marketplace into a battlefield.

Rise of Chinese MNCs

In earlier decades, European MNCs and rising Japanese, Korean and Taiwanese MNCs challenged the competitive position of the US. In instances when it felt core interests were threatened, the US forced European and Japanese MNCs into making concessions. Overall, the OECD governments and MNCs were geopolitically docile and subordinate to US leadership.

This is where the rise of  China’s MNCs is different. Ho-Fung Hung[1] relates “throughout the ’60s, the ’70s, and the ’80s, there was an image of flying geese, in which the whole formation flies forward, but they maintain a stable hierarchy between the leading goose and its followers. Japan is the leading goose at the time: it always manufactured the highest value-added products, the most sophisticated, profitable products. Once Japan moved up to even higher value-added products, the less fashionable, less profitable products were outsourced to the other geese: Taiwan, South Korea, and so on. The whole formation moves forward, but the hierarchy of Japan, and then the four tigers, and then Southeast Asia is maintained – that is, until the 1980s and 1990s, when China enters the picture. Because China is so big and resourceful and has a huge internal market, it attracts not only the low value-added industries, but also high value-added industries. In the end, China absorbs everything from electronics to computers to, very famously, the iPhone; it also absorbs low-cost products, like garments, Christmas trees, and Halloween costumes. In the 1990s, there’s an Economist article called A Panda Breaks the Formation. It comes with a cartoon, in which a panda breaks the flying geese formation. Because China is so big, it absorbs everything, and then the production networks become Sino-centric. Japan, Korea, Taiwan, and Southeast Asia all outsource their capital and manufacturing activities to China, and the capitalists in those places focus on finance and real estate speculation”.

Ho-Fung Hung explains China’s economy started to lose momentum after the 2008 global financial crisis. “For many troubled and heavily indebted Chinese companies with state backing, the strategy of survival is to eat up the market share of foreign companies in China…many of the dominant enterprises in China are either outright state-owned or, if they are private enterprises like the real estate and tech companies, they have state backing and insider party-state connections. These enterprises become very aggressive, and with the help of Chinese regulators, they eat up their market share of the foreign investors in China. In many cases, they also try to appropriate the technological advantage and edge off foreign competitors, again with the help of the state. This competition between foreign companies – especially US companies and Chinese companies – within China’s market becomes so intense that US corporations ask the US government for help. They complain that they are unfairly targeted, squeezed by their Chinese counterparts and sometimes even their partners. This underlying economic force led to the deterioration of US-China relations”.

Ho-Fung Hung notes the Chinese government targeted two sources of expansion; namely “the accelerated technological upgrading represented by Made in China 2025; another is the Belt and Road policy”. The BRI was “very explicit external stimulus. Chinese banks lend money to foreign countries in the developing world to create demand for oversupplied Chinese steel, high-speed rail trains, and coal plants. China exports excess capacity to developing countries, creating competitive pressure for American, European, and Japanese companies in these developing countries. One very interesting example is construction machine makers, like Caterpillar in the US; Japan and Europe have their leading companies in this business as well. Ever since the Belt and Road takeoff, all the Belt and Road countries are buying Chinese construction machines overwhelmingly, at the expense of Caterpillar and European and Japanese construction machines. The situation deteriorates for American companies, as they find that they are not only in a tough, competitive situation in the Chinese market, but also in different markets in the developing world: in the Caribbean, Latin America, Central Asia, South Asia, and the Middle East”.

The rise of China’s MNCs[2] is a trigger that turned the cooperative US-China relationship into an adversarial one. Global Times report “for the first time, Chinese companies on the 2022 Fortune Global 500 list have made more money than their US counterparts. Chinese companies accounted for 31 percent of the total revenues of 2022 Fortune Global 500 giants, surpassing US firms’ 30 percent for the first time. Three of the top five companies on the list are from China…Walmart, Amazon and State Grid Corp of China were the top three…Chinese energy giants China National Petroleum Corp and Sinopec Group ranked fourth and fifth. A total of 145 companies from the Chinese mainland, Hong Kong and the island of Taiwan were on the list, compared with 124 US companies. Three Chinese commercial banks – Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China – remained in the top 10 by profits”.

An example of mounting competitive pressure is in the car industry. Japan was the first Asian country to break the dominance of US and European manufacturers in the 1980s; followed by Korea after 2000. Now they are joined by China’s car manufacturers which are beginning to expand abroad. With their strengths in electric vehicles (EVs), they pose a major threat to OECD car manufacturers. Gregor Sebastian and François Chimits points out “Europe has become the primary destination for Made in China EVs. In 2021, China’s global EV exports more than doubled to 555,041 units on the back of booming production capacity. Around 40 percent of this was absorbed by Europe, where Chinese EV already make up ten percent of total EV sales”. “China-made EVs could turn Sino-EU automotive trade on its head…if European carmakers use China as an export hub for third markets, this will mean less production in Europe…This has serious implications for Europe’s industrial heartlands because the automobile sector has long been one of the main European exports – to China and third markets. In 2019, it made up ten percent of EU exports and a third of the EU trade surplus. The sector also accounts for seven percent of Europe’s GDP and ten percent of manufacturing jobs (2019). This highlights that China-made vehicles put European employment, investment and innovation at stake”. “The shift in trade relations in the automotive sector underpinned by China’s industrial policy marks a fundamental turning point in EU-China relations – one that requires a European response. Foreign carmakers’ deep entanglement and investments in China are strengthening China’s own EV and battery tech capabilities and will potentially foster strong competitors for Europe’s homegrown industry. While corporations look at declining market shares in China, the EU needs to grapple with long term impact on its industrial base at home”.

