Chinese President Xi Jinping speaks at an event held by the National Committee on U.S.-China Relations and the National Committee on U.S.-China Business during APEC Leaders Week in San Francisco, California, on November 15, 2023.
Carlos Barria | AFP | Getty Images
A senior International Monetary Fund (IMF) official warned on Tuesday that the rift between the U.S.-led Western economic bloc and those aligned with China threatens global trade cooperation and economic growth.
Gita Gopinath, deputy managing director of the International Monetary Fund, said in the report speech Stanford University professors say the global pandemic and events such as Russia’s invasion of Ukraine have disrupted global trade relations in ways not seen since the Cold War.
“Countries around the world are increasingly guided by economic security and national security concerns in deciding who to trade and invest with,” she said, adding that this has led to countries increasingly choosing sides between China and the United States. Team
Gopinath said that while increasing economic resilience was “not necessarily a bad thing”, the trend toward fragmentation could lead to a breakaway from the “rules-based global trading system” and “a significant reversal of the gains from economic integration.”
Tensions between Washington and Beijing have been escalating as the United States steps up trade restrictions and sanctions against China on national security grounds, while concerns about Beijing’s advances in the South China Sea and rhetoric around Taiwan have also dented sentiment.
Growing tensions between the world’s two largest economies have been reflected globally, with more than 3,000 trade restrictions imposed by countries around the world in 2022 and 2023, an increase from 2019, according to data compiled by the International Monetary Fund. Three times more.
Gopinath said trade between the China-U.S. bloc has declined compared with trade between countries within the bloc.. American Group mainly include Europe, Canada, Australia and New Zealand, while countries leaning towards China include Russia, Eritrea, Mali, Nicaragua and Syria.
Since the invasion of Ukraine, trade between the bloc has fallen by about 12% and foreign direct investment by 20% compared with bloc members.
China has struggled to maintain foreign investment, especially amid rising tensions with the West.Foreign direct investment flows into the country It is said The first three months of 2024 were down 26% compared with the same period last year.
future impact
Gopinath said that while economic fragmentation has not yet reached Cold War levels, its potential impact is much greater because of the global economy’s greater reliance on trade.
If the divide is not bridged, the International Monetary Fund estimates that the economic cost of world GDP could be as high as 7% under extreme fragmentation. If there is a slight split, GDP will be hit by about 0.2%.
The IMF said low-income countries were likely to be hardest hit because they were more dependent on agricultural imports and foreign investment from more developed economies.
Gopinath said that despite the fragmentation trend in the world economy, the proportion of total trade in goods to global GDP has been relatively stable over the past two decades.
One reason is that the effects of fragmentation are buffered by a group of countries that remain neutral toward the United States and China, such as Mexico and Vietnam, which act as “linkage” economies through which trade and investment can be rerouted.
Gopinath said that by using their “economic and diplomatic influence”, these non-aligned countries can play a greater role in keeping the world integrated.
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