Anti-globalization, or de-globalization, is a narrative of the slowdown or reversal of the process of global economic integration in recent yearsBut this is not a completely new expression, our world has been reincarnated many times in the great cycle of globalization and deglobalization for nearly a century.
The curtain of this round of anti-globalization planted the seeds from the financial crisis in 08, the Sino-US friction kicked off in 18, the new crown epidemic accelerated the global differentiation pattern in 20, and the first shot was fired in the Russia-Ukraine conflict in 22The sun is still rising, but the underlying logic of the world we live in is undergoing a profound adjustment.
The future is windy and turbulent, and the undercurrent is surging.
In this article, we focus on de-globalization, analyze its logic, study its history, and finally base on the future path under the assumption of de-globalization based on the current global pattern.
The underlying logic of de-globalization
Perspective on its essence
What is globalization?
To understand what deglobalization is, let's first think about what globalization really means.
For example, from the perspective of division of labor, we can roughly divide the world into three camps:Resource, producer and consumer.
among othersResource countriesIt has abundant energy minerals and is mainly responsible for providing means of production; Country of originIt has the advantage of factors, mainly intermediate processing; Consumer countriesThe comprehensive national strength is generally strong, and most of them have strong terminal consumption capacity.
Therefore, globalization is actually a mode of cooperation, which allows each closed country to use its own endowment advantages to join the global division of labor, improve resource utilization while maximizing overall efficiency.
In addition, globalization is not only economic, but also political, cultural, and technological globalization. The division of labour and cooperation between countries also facilitates the cross-border movement of technologies, services, people and capitalAs a result, a virtuous circle of economic efficiency, political harmony, cultural integration, and technological progress has been promoted.
The collapse of globalization
But on the other hand, the global division of labor has contributed to the overall efficiency improvementHowever, it has exacerbated the imbalance in the distribution of local wealth. Especially when the economic momentum is insufficient, the contradictions around the distribution of resources will become more prominent.
First of all, for resource countries, resource products are the core contradiction and where their national fortunes lie. However, on the one hand, resource products are affected by the fluctuation of the linked currency, and on the other hand, they will be affected by the impact of the capital expenditure cycle. Therefore, resource countries have an incentive to trigger resource wars in order to improve their pricing power.
Secondly, for consumer countries,On the one hand, over-reliance on cheap commodities from producing countries and cheap energy from resource countries will exacerbate the hollowing out of domestic industriesThe inherent contradiction of widening the gap between the rich and the poor in societyOn the other hand, the increase in the national strength of the producing countries will pose a threat to the hegemony of the consumer countriesChina shock is a good example. Therefore, based on the maintenance of hegemony and the protection of their own industries, consumer countries will tend to impose ** sanctions on producing countries, or even escalate into ** war or foreign exchange war.
Finally, from the perspective of the producing country,It is the general trend to use its own factor advantages to continuously earn ** surplus from consumer countriesWith the improvement of comprehensive national strength,It is also logical to be suppressed and sanctioned by consumer countriesTherefore, industrial upgrading and great power competition have become the main theme in the process of advancement of producing countries.
In a word
So to put it simply,De-globalization is the process of transformation or disintegration of the old global division of laborIt is often accompanied by the transfer and reconstruction of the industrial chain, which is manifested in political camp and economic multipolarization.
Global rotation from a cyclical perspective
Take history as a mirror
Looking back at history, this is not the first time that we stand at the fork in the road of "deglobalization". Judging from the data, from the late 19th century to the present, we have experienced a total of three rounds of globalization cycles.
The first cycle of globalization lasted from the late 19th century to the end of World War II.
The second scientific and technological revolution (the electrical revolution) from 1870 to 1914 linked the major capitalist countries (Western Europe, the United States, and Japan), and the pursuit of efficiency and profit led countries to cooperate with each other, and the rapid development of industry contributed to the prosperity of this round of globalization.
However, with the imbalance of economic development, countries have launched a fierce struggle for hegemony and colonies, and have entered a state of contraction, and ** protection measures have emerged in an endless stream. The First World War and the Great Depression of the thirties of the twentieth century marked the beginning of the first wave of deglobalization in full swing, which lasted until the end of the Second World War.
The second cycle of globalization lasted from the end of World War II to the 80s of the 20th century.
After World War II, the world was in ruins, and capitalist countries entered an era of economic growth. First of all, the demographic dividend and baby boom brought about by demobilized soldiers starting families have injected vitality into the economy. In addition, thanks to the reconstruction needs of Europe + Japan, the United States has gradually become the world's largest creditor, replacing the United Kingdom as the global hegemon, rebuilding freedom, and the wide circulation of global talent and technology. At the same time,The third scientific and technological revolution, represented by space technology and computer technology, has shone under the stable monetary mechanism of the "Bretton Woods system" and has greatly promoted this round of globalization.