Gregor Sebastian adds “German carmakers are in a bind between holding back on further investments in China and potentially losing global competitiveness. A greater entanglement in Beijing’s goals can potentially alienate key stakeholders including in government and civil society as well as investors”. At the same time, German carmakers think that “by establishing partnerships with Chinese tech companies and increasing investment into research and development (R&D), they are trying to retain their market shares in China’s emerging electric vehicle (EV) market…Their new China investments could help German carmakers remain globally competitive and even outpace their rivals”. But investments into China “might also benefit China’s economy more than Germany’s” and “disrupt their strategic alignment with their country’s policymakers”.

Bluntly put, China’s government and their MNCs have ambitions to challenge OECD domination and, if possible, to achieve parity with the US. Unlike their Asian peers, they have no intention of backing down. Concerned by China’s domination of global supply chains and its rapid pace of technological advancement, the alarm[3] was sounded. The US imposed trade tariffs in an attempt to negotiate for concessions from China but were rebuffed. Trade tariffs were perceived as ineffective and inflicting self-harm on the US economy. The US refined its strategies to forestall China’s domestic and global advances, break its hold on several global supply chains, drive the relocation of production facilities and to strengthen and expand its geographical sphere of influence. This includes using strategies such as sanctions creep, whole-of-government, supply resilience and reindustrialisation[4], and friendshoring. OECD allies and MNCs were initially reticent but, after the Russian invasion of Ukraine, they seem to have finally got on board with decoupling.

Geopoliticisation of MNCs

At the moment, the US is drawing the line in the sand; calling upon countries and MNCs to define their nationalities and to declare their loyalties. MNCs find themselves increasingly unable to avoid getting caught in the geopolitical crossfire. Hence, MNC deglobalisation is the main force for accelerating and deepening decoupling.

The acceleration of decoupling is largely due to the escalatory nature of asymmetric warfare. Neither the US/OECD nor China/Russia has incentive to negotiate and de-escalate because concessions in one area do not stop provocations in others. For example, China probably finds tariff negotiations meaningless because the US continues to target companies and products. As the US tightens its grip on technology chokeholds, China accelerates de-dollarisation. As China moves closer to Russia, the US intensifies provocations on Taiwan. But how does bargaining take place over technology chokeholds, Taiwan, de-dollarisation and the China-Russia relationship? Without de-escalation, the OECD and China/Russia-anchored spheres would be more clearly formed within the next 5 to 10 years.

Strategic asymmetries also exist at the MNC level. The US advantage is that its sanctions has worldwide reach. In contrast, the impact of China’s sanctions is generally limited to its domestic market. This is why China finds it difficult to retaliate in kind. US sanctions are mainly aimed at deterring OECD MNCs from expanding in China and blocking Chinese MNC expansion in the West. China continues to favour enticing foreign MNCs. This also constrains its ability to retaliate. Hence, MNC asymmetry is causing China to counter the West’s close strategies with open strategies.

The defect of close strategies is that it goes against the conventional wisdom that OECD governments should be pushing their MNCs to expand their influence to increase Russian and Chinese economic dependency on them. Close strategies are instead a strategy of ostracization[5] based on the fallacious belief that Russia and other countries are totally dependent on OECD MNCs and that recalcitrant economies can be successfully isolated and left helpless. Today, know-how and talent has dispersed sufficiently to loosen OECD grip on technology and finance. Western markets and capital are still important but no longer critical. Non-OECD MNCs, particularly those from China, have acquired global capabilities. Most products and services can be gotten from alternative sources or substitutes be found eventually.

In addition, controls are porous in the modern global economy. Ellen Loanes notes it is relatively easy to evade the Western sanctions on oil. This includes hiding identities using front companies and conducting transactions through third party countries. “Iran developed methods like multiple ship-to-ship transfers, temporarily disabling vessel-tracking transponders and using obscure sailing patterns” to transport oil. The Russians used ships with complex ownership structures, often sailing under flags of countries with lax requirements, without a set destination and rely on ship-to-ship transfers and blending to obscure its origins. As a result, countries like China, India and Turkey can ignore the OECD ban and buying Russian oil and gas at a discount. The most likely outcomes of ostracization are fragmentation and a pick-up in illegal activities.

The reality is that the Western exodus from Russia is constraining OECD MNCs; making them give up markets, scale, alliances and investments and force them into a costly and disadvantageous reshuffling of their supply chains. MNCs from US, Europe, Japan, Korea and Taiwan end up competing for a share of a shrinking pie. Europe is paying a premium for oil and gas, and the energy shortages and high costs are hurting consumers and prompting some MNCs to relocate factories out of Europe. Thus the inflexible close strategies are rebounding on the OECD and disadvantaging their MNCs.

Open strategies confer an advantage to China and Russia. They can encourage their MNCs to explore opportunities to bypass the OECD blockade, and keep the doors open to foreign investors and businesses. This is why they are keeping retaliation to a minimum. Open strategies are pragmatic and flexible. In contrast, OECD MNCs now need to second-guess policy and public opinion trends and are likely to react by cutting investments and generally limiting expansion to areas where the government provides incentives.

In my view, the biggest misunderstanding relates to the role of MNCs in an economic war. To strengthen soft power, OECD needs their MNCs to globalise and expand their control over markets, resources, information and technology. For example, the USD is the dominant currency because it is supported by OECD MNCs and financial intermediaries. As OECD MNCs and financial intermediaries pull back from “hot spots”, their global coverage is weakened and this, in turn, diminishes OECD soft power and USD dominance.

Yet, OECD governments, via geopoliticisation of business, are repositioning their MNCs[6] to drive deglobalisation. Informal and formal government policies set out the parameters, by nationalities and geography, for business ownership and relationships. In the process, governments seek more information, increase compliance requirements and levy more fines and punishments. Even employment of foreign nationals or by foreign MNCs are now tainted as a form of espionage, theft or betrayal. It is so easy for MNCs to trip up in this type of environment.

