By Gordon Brown – Whether or not one realizes it, 2018 may have been a historic turning point. Poorly managed globalization has led to nationalist “take-back-control” movements and a rising wave of protectionism that is undermining the 70-year-old American-led international order. The stage is set for China to develop its own parallel international institutions, auguring a world divided between two competing global-governance systems.
Whatever happens in the next few years, it is already clear that the 2008-2018 decade marked an epochal shift in the balance of economic power.
Whereas around 40% of production, manufacturing, trade, and investment was located outside the West in 2008, over 60% is today.
For decades after its formation in the 1970s, the Group of Seven (G7) – Canada, France, Germany, Italy, Japan, the United Kingdom, and the US – essentially presided over the entire world economy. But by 2008, I and others had begun to discern a changing of the guard. Behind the scenes, North American and European leaders were debating whether it was time to create a new premier forum for economic cooperation that would include emerging economies.
These debates were often heated. On one side were those who wanted to keep the group small (one early US proposal envisioned a G7+5); on the other side were those who wanted the group to be as inclusive as possible. To this day, the results of those earlier negotiations are not fully understood.
The current trade conflict between the United States and China is symptomatic of a larger transition in global financial power. On the surface, the Trump administration’s confrontation with China is about trade, with disputes over currency manipulation thrown in for good measure. But from Trump’s speeches, one gathers that the real battle is about something bigger: the future of technological dominance and global economic power.
While Trump at least detects the growing threat to American supremacy, he has ignored the most obvious strategy for responding to it: namely, a united front with US allies and partners around the world. Instead, Trump has asserted a prerogative to act unilaterally, as if America still rules over a unipolar world. As a result, a trail of geopolitical ruin already lies in his wake. more>