The Bloomberg News website published an article on October 10th titled "The Extinction of Globalization Is Overexaggerated" by Daniel Moss. The article excerpts are as follows:
Don't shed too many tears for globalization. The stable cross-border flow of goods, services, capital, and technology did not come to an abrupt end. The global economy has not fragmented to the point where it cannot be repaired. The transfer of some investments has far from freeing American industries from China's influence, but may instead enhance China's influence in the supply chain.
Fashionable terms such as backflow, outsourcing, and fragmentation are gaining popularity, simply describing some isolated and seemingly gradual development trends. These arguments can also be safely thrown out at meetings in Davos without worrying about facing challenges.
But they will still face setbacks: last year, the US China trade volume surged to record levels, and all those who advocate decoupling were slapped in the face. Another drawback is that catchy slogans cannot be comprehensive. The global circulation and shipment of goods may have reached its peak, but service trade has performed outstandingly. According to data from the Bank for International Settlements, the most globalized market, the currency trading market, has expanded to an astonishing $7.5 trillion per day.
The rhetoric of "de globalization" is endless, but in recent years, it has been proven that in the face of multiple shocks, trade is still highly resilient, and the degree of world economic integration is still very high. Even if we look at the trade between China and the United States, which is the most tense trade relationship, we can still find that the United States' imports from China in 2022 have increased significantly compared to 2017.
Caroline Froude of the University of California, San Diego, and economists from the World Bank and the International Monetary Fund have found that tariffs do lead to a certain degree of decoupling between the United States and China, but they have not broken the dependence on China, the world's second largest economy. As indirect connections increase, the situation may even be the opposite. In order to serve American customers who require diverse sources, third countries still require products or product components made in China. In other words, you cannot have professional knowledge and business opportunities overnight.
At a meeting held by the Federal Reserve in August, Laura Alfaro of Harvard Business School expressed a similar view. It is difficult to remove factories controlled by China from the value chain.
Although the United States' direct dependence on China has decreased, China's share in the total imports of "friendly" countries such as the European Union, Mexico, and Vietnam has increased. China is unlikely to replicate the strategy of other countries producing domestically in the United States through foreign direct investment to avoid policy restrictions, but Chinese companies are strengthening direct investment and expanding production facilities in key areas of Vietnam and Mexico.
In this era of economic governance, trendy terms can indeed add color to the covers of well-known magazines. Unfortunately, they can both illuminate the way forward and confuse the public. If what we see is true, the bizarre talk of economic and financial fragmentation may ultimately highlight how closely people and markets are connected.