Worse still, governments (or their political leaders) don’t seem to be connecting the dots between the impact of policies on their MNCs and the macroeconomic consequences. At the national economy level, the mercantilist and protectionist policies defy and distorts the Darwinian process of creative destruction and industry consolidation. They cause their own MNCs to be handicapped in terms of recruiting talent; and accessing technology, finance, raw materials, supplies and markets. From decades of economic experience, the goal of self-reliance has proven to be a false proposition that generally fails because it results in higher costs and inefficiencies. Governments seem oblivious to the damage they are inflicting on the competitiveness, innovativeness, investment and efficiency (productivity) of their MNCs and on market discipline. As their corporate sector weaken, tax revenues and employment would fall. Governments will find it difficult to finance their large deficits – worsened by rising military expenditures and import costs (inflation and currency depreciation).

The geopoliticisation of business will have adverse global effects. Corporate strategies will be realigned away from globalisation and towards fragmentation. The pattern of trade, labour, information and capital flows will certainly change. In particular, the gap between Western consumption/deficits and Asian production/savings needs to be addressed; particularly if China is discouraged from buying OECD assets. The question is how much more damage can global interdependencies absorb before the global economy collapses[7].

New realities for MNCs

MNCs are facing up to the changing geopolitical realities. MNCs are being drafted by governments to be weapons of the economic war. They are at the forefront in implementing sanctions (stop production, supply sourcing, investments and sales) which is resulting in significant revenue loss for affected MNCs. They have a prominent role in reshoring and friendshoring – where geopolitical rather than commercial goals determine where they shift out from and where they should locate their next factory. This is costly exercise incurring unnecessary expenses and investments. Apart from the commercial impact, the exits will likely damage their long-term relationships with the host government, suppliers and consumers. MNCs are requested to “work with” their OECD competitors but this usually means sacrifices or compromises are needed. Overall, in the current mood, governments are setting policy goals on a broad range of challenges such as on technology, reindustrialisation, climate change and inequality. But the accountability is placed on MNCs. Failure to meet the government’s KPIs could result in adverse consequences for these MNCs.

that MNCs are also the biggest victims of economic warfare. The consequence of weaponising MNCs is to fix a bullseye on their back. MNCs are a target of beggar-thy-neighbour policies (collateral damage from loss of sales) abroad and Robin Hood policies (higher taxes) at home. MNCs need to cope with conflicting policies, market malfunctioning (excess capacity and shortages), loss of scale, diverging laws and standards, reduced information access and growing distrust. GEW is also prompting governments around the world to be more assertive over controlling their national resources; much to the detriment of MNCs. In addition, MNCs have to operate in an environment of monetary disorder which is raising financing costs and reducing availability of cross-border finance and liquidity.

MNCs are adjusting their strategies accordingly with adverse global economic consequences. Generally, MNCs are putting their global ambitions on hold and adjusting their finely-tuned global models for a fragmented landscape where the degrees of freedom (in terms of technology, finance, data and logistics) are constrained by geography and nationality. Hence, they are moving towards a second-best model that is defensive and able to withstand geopolitical, economic and financial stress. This implies prioritising diversification and balance sheet resilience over growth, scale and innovation; and changing their organisational structure, supplier relationships, and marketing and branding to mitigate geopolitical risks.

Governments make policies and laws but MNCs may not follow. At the end of the day, MNCs are driven by self-interest and profits. They would seek to exploit opportunities created by geopolitical animosity by seeking subsidies and government contracts; lobbying for rules to tilt the playing field in their favour; and arbitraging government controls. Fragmentation leads to market segmentation and firms can seek to maximise profits by differential pricing strategies. There are also signs that entrepreneurs, investors and firms are amassing cash and waiting for the collapse in asset prices and economic contraction to create opportunities to buy strategic and attractive assets at a cheap price. Those that lack the deep pockets to these opportunities are likely to conserve resources, restructure debt or exit the business. This describes a situation where animal spirits are going on strike and leaving rentiers to dominate the playing field.

Changing geographical patterns

MNCs used to be the vehicles of globalisation but they are now the vehicles of fragmentation. Most likely, OECD and non-OECD MNCs are reorganising their business along the geopolitical fault lines. The remapping of MNC geography is likely to center around the challenge of reducing dependence on China and expanding in the Global South. Relocating to the OECD economies is less attractive because it is matured and offer less opportunities.

The major source of change revolves around decoupling with China. Hung Tran[8] notes decoupling “the economic and technological relationships between the West and China have presented difficult challenges to policymakers as well as corporate executives. Basically, China occupies a crucial position in global supply chains: being the top manufacturer, including of high-tech goods; accounting for 18 percent of the global gross domestic product (GDP) and 15 percent of world trade; and ranking among the top trade and investment partners to most countries on Earth. It is thus not an easy task to divert global supply chains away from China”.

Several forces are driving decoupling. The first is US pressure to persuade OECD MNCs to relocate production facilities out of China. Clete R. Willems and Niels Graham notes “the Biden administration should be applauded for an agenda that seeks to work with an unprecedented number of allies and partners and includes novel flexibilities to accommodate varying levels of development. This approach has the potential to allow the United States to link its economy with more countries than ever before. As it develops these various initiatives, the administration must carefully consider how to coordinate them to ensure they are as complementary as possible and not working at cross purposes. More fundamentally, the Biden administration should also raise the level of ambition within the individual agreements and seriously consider adding traditional market access components. Market access is critical to provide new opportunities for US businesses and workers as well as to create an incentive for other countries to trade off substantial economic reforms as part of the agreement. Ultimately, the administration will find it difficult to fulfill many of its priority objectives – linking supply chains with partners and allies, encouraging partners to open their markets and commit to US-level standards, and positioning the United States to better compete with China – without market access. But even if the administration is not willing to embrace market access in the short term, it should include design features in these frameworks to enable them to serve as stepping stones to true FTAs with market access in the future”.

