The COVID-19 pandemic has catalyzed the emergence of a multipolar global economy, with states and regions worldwide moving towards protectionist trade policies, particularly in industries of strategic importance. This will shape the operating environment for businesses, as they seek to make manufacturing and supply chains more resilient to political and economic turbulence.

Myriad insights were presented at the webinar, along with policy recommendations on how to navigate the geopolitical landscape.

Stewart Paterson discussed the consequences of China becoming the world’s largest trading country in a global trading system not designed to have a non-market economy. He argued that China is not likely to comply with the criteria of symmetric and sustainable trade: state-owned enterprise reform, a liberalized capital account, a market-driven exchange rate, and removal of the industrial subsidies by which China gained its market share in manufacturing and trade. In the absence of a complete shift to a genuine market economy, Paterson suggested the inevitable move towards economic resilience by both China and the rest of the world.
Masamichi Ito, Director of Industrial Research of Japan External Trade Organization (JETRO), remarked on the importance of striking a balance between efficiency and resilience in trade policy. Ito recognizes that, to bolster more resilient supply chains, some efficiency may be sacrificed in the pursuit of self-contained or redundant supply chains in home countries or lower-risk regions. He also acknowledged the industry challenge of accounting for force majeure and other risks when deciding to create new production sites and supply chains.
Yu Jie, Senior Research Fellow on China, Asia-Pacific Programme, Chatham House, pointed out that China hopes its Dual Circulation strategy will restore its economic resilience while reassuring the supply chain. She noted that, given China’s aim to close the income gap between its citizens, the country will have to expand beyond manufacturing into services and digital trade – and the world should expect China to become more proactive by setting trade standards in these sectors.

The webinar, chaired by Ryan Avent of The Economist, also took questions from the audience.