However, with the rise of Japan and Germany, its high-quality and low-cost products began to gradually occupy the global market, and anti-globalization sprouted; In 1971, the United States** turned from a surplus to a deficit for the first time, coupled with the drag of the Vietnam War and the runaway domestic inflation, the disintegration of the "Bretton Woods system" finally transmitted the dollar crisis to the world; Coupled with the food crisis and the two oil crises, the great global stagflation has stimulated the rise of protectionismThe U.S. sanctions against Japan, which ran through the entire second round of anti-globalization, are a good example.
The third cycle of globalization has lasted from the 90s of the 20th century to the present.
On the one hand, the development of electronic computers and networks has escorted globalizationOn the other hand, the active participation of emerging economies represented by China in the international division of labor has pushed globalization to a new height.
However, since the subprime mortgage crisis in 08, the proportion of global ** in global GDP has begun to slow down significantly. On the one hand, the instability of the financial system has caused a rift in globalization. On the other handQuantitative easing under the over-issuance of debt has become the mainstream rescue strategy, but its nature of financial exploitation has also laid the groundwork for the wave of anti-globalization.
Brexit in 16 years has shown that anti-globalization has risen to the political level, the Sino-US ** friction in 18 years has gradually opened the curtain of this round of anti-globalization, and the new crown epidemic in 20 years has accelerated the reconstruction of the global industrial chain, and the conflict between Russia and Ukraine has further exacerbated the ...... camp
The tide has arrived, and we are already in the process of the third round of de-globalization.
The old global order and the new pattern
The way forward is one of them
The collapse of the old order
After sorting out the underlying logic and historical line of anti-globalization, let's take a look at the current global pattern and path extension from a higher perspective.
The biggest characteristic of this globalization is the formation of two major economic blocks, namely China and the United States, and Russia and EuropeThe former was written by the British historian Neil. Ferguson called it "Chimerica" (Central America), and the latter was called "Eurussia" by Credit Suisse analyst Zoltan Pozsar.
This is also the main axis of win-win cooperation between the three camps in the global division of laborThe United States pays dollars for cheap Chinese goods, and Europe pays euros for cheap Russian energy. On the one hand, cheap energy and commodities increase the real purchasing power of wages in consuming countries, maintaining their industrial competitiveness and people's living standards. On the other hand, China and Russia use the surpluses they earn to vigorously develop their economies, and at the same time buy financial assets from the United States and Europe, forming a mutually beneficial and symbiotic ecosystemGlobal value chains are developing at full speed, supported by efficiency models and financial integration.
However, as China's overall power as a producer country rises to the point where it begins to threaten the "one-power" pattern of the United States, the model of mutual cooperation based on "trust" is broken, which is why the list of US sanctions against Chinese technology has become longer and longer.
The curtain of anti-globalization is slowly opening, the original cooperation model has changed, and confrontation has become more and more frequent, followed by the competition for resources, the control of technology, and the game ...... around key geographical nodesThis is why the world is reducing carbon and restricting primary energy such as oil and coal while promoting renewable energy and electricity as a secondary energy source, why the United States wants to cut off China's high-end chips, limit our technological development, and why there will be many frictions in the Istanbul Strait (Russia-Ukraine war, natural gas, ** and food), the Strait of Hormuz (Palestinian-Israeli conflict and **) and the Taiwan Strait.
The price of the new paradigm
However, in the process of changing from one equilibrium to anotherThat is, the process of de-globalization in which China and the United States are hostile and Russia and Europe are separated will inevitably incur relatively large costs.
The first is the cost of industrial chain reconstruction.
The Sino-US war, the global epidemic, the Russia-Ukraine conflict...The global chain knots caused by geopolitics and natural disasters have accelerated the rise of protectionism, and the trend of "de-risking" has risen, and more and more countries have begun to realize the importance of industrial chain securitySex:The chain is too concentrated, like putting eggs in one basket, and once the conveyor path is cut off, the capacity is invalid.
Therefore, under the de-globalization, the restructuring of the global industrial chain is accelerating. On the one hand, the United States has passed a number of fiscal stimulus bills in recent years, vigorously promoting the reshoring of manufacturing, enhancing the strategic independence of key industries such as energy and semiconductors, and actively guiding friendly and near-shore productionMexico surpassed China to become the largest importer of the United States; On the other hand, Europe has also changed from the previous idea of "open innovation, open science, and open world" to open strategic autonomy, with more emphasis on "technological sovereignty" and "chain resilience".
However, for developed economies, the industrial chain nodes under the current round of global division of labor are detailed and scattered, and there is a high degree of path dependence, breaking the existing pattern directly indicates an increase in costsFirst, the high local labor force means that onshore production will be mostly limited to high-end manufacturing. Secondly, the selection of the production line, the early laying, and the control of product quality are not achieved overnight, which will generate additional time costs and friction costs; Finally, the focus on safety will discourage the development of comparative advantage, and the slowdown in technology diffusion and reduced production efficiency will also be cost headwinds.