The US has refined its strategies to accelerate the pace of decoupling. US Commerce Secretary Gina Raimondo[9] says “I’m hearing it from US CEOs, even from companies that have been manufacturing in China for decades…The climate is getting tougher: uncertainty, [Chinese President Xi Jinping’s] increase toward autocracy. It’s hard to argue with them.” “What I say to them is: ‘You want to go to places that are working with the United States to align their standards – tech standards, rule of law, transparency, anti-corruption”. She lauded the Indo-Pacific Economic Framework (IPEF) as an example of an agreement that stands to benefit US companies interested in leaving China. Over a decade, Raimondo envisions the US producing a million more engineers per year, 150,000 new manufacturing jobs, hundreds more chip-related startups, and by then substantially decreasing its dependence on Taiwan for chips.

MNCs with large semiconductor manufacturing operations and sales in China are in a quandary. SK Group chairman Chey Tae-won[10] said his company is making contingency plans for decoupling between the United States and China; including preparing for possible scenarios as rivalry between China and the US intensifies, including for a military clash over Taiwan. “In the past, the whole world was a single market. Now it seems like the market is splitting as a result of decoupling. We have to think about what to do – for example, whether we should discard one of the two markets,” “It is not possible to give up the Chinese market, which accounts for a large proportion of exports. We need to come up with countermeasures so that Korea can survive in such a decoupled place. “It doesn’t make sense for a company to try to solve it alone, and it requires a wider choice, support, and collaboration from the government.” “Honestly, if equipment cannot enter [into China], the factories will continue to deteriorate and upgrading become difficult…If there is a problem due to ageing, we have no choice but to invest and build a factory elsewhere.”

As the US progress in decoupling and reshoring, China works to plug its technology gaps and retaliates by targeting US imports. Cheng Li notes “in early July, four large Chinese airlines announced a bulk order of 292 aircraft from the European aircraft manufacturing giant Airbus, totaling US$37.3 billion…Boeing, the American aviation giant, expressed the company’s disappointment…that geopolitical differences continue to constrain the export of American jets…As the Rhodium Group recently estimated, a complete loss of access to China’s market for U.S. aircraft and commercial aviation services would create U.S. output losses ranging from $38 billion to $51 billion annually. Cumulatively, lost market share impacts would add up to $875 billion by 2038. This would further aggravate economic problems such as lower U.S. manufacturing output, job losses, and reduced R&D spending. This would undermine rather than enhance American competitiveness in this critical industry”.

The second is OECD pushback against China’s economic coercion. Aya Adachi, Alexander Brown and Max J. Zenglein note “since 2018, China has increased its use of economic coercion, and the triggers have become more diverse. China’s red lines have expanded beyond traditional issues of sovereignty and national security to include China’s international image and the treatment of Chinese firms abroad”. The forms of coercion include popular boycotts (in 56 percent of cases when companies crossed a perceived red line), and restrictions on trade (41 percent – in response to the actions of foreign governments) and tourism (20 percent). Empty threats, to deter  other governments and companies from unwanted actions, account for about a fifth of all cases”. “Companies in the consumer and agricultural goods, commodities and services sector are the most frequent targets of retaliation, since in these areas alternative providers can usually be found. Almost half of recorded coercive measures were in the consumer goods sector”. “Foreign companies of high strategic relevance, such as high-tech firms with a large investment presence in China, are likely to be more secure”.

The third is that while the US-China rapture is clear, there is uncertainty over the future trend for the China-EU economic relationship. While European investment in China is holding up, Agatha Kratz, Noah Barkin and Lauren Dudley found European investment in China “has grown much more concentrated, both in terms of the companies that are investing there, the countries they come from, and the sectors in which they operate. While a handful of large firms, many of them German, continue to pour money into their China operations, many other firms with a presence in China are withholding new investment. At the same time, virtually no new European firms have chosen to enter the Chinese market in recent years. And acquisitions of Chinese firms have stalled, with greenfield investments increasingly dominating the FDI landscape”. Over the past four years, the top 10 made up nearly 80% of total European direct investment. Nearly 70% of FDI investment was concentrated in five sectors – autos (especially in new facilities for electric vehicles), food processing, pharma/biotech, chemicals and consumer products manufacturing. Four countries – Germany, Netherlands, UK and France – made up 87% of the total investment value.

Agatha Kratz, Noah Barkin and Lauren Dudley explain “the biggest European investors in China have maintained steady investment flowing into large greenfield projects due to three main considerations: First, they have generated significant profits in China and believe the market will continue to be lucrative despite the economic and geopolitical headwinds. Second, these companies feel they must continue to invest and develop products in China in order to safeguard the value of past investments and remain competitive with increasingly innovative domestic rivals, for example in sectors like electric vehicles. Third, they are trying to insulate their China operations from rising global risks through greater localization—an approach that is also being actively encouraged by Chinese authorities. In this respect, recent FDI in China looks quite different than it did a decade ago. It has become more defensive, in a reflection of a more risky environment, in China and globally”.

