In 1973, Alain Peyrefitte wrote a highly significant essay entitled “Quand la Chine s’éveillera… le monde tremblera” (“When China awakes, the world will tremble”). Fifty years later, events are proving him right. China’s emergence as a global manufacturing superpower shook many countries, leading them today to denounce globalisation in its current form. In this article, originally published in the magazine Pour l’Eco, Rodolphe Desbordes, professor of Economics, Director of the SKEMA Centre for Global Risks and author of Les Grands Enjeux de la mondialisation commerciale (Ellipses), analyses this second China shock.
China’s entry into the global economy at the beginning of the twenty-first century shocked the world. Levels of Chinese imports in developed countries rose spectacularly, but there was a trade-off: heavy manufacturing job losses in industries hit by the competition. This first Chinese shock not only revealed the degree to which international trade’s losers can be geographically concentrated, but also demonstrated their inability to bounce back, even years later, due to a lack of qualifications or regional mobility. In addition, it fed an attraction among voters for nationalist and protectionist candidates, helping to bring about Donald Trump’s 2016 election victory in the USA, which was followed by the US-China trade war.
The new Chinese wave…
In 2024, a further shock from China could be the final push that completely disrupts globalisation. After two decades of stellar economic growth, the Chinese economy has slowed markedly, hampered by Covid-19 and a struggling property sector. Chinese leaders are attempting to boost their economy through exports once more, turning back towards an economic model that had appeared outdated as they are incapable of moving to one driven by internal consumption. They aim to dominate the global market for the technologies behind the ecological transition: lithium-ion batteries, electric vehicles and solar panels. Thanks to genuine technical expertise combined with generous public subsidies, China is already highly competitive internationally in the manufacture of these goods. The conditions are therefore conducive to a second Chinese shock that would jeopardise high-potential industries in other countries.
…and the Western breakwaters
But European and American leaders have learned their lessons from the first shock. This time, they are refusing to sacrifice massive numbers of jobs and lose their manufacturing sovereignty in areas as strategic as vehicles (8% of European manufacturing jobs), batteries and solar panels. To defend their own interests, the European Union and the USA are threatening to retaliate against China with protective measures, restricting the export of certain technologies and putting in place their own industrial policies. The two Chinese shocks are to a great extent responsible for the tensions suffered by global trade in 2024, and the risks that we will see globalisation split into geopolitical blocks, causing damaging geo-economic fragmentation. What is required is quite the opposite: to open a dialogue between partners with the aim of rebuilding an international economic order that would be accepted by everyone and recognised not only between countries but also within them.
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