A different path of globalization
In the West, China is often perceived as a “challenger” of the world order, but in many areas, China is as supportive of international norms, rules and treaties as Western countries are, if not more so. Meanwhile, in the past year we saw investments in the Chinese Belt and Road Initiative project decline. Not because China is weakening, or other countries are less willing to cooperate with China, but precisely because China is becoming a mature global power. The country now more strategically and responsibly considers foreign investment, as the U.S., Europe and Japan have done for decades. During the coronavirus crisis too, the stability of the Chinese global power has become apparent. In fact, the rapid recovery of the Chinese economy soon turned out to be a vital driving force of the global economy. In addition, in 2020 China was the largest economy to sign the RCEP trade deal of 15 countries, the biggest trade deal in the world. While the Western world is skeptical about accelerated integration with the global economy, Eastern countries actually embrace further economic globalization.
In 2020, Russia stayed in the background, but it’s precisely this that shows Russia is notably changing its course. It’s becoming a geo-economic power that leans less on military capacity than we think and is creating more influence with strategic economic policy. The Eurasian Economic Union is an important Russian initiative to strengthen economic ties with Eastern countries, so that Russia gains a stronger position than the West in respect to Europe. Russia’s biggest ambition is to create “technology transfer” – to import high-grade technology from Europe, Japan and South Korea to revive its own economy. With its new, remarkable course, Russia is laying the groundwork for this strategic move.
Thus, the complexity of globalization will become apparent in the coming years. The first responses to the coronavirus crisis, containing phrases such as “reshoring” and “the end of globalization”, seem to have been based on false hope. There has not been a fundamental reappraisal of efficiency in value chains either. Globalization will continue, but in a different way. There will be different types of globalization, as there are different elements to the world order. Many non-Western countries still embrace economic globalization, while Western countries, under the influence of certain political groups, are becoming more skeptical. Because of these dynamics, political globalization, in the form of multilateralism and the protection of human rights, is becoming more difficult – rising countries such as China are less active in this area. Furthermore, new domains of globalization are emerging, such as the digital domain, where countries will be in direct opposition to each other with different digital models, projects and strategies, such as the Chinese New IP internet protocols, the Russian Runetand the European internet and data strategy and the GAIA-X platform. All of these projects gained momentum in 2020 and will take shape in the coming years.
Hence, in 2020, two major implications of the new complexity of globalization became clear.
First, there are stronger borders between the superpowers. The alliance between the U.S. and Europe is no longer a given. The stakes are getting higher because of the rise of other Eurasian countries and the cooperation between Western superpowers will become more opportunistic. The conflict between the U.S. and China will outlast Trump. 2020 also saw India and China butt heads with military clashes in the border region and mutual economic sanctions. The borders between superpowers are becoming harder in these times of hegemonic shift. Second, an opportunity is arising for a new model of globalization, in which Europe could play an important role. Efficient value chains will remain the driving force of economic growth and most developing countries will stay amenable to the model of economic globalization.
Precisely in this world, where the conflict between the U.S. and China is threatening the current model of globalization, an opportunity is arising for Europe to break new ground. With regulation, digital models and multilateral strategy, Europe may come to lead the world increasingly often in its own way, a way that would allow for a new phase of globalization.