Agatha Kratz, Noah Barkin and Lauren Dudley note “three types of investors are conspicuously absent in our review of recent trends. First among them are investors in the services sector. Our data shows that between 2018 and 2021, business services made up less than 2% of the value and just 7% of the total deal count, while software & IT services made up 0.5% of the value and 3% of the deal count. This is despite the fact that, as of 2020, services made up 53% of China’s GDP and despite the strong competitive advantage that European firms enjoy in those industries. Explanations for this include continued market access problems and the belated opening of the Chinese market to European players. Second, we are seeing far fewer European companies looking to acquire Chinese firms. Greenfield investment makes up the lion’s share of European investment in China, representing two-thirds of the total over the past five years. Its share of total investment has been steadily increasing since 2019. By contrast, the value of European acquisitions in China hit a four-year low in 2021. As an economy matures, one would expect acquisitions to become a more common investment channel.  That hasn’t happened in China, as European firms remain wary of buying Chinese companies given formal restrictions, high valuations and a lack of transparency around financial accounts and other liabilities. COVID-19 travel restrictions have amplified the M&A downtrend. Third, China is seeing fewer and fewer new entrants on its market. Since the outbreak of the pandemic in early 2020, for example, stakeholders on the ground say that virtually no European investors that were not already present in the country have made direct investments…conversations with stakeholders suggest that a longer-term dynamic may be at work, with smaller European companies reluctant to accept the growing risks of investing in China…The absence of new players has contributed to the greater concentration of European FDI around a few big players. Incumbents have a distinct advantage in an increasingly politicized market where foreign firms face high barriers to access, an uneven competitive playing field vis à vis local players, and a less-than-transparent compliance landscape. This explains why fewer small and medium-sized enterprises (SMEs) are venturing into the country, and why in sectors like financial services, which have been opened to foreign investment in recent years, only a handful of big European players have made the leap, despite the growth opportunities…As China’s economic slowdown accelerates, amid a real estate crisis and crackdown on private enterprise, and as policymakers in Berlin and other capitals press ahead with a resilience and diversification agenda, the proportion of China skeptics in European corporate boardrooms may continue to grow. We believe it is likely that the gap between the chosen few and the broader swathe of European companies that are reducing their China exposure, either by paring back their footprint on the ground or putting future investments into other markets, could become more pronounced in the years to come. What does the future hold for those firms that remain fully committed? We are already seeing what might best be described as an internal decoupling dynamic taking hold within some of these companies – as staff, supply chains and data flows are increasingly localized and ringfenced. This in China for China push risks opening up a greater divide between the headquarters of European firms and their China operations, a dynamic that poses long-term challenges for the companies concerned – reputational, cultural and financial (due to smaller economies of scale). Corporate boardrooms and policymakers will have to consider these risks as they weigh up their future relationship with China”.

Given pressure from the US, Chinese investments in Europe are being subject to greater scrutiny. Yet Europe seems reluctant to take a hard line on China because, unlike the US, Europe seems to be bearing the bulk of collateral damage. For example, EU’s economy was badly hurt by the energy crisis (caused by the sanctions in Russia) and over-regulation (Cross-Border Adjustment Mechanism or import carbon tax). Irina Slav notes “a tenth of Europe’s crude steel production capacity has already been idled…All zinc smelters have curbed production, and some have shut down. Half of the primary aluminium production has shut down as well. And in fertilizers, 70 percent of factories have been idled because of the energy shortage. Chemical plants are also curbing their activities, ferroalloy furnaces are going cold, and plastics and ceramics manufacturing is shrinking as well”. Some businesses are choosing to relocate to places “with cheaper and more widely available sources of energy, contributing to the deindustrialization process in Europe”; notably to the US and some in China. It is not evident Europe is prepared to take a further blow by cutting off relations with China.

By the same token, geopolitical tensions are dampening Chinese investments in EU. Luna Sun notes a China Chamber of Commerce to the EU (CCCEU) survey of 150 Chinese enterprises “found that 53 per cent of respondents believed the business environment had deteriorated in the 12-month period covering the second half of 2021 and the first half of this year – the third year in a row sentiment had dropped. It also said the deteriorating macroeconomy had created a less favourable business environment, while 38 per cent of respondents found that a hostile political environment had hit their business operations. In total, 80 per cent of the surveyed enterprises said geopolitical dynamics, the Covid-19 pandemic and supply chain disruptions were taking an increasing toll on both the global economy and enterprises operating in the EU”. “The wall put up around the hi-tech and telecom sectors in Europe is making matters difficult for Chinese enterprises operating in the EU…Chinese firms expressed concerns about the EU’s unilateral economic and trade policy instruments – including the 5G cybersecurity toolbox and foreign direct investment screening – as well as the toolkit to mitigate foreign interference in research and innovation. They said they worried this might cause decoupling of the two economies in the hi-tech sector and the fragmentation of international technological standards”.

European and North Asian MNCs are vague about their intentions because they are global exporters with large interdependencies with China. Their dilemma is that withdrawing from China not only means giving up on a large market, but the loss of global competitiveness in terms of supply chain efficiencies and scale; missing out on the latest trends, talent and on potential business partners to tap BRI opportunities. Instead, they have to bear collateral damage (from decoupling with China) and compete in a shrunken market space. Worse still, when their relocated plants come onstream, they will have to compete with factories sprouting in China. In this context, Chinese MNCs have the easier path of moving from being suppliers into developing brands as compared with OECD MNCs that has to reorganise their supply chain.

Events in Russia and China are illustrative of the way geopolitics is changing geographical patterns. The pressure to exit Russia probably surprised the MNCs themselves. While Western MNCs were quick to comply, the North Asian (Japan, South Korea and Taiwan) MNCs were reticent. The vacuum is left by the Western exit is being filled. Scott Foster notes “there’s also an unintended effect as competitors from countries led by India, Turkey and China pick up the slack…The Chinese government is helping private Chinese companies fill the void in the Russian market with special emphasis on small and medium-sized enterprises that are less likely to attract attention than large state-owned enterprises”.

Non-compliance with OECD sanctions can be tiered at three levels. At the first level, heavily-sanctioned countries are expanding trade with each other. At the second level, Global South countries – including Western allies such as India, Turkey and the Middle East – are carefully strengthening their economic relationships with Russia, China and each other. At the third level, the North Asian economies walk a fine line so as not to displease US while keeping open their relationship with Russia.