Second, in a state of confrontation, the cost of rearmament of countries to maintain order and the cost of replenishing stocks to compete for resources will increase significantly.
According to the "National Defense Authorization Act for Fiscal Year 2024" signed by Biden in December 2023, the defense budget of the United States in fiscal year 2024 is as high as 886 billion US dollars, setting a new record for US defense spending, accounting for about 40% of the total global military spending, which has exceeded the total military spending of the next nine countries. In Europe, Germany's defense budget for fiscal year 2024 increased by 34%, reaching 56.5 billion US dollars, has maintained growth for 9 consecutive years; France increased by 75% to US$49.7 billion; Russia added about $120 billion. In Asia, South Korea plans to spend about $270 billion on military spending in the next five years, and Japan's defense budget has risen for 11 consecutive years and is expected to grow by 16 percent in 20245%, reaching an all-time high of $55.9 billion.
The so-called peace dividend is fading away.
At the same time, with the frequent occurrence of confrontation and conflict, the continuous rise of the strategic position of commodities will push up their ** and increase global inflationary pressures. At present, OPEC led by Saudi Arabia and Russia continue to tighten supply, and the shale oil game with the United States continues to be implicated, which is implicated in the replenishment demand of the United States to rebuild the Strategic Petroleum Reserve (SPR) and global energy security. In addition, there are European natural gas stocks, Indian coal stocks and so on.
Finally, in the context of deglobalization driving up global costs, maintaining the stability of the financial system will entail a higher cost: the cost of fighting inflation.
The "freedom" of the United States comes from the hegemony of the dollar, and the freedom of the hegemony of the dollar comes from quantitative easing, but the "freedom" of quantitative easing is based on the cooperation model of mutual trust and the ** chain of globalization. Deglobalization has raised the center of global inflation and forced the Fed to keep interest rates higher, because once the easing of monetary policy leads to an increase in demand, then the constrained ** will push inflation higher again.
In summary, we can see that the increase in costs under deglobalization will give friction to global operations from all angles:Surging costs mean stickier inflation, higher interest rates and borrowing costs on the one hand, and higher spending on the other hand means higher debt, more diluted sovereigns, and a more fragile monetary system.
Taken together, it is a higher probability of stagflationary risk, and the acceleration of the collapse spiral of the monetary system.
Where is the road of our country?
The way forward Second
China, which is in the eye of the anti-globalization storm, will also face the impact of industrial chain restructuringLow-end manufacturing will gradually undertake to Vietnam, Cambodia and other Southeast Asian brother countries, high-end to compete with India, high-tech benchmarking Japan and South Korea, catching up with Europe and the United States.
New problems arise under the new positioning, such as:overcapacity and insufficient demand; But there will also be new strategies, such as:Boost domestic demand and industrial upgrading.
From a global perspective, China's industry is more in the middle and lower reaches, so it is necessary to adjust the main direction, increase investment in scientific and technological innovation and other upstreams, and accelerate the clearance of backward industriesThat is, from the old model of relying on real estate and its industrial chain to drive the economy, to a new model focusing on industrial upgrading and improving labor productivity. At the same time, we will make full use of the advantages of the whole industry chain to achieve a balanced and independent export structure.
Write at the end
The tide of de-globalization has arrived, and the underlying logic of the world's operation is changing. Geo-camping is becoming more and more obviousThe world is shifting from an efficiency model to a security model, the value chain tends to be localized, and competition and game will become the main line.
Everything will become less stable. Economic blocking,Cyclical dislocation or increased volatility, and a multipolar payment system will also impact the existing monetary system; Geo-camping,** The chain may be tied for a long time, resulting in an upward shift in the inflation pivot and a downward shift in the growth pivot, and the pain of top-down transformation will continue.
But life has to go on, and everything will return to a new balance. Just as the flow of energy pipelines is being reshaped by the geopolitical pattern, the migration and reconstruction of the industrial chain has been underway: Russian pipeline gas flowing to Europe is being replaced by liquefied natural gas from the United States, and Japanese and South Korean chips flowing to Russia will also be replaced by chips produced in Chinese mainland. In Zoltan's words, "Whether it is a TSMC (TSMC) chip or SMIC (SMIC) chip, Russia's missiles can fly in a perfect arc." ”
Sorting out the underlying logic and pattern changes of de-globalization is only the initial part, and a detailed understanding of the direction of the restructuring of the global industrial chain and the details of capital flow can truly grasp the future opportunities. To this day, the author still cannot see the path of many things, such as the magnitude and depth of the future turn of de-globalization;