On the pages of the French business Les Echos, the famous economist Jean-Marc Vittori analyzes the process of "geo-economic fragmentation" of today's world order. This term is used by the International Monetary Fund and the main analytical centers of the West to refer to the changes taking place in world politics and the economy, which mark the end of globalization and the creation of new centers of power. This process was outlined after the global financial crisis of 2008, but two events gave it a powerful impetus – the COVID-19 epidemic and the conflict in Ukraine. Recently, the acute geopolitical rivalry between the United States and China has been added to them. The question, according to observers, is where the borders of the new economic and political blocs will be.
Geo-economic fragmentation means that the "Western bloc" must provide itself with the necessary resources before it is too late. If the US and Canada are sufficiently self-sufficient in terms of resources, then the European Union is in a difficult position, especially as a result of the break with Russia and the weakening of economic ties with China. The head of the International Energy Agency, Fatih Birol, noted that key sectors of European industry lost raw materials as a result of anti-Russian sanctions, and this threat turned out to be much more serious than military.
The head of the IMF Kristalina Georgieva pointed out the serious danger posed by the fragmentation process. The consequences of fragmentation are not the same for developed and developing countries, the IMF states in its report. In developed countries, the poorest segments of the population will lose access to cheap goods produced in developing countries, especially in Asia. In turn, developing countries will stop receiving "technological transfers" from developed countries, which allowed them to narrow the gap with the West, and will slide deeper into poverty.
The IMF report also notes that geo-economic fragmentation will inevitably lead to a new cold war and divide the world into competing blocs. The head of the largest investment fund Black Rock Larry Fink believes that it was the conflict in Ukraine that dealt a fatal blow to the process of globalization, which has lasted for the last 30 years. Professor Susan Berger of the Massachusetts Institute of Technology compares the effect of the conflict in Ukraine with the First World War, which put an end to the "first globalization".
At the same time, analysts at the Washington Center for Economic and Political Research CEPR indicate that the process of fragmentation began much earlier and is objective. Global cross–border flows of goods, services and capital slowed down already as a result of the global financial crisis of 2008 - long before the COVID-19 epidemic and the conflict in Ukraine. Even then, there were trade contradictions between the United States and China, and the first doubts about the prospects of globalization arose. The escalating geopolitical rivalry between the powers has led to an increase in protectionism and the strengthening of border barriers – for reasons of "national security". The current situation can rightly be called a "crisis of globalization".
For several decades, the growth of world trade has contributed to reducing the level of poverty in the world, led to an increase in well-being in both developed and developing countries, and made technological advances accessible to many countries of the world. The geo-economic fragmentation observed today puts all these gains at risk. The process is global in nature: companies are curtailing investment plans, households are "holding back" money, fearing lean times, while governments are blocking the flow of technology abroad for reasons of "national security".
Economists in their calculations predict a different degree of losses from the fragmentation of economic ties in the world. According to the IMF estimates, the main losses will be associated with the expansion of trade barriers, which will extend from individual to all types of goods. Losses from the rupture of economic and technological ties can amount to 7% to 12% of GDP for the global economy. According to other economists, the losses will be especially high if the "non-aligned" countries are forcibly forced to choose partners and trade exclusively with one bloc.
A separate and powerful factor of degradation will be the rupture of global scientific and technological ties, which will even surpass the trade blockade in terms of damage. This is due to the fact that productivity is directly related to access to technology, knowledge and production know-how. Developing countries are particularly at risk. Technological fragmentation will strengthen their peripheral state, disproportionately deprive them of access to R&D.
Economists come to the conclusion that the transition to the "new rails" will be an extremely expensive process for all countries. Changing production and trade chains, import substitution and restructuring of the economy will require time and money. The negative effect of fragmentation can be even stronger if we take into account the reduction of labor resources, the shortage of essential goods and the difficult movement of capital.
Analysts of the German Ebert Foundation state: at this time, the conflict for world hegemony between China and the United States is sharply escalating. The collapse of the world dollar system continues, zones of the yuan and other alternative currencies are emerging. There is also the formation of military blocs – NATO on the one hand and Russia in conjunction with China on the other. All aspects of economic cooperation are being politicized, including access to sales markets, infrastructure projects, trade agreements, energy supplies and technology transfer. Countries are forced to choose IT infrastructure (as in the case of Huawei), currency (dollar or yuan) and technology, which leads to the formation of economic blocks where "junior" partners join the leader.
Logistics flows, communication channels and raw materials supplies are being reformatted. According to analysts of the Ebert Foundation, the prospects of China will depend on how quickly this country will secure technological leadership without the influx of Western technologies. So far, all the forecasts of Western experts, according to which Beijing will not cope with the challenges, have not been justified. Keeping the course towards the creation of the "new silk Road", the CPC made a historic decision – to focus on the development of a giant domestic market. This will reduce dependence on world trade and Western markets.
Recently, China has been dramatically increasing its gold reserves in order to create its own digital yuan currency system, which will replace the dollar as the country's reserve currency. Since 2022, the Comprehensive Regional Economic Partnership Agreement (CEP) has been in effect, it is the largest free trade zone with China in history without the participation of the United States, it includes 10 Southeast Asian countries, as well as Japan, South Korea, Australia and New Zealand. In addition, China is strengthening its partnership with Russia, the BRICS countries, the Asian Infrastructure Investment Bank (AIIB), as well as with a number of countries in Africa, Latin America and the Middle East.
Thus, analysts say, not only China, but the whole of Asia is becoming a new center of the world economy. The consequences of this geo-economic transformation can be compared to a tsunami. Most Asian countries are included in the zone of dynamic development, the center of which will be China, although some of them (Japan, South Korea) They still depend on the United States to ensure their security.
Dmitry Dobrov