China’s transformation will be a major driver of geographical change. Ho-Fung Hung[11] explains “China is following the old Four Tigers model, in which they incentivize production and exports, but repress domestic consumption. The whole world’s imbalance between supply and demand and the problem of overproduction didn’t begin with China. But after China rises up as a big supplier of all kinds of manufactured products, the problem of the lack of demand for manufactured products makes it more and more difficult for other countries to follow China’s path, because there just isn’t enough effective demand for continuous expansion of the export production machine. This does create difficulties for many developing countries. For example, in Latin America, Mexico and Brazil were trying very hard to industrialize their economies and turn away from natural resource extraction to become manufacturers. But the rise of China basically deindustrialized them…Chinese products also conquered a lot of the world market, from cell phones to cars and many other things. This makes it harder for these countries to export their manufactured products. Because of the rise of China, many late-industrializing countries find it much more difficult to industrialize; some of them even deindustrialize. In Brazil, rising China has a lot of demand for their natural resources and raw materials, but also puts pressure on their industrial establishment. So thanks to China’s rise, Brazil industrializes and goes back to raw material and commodity exporting. Overall, China’s rise is contradictory: it helped raw material exporters in the aftermath of the 2008 global financial crisis, but it made the path for aspiring industrial powers much more difficult. In the end, the rise of a gigantic China makes it harder for other countries to replicate China’s model”.

Ho-Fung Hung[12] notes “ten years ago, when other countries became very dependent on Chinese loans, investments, and companies for mining…people are starting to find issues with this kind of dependency. They’re also encountering the traditional problem, in which a more developed economy extracts the most valuable and profitable resources, taking the raw materials away to be processed elsewhere; the local economy is plundered of raw materials without receiving many benefits in return. This very familiar pattern did show up in many Latin American and African countries, so much so that it became a winning electoral strategy to accuse the opposition of colluding with Chinese companies and taking away our resources”. “China is not particularly inventive in creating this kind of a neocolonial situation…They are just following the foot paths of old, global, neocolonial powers. Again, the effect on the ground in the developing world depends on whether the developing countries in question have multiple powers courting them, playing one against the other to get the best deal. If this isn’t the case, they often become too dependent on one supplier of capital. Of course, the outcome also depends on whether the local government has a strong, institutionalized state, capable of negotiating with external capital”. Ho-Fung Hung concludes “the recent trade war is trying to transform this Sino-centric network, but we still don’t know what it is transforming into”.

Ho-Fung Hung adds “in the twenty-first century, the situation is very different from the Early Modern period or the Cold War period, when modest states would accept their status as subsidiaries of bigger empires. Now, nationalism is in the air everywhere, from Ukraine to Taiwan, Malaysia, and all these smaller states. They want self-determination and independence. One way to achieve this is to play these big powers against each other, and this is what these smaller states have been doing. Our analysis can often focus too much on the dynamics between big powers, without paying enough attention to these smaller states…So for smaller and weaker states, a nationalist desire for self-determination and sovereignty is really driving geopolitics more than the preferences of big empires”.

The question is how far can OECD economies and MNCs go to reduce their “China dependencies”. If they don’t, the US would probably pile on the pressure. If they do, they are concerned that China would react by reducing access to its market. But the US could also be approaching its limits in exercising sanction power because if the sanction list covers too many countries and MNCs, it will lose impact.

The geopolitical contest in OECD and China is likely to end in a stalemate as MNCs can exploit home ground advantage. In my view, the main battleground for global corporate supremacy will take place in the Global South. Most of the growth opportunities – capital formation and financial deepening – are in the Global South. With the economic diversion, growth in the Global South is likely to surpass the mature OECD economies and possibly even China.

One major beneficiary is India with the largest population and the fifth largest economy in the world. The popular view is that OECD would like to position India to replace China as the engine for its growth. There are signs of OECD investment being diverted from China to India. Kane Wu and Roxanne Liu notes Refinitiv data showed that in tandem with a 35-6% decline in global and Asian merger and acquisition (M&A) transaction values, M&A transactions “involving China plunged by 35% year-on-year to $266 billion in the first nine months of the year, to the lowest level since 2013…though it remained Asia’s largest deals market…strategic sectors including semiconductors, artificial intelligence, healthcare and new energy vehicles are likely to be among the most popular sources of deals”. They note “dealmakers in Asia are betting a possible retreat of multinational companies operating in China and a rise in acquisitions in India and Southeast Asia will replenish the M&A pipeline, amid macroeconomic headwinds…Private equity firms, the region’s major deal driver with over $500 billion of unspent capital, have pivoted from China to look at other markets in Asia, particularly India and Southeast Asia, bankers and investors said. India M&A shot up 55% by end-September to reach $145 billion…Southeast Asian startups are also enjoying a boom in fundraising exercises by venture capital and buyout funds that are chasing bigger returns outside China. Within China, dealmakers said they expected opportunities for transactions involving multinational companies as the country’s economic growth outlook remains uncertain, the zero-COVID policy hits business confidence and Sino-Western geopolitical tensions linger. They are reviewing what to do to their China business by either bringing a Chinese investor or exiting it“.

It is evident India sees benefits in aligning with OECD and appears to be cracking down on Chinese companies to reduce its dependence on China. Chu Daye notes “Chinese smartphone brands in India felt a palpable sense of being squeezed by the Indian government’s crackdown…Indian tax authorities have been probing virtually every major Chinese smartphone company over alleged tax evasion, and more than 1,000 Chinese businesspeople have allegedly been mistreated over visa issues. Almost 2,800 foreign companies left the Indian market between 2014 and November 2021…High tariffs and tax disputes have become the two leading factors behind the foreign company exodus from India…India has…banned more than Chinese 300 apps, including Tencent’s WeChat and ByteDance’s TikTok…reportedly seeking to bar Chinese companies from its sub-$150 phone market in a bid to bolster the position of domestic players, though an Indian official has denied the report. The Chinese executive said the reason for the Indian government to call off the reported move is the realization that its domestic smartphone production capacity still has not reached the level where it can fill the gap left by Chinese firms, should they be banished from the market segment…India has also been seeking to bolster its domestic smartphone manufacturing sector, though it faces many challenges. For instance, Apple supplier Foxconn announced a plan to work with Indian giant Vedanta on a $19.5 billion deal on Tuesday to set up semiconductor and display production plants in Gujarat…Indian conglomerate Tata Group is in talks with Taiwan region-based Apple supplier Wistron to ramp up the latter’s iPhone production capacity by 500 percent from the current level…The deal could pave the way for Tata to become the first Indian company to assemble iPhones”.

Chinese MNCs are responding by shifting their attention elsewhere in the Global South. Chu Daye notes Chinese smartphone maker OPPO is reportedly setting up a plant in Egypt. This “may herald an exodus of Chinese mobile phone firms from India…Chinese smartphone brands are also looking at Indonesia, Bangladesh and Nigeria as replacements for India…companies will evaluate bilateral ties, market potential, preferential policies and labor costs, in that order”.

Decades ago, the notion of competitive Global South MNCs seemed far-fetched. Today, OECD MNCs face fierce competition from them and operate at a disadvantage because geopolitics restricts their degrees of freedom. While Global South MNCs can still tap opportunities in the matured but affluent OECD markets, the greater upside is in their own markets – including China and Russia. While staying below the OECD geopolitical radar, Global South MNCs will explore opportunities to expand business among themselves while governments collaborate to evolve a new and more informal ecosystem based on alternative networks and intermediation processes located in hubs in the Global South.

This brings us back to the issue of interdependence and globalisation. Akhil Ramesh points out “Russia’s invasion of Ukraine…revived discussions on increased dependence on adversarial nations, leading several nations to rethink the type of globalisation practised over the past two decades”. This includes European dependency on Russian energy supply, and Australia and South Korea’s experience with Chinese economic coercion. But interdependence is a two-way street. Iran and Russia are regular targets of Western economic sanctions and has learnt to cope with these attacks. Both China and India have faced the brunt of Western economic sanctions. “Initiatives such as Beijing’s “Made in China 2025” and India’s Atmanirbhar Bharat, or a self-reliant India” reflect “the two large Asian economies do not want to tie their technological or economic destiny to the West”.

Akhil Ramesh argues “globalisation was supposed to be an antidote to conflict, with increased interconnectedness a recipe to sustain peace. With the Ukraine conflict and increased US-China competition, nations are beginning to grasp the challenges associated with interdependence on adversarial nations and scaling back their interconnectedness with certain states. As the world moves towards multipolarity, the threat of weaponisation of interdependence looms over economies and, as a result, they might not prefer a small group of nations controlling entire value chains of vital industries, as the US and China have in the past 20 years. Consequently, the pursuit of diversification will lead to increased fragmentation of value chains”. There is little point to regret interdependence and globalisation. Without it, the world would not have enjoyed prosperity. Globalisation remains the only path to global economic growth. A retreat to beggar-thy-neighbour isolationism will be harmful not only to the global economy but also to national economies.


The fate of nations cannot be separate from that of their MNCs. When nations enter into decline, the loss of sovereign power will be eventually be followed by a decay in the prestige and presence of its MNCs (which may get acquired by foreigners). The converse is equally true. As MNCs lose competitiveness, their country will experience loss ability to project soft power. This explains why MNCs are at the forefront of great power rivalries to reshape the world order.

Several broad trends can be extrapolated. In my view, fragmentation will work to the disadvantage of the OECD incumbents. First, there is a natural process where some OECD MNCs will fall by the wayside. The critical aspect is whether they would be replaced by up-and-coming OECD or Global South companies. Second, Global South economies and MNCs have the cost advantage and, being less developed, offer higher prospects for economic growth and profit. In contrast OECD companies are constrained because of geopolitical risks (from their own governments). This reduces their global reach and ability to compete for talent and capital. Third, the premium is for countries able to provide assurance on the “safety” of its assets and that it is insulated from long-arm jurisdictional reach.

Hence, the MNC landscape will be multipolar. The rise of Global South MNCs will accentuate the decline in OECD MNC share of the global economy and markets. OECD governments need to be conscious of the impact of their policies on their own MNCs as the world heads towards fragmentation. Pressuring MNCs to restrict their business activities in “adversarial” countries and closing markets to “adversarial” MNCs assumes that the OECD economies can generate enough growth to compensate for the loss of activities. Governments should take greater heed on the interaction between geopolitical objectives and MNCs and develop a vision for their MNCs.


Agatha Kratz, Noah Barkin, Lauren Dudley (14 September 2022) “The chosen few: A fresh look at European FDI in China”. Rhodium Group.

Akhil Ramesh (31 October 2022) “Effects of Russia’s Ukraine war teaching world hard lessons on weaponised interdependence”. South China Morning Post (SCMP).

Aya Adachi, Alexander Brown, Max J. Zenglein (25 August 2022) “Fasten your seatbelts: How to manage China’s economic coercion”. Mercator Institute for China Studies (MERICS).

Cheng Li (5 August 2022) “China’s growing prominence in the aviation market and the space club”.

China Chamber of Commerce to the EU (CCCEU), Roland Berger (September 2022) “Strengthening mutually beneficial cooperation to shape the common future. A report on the development of Chinese enterprises in the EU in 2021”.

Chu Daye (14 September 2022) “OPPO’s reported Egypt deal may herald exodus of Chinese mobile firms from India”. Global Times.

Clete R. Willems, Niels Graham (27 September 2022) “TTC, IPEF, and the road to an Indo-Pacific trade deal: A new model”. Atlantic Council.

Daniel Denvir (30 July 2022) “What Chinese capitalists owe to Mao Zedong: An interview with Ho-Fung Hung”. Jacobin.

Daniel Denvir (31 August 2022) “Corporate interests are inflaming US-China tensions: An interview with Ho-Fung Hung”. Jacobin.

Diego Cerdeiro, Siddharth Kothari, Chris Redl (27 October 2022) “Asia and the world face growing risks from economic fragmentation”. International Monetary Fund (IMF).

Ellen Loanes (16  October 2022) “Despite sanctions, Russian fuel is still selling – here’s who’s buying”. Vox.

Erika Na (24 September 2022) “South Korea’s SK Group bracing for US-China decoupling, but admits it’s not possible to quit mainland market”. South China Morning Post (SCMP).

Global Times (3 August 2022) “Revenues of Chinese corporate giants top 2022 Fortune Global 500”.

Gregor Sebastian, Francois Chimits (30 May 2022) “Made in China electric vehicles could turn Sino-EU trade on its head”. Mercator Institute for China Studies (MERICS).

Gregor Sebastian (27 October 2022) “The bumpy road ahead in China for Germany’s carmakers”. Mercator Institute for China Studies (MERICS).

Hung Tran (27 October 2022) “Our guide to friend-shoring: Sectors to watch”. Atlantic Council.

Irina Slav (3 November 2022) “Europe may see forced de-industrialization as result of energy crisis”.

Jude Blanchette, Jonathan E. Hillman, Mingda Qiu, Maesea McCalpin (8 July 2020) “Hidden harbors: China’s state-backed shipping industry”. Center for Strategic & International Studies (CSIS).

Kane Wu, Roxanne Liu (30 September 2022) “Dealmakers eye China divestments, rise of India and SE Asia as M&A pipeline shrinks”. Reuters.

Luna Sun (2 October 2022) “Chinese firms in Europe concerned by calls for decoupling and growing support for protectionism”. South China Morning Post (SCMP).

Nick Fouriezos (29 September 2022) “Commerce Secretary Raimondo: Corporate America is increasingly considering pulling out of China”. New Atlanticist.

Nisha Narayanan (17 October 2022) “Changing Bretton Woods: How non-state and quasi-state actors can help drive the global development agenda”. Atlantic Council GeoEconomics Center.

Phuah Eng Chye (2015) Policy paradigms for the anorexic and financialised economy: Managing the transition to an information society.

Phuah Eng Chye (5 June 2021) “Global reset – Two whales in a pond”.

Phuah Eng Chye (12 February 2022) “Global reset – Economic decoupling (Part 5: Growing divergence between governments and MNCs)”.

Phuah Eng Chye (26 February 2022) “Global reset – Economic decoupling (Part 6: MNCs in a deglobalizing world)”.

Phuah Eng Chye (2 July 2022) “Theories on war and diplomacy (Part 3: Conflict in the information realm)”.

Phuah Eng Chye (30 July 2022) “The Great Economic War (GEW) (Part 1: The beginning)”.

Phuah Eng Chye (13 August 2022) “The Great Economic War (GEW) (Part 2: Strategic concepts and implications)”.

Phuah Eng Chye (27 August 2022) “The Great Economic War (GEW) (Part 3: The financial nuclear bomb)”.

Phuah Eng Chye (10 September 2022) “The Great Economic War (GEW) (Part 4: Battles reshaping the global monetary order)”.

Phuah Eng Chye (24 September 2022) “The Great Economic War (GEW) (Part 5: Global economic breakdown and monetary disorder)”.

Phuah Eng Chye (8 October 2022) “The Great Economic War (GEW) (Part 6: Geopolitics, monetary policy challenges and the collapsing tripod)”.

Phuah Eng Chye (22 October 2022) “The Great Economic War (GEW) (Part 7: Global depression and deglobalisation)”.

Phuah Eng Chye (5 November 2022) “The Great Economic War (GEW) (Part 8: Lawfare)”.

Prabir Purkayastha (29 October 2022) “US chip ban de facto declaration of war on China?” Asia Times.

Pierre-Olivier Gourinchas (11 October 2022) “Policymakers need steady hand as storm clouds gather over global economy”.  International Monetary Fund (IMF).

Scott Foster (26 April 2022) “Eurasian firms see Russia sanctions as big biz chance”. Asia Times.

Special Competitive Studies Project (Sept 12, 2022) “Mid-decade challenges to national competitiveness”.

Sujai Shivakumar, Charles Wessner, Tom Howell (1 September 2022) “Can semiconductor reshoring prime a U.S. manufacturing renaissance?” Center for Strategic & International Studies (CSIS).

[1] See Daniel Denvir.

[2] See Jude Blanchette, Jonathan E. Hillman, Mingda Qiu and Maesea McCalpin analyses the complicated and opaque system of formal and informal state support that assisted Chinese companies to gain dominance across the maritime supply chain; an aspect of Beijing’s evolving playbook supporting its rising control of strategically significant industries.

[3] The Special Competitive Studies Project perceives the US to be in a state of perpetual conflict with China and Russia, with rising likelihood of war. The protracted contests place a premium on the strength of the industrial base, innovation ecosystem and political will. See also “Global reset – Technology decoupling (Parts 1-2)”.

[4] See Sujai Shivakumar, Charles Wessner and Tom Howell.

[5] See “Theories on war and diplomacy (Part 3: The information realm)” and “The Great Economic War (GEW) (Part 2: Strategic concepts and implications)”.

[6] See “Global reset – Economic decoupling (Part 5: Growing divergence between governments and MNCs)”; “Global reset – Economic decoupling (Part 6: MNCs in a deglobalizing world)”.

[7] See Diego Cerdeiro, Siddharth Kothari and Chris Redl on the growing risks of economic fragmentation. Pierre-Olivier Gourinchas thinks one-third of the world economy will likely contract this year or next amid shrinking real incomes and rising prices.

[8] Hung Tran reviews the progress, potential, limits, and implications of friend-shoring – and China’s countermeasures – especially in the production and supply of critical high-tech and strategic products, focusing on five key sectors.

[9] See Nick Fouriezos.

[10] See Erika Na.

[11] See Daniel Denvir.

[12] See Daniel Denvir.