The Director General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, recently urged countries to continue with globalisation while acknowledging that countries need to prioritise their national security.
She warned that if countries embark on large-scale reshoring, they would lose the benefits that come with specialisation, scale, and trade. This would lead to less resilient supplies and a decrease in productivity gains.
The US has recently introduced new legislation and administrative manoeuvres, which some interpret as a signal that the US is trying to regain its reputation as a manufacturing giant. China has also expressed concern about the rise of global protectionism.
Chinese premier, Li Qiang, urged the international community to rebuff protectionism and uncontrolled globalisation. The IMF has warned that decoupling from China would lead to a 7% reduction in global GDP, while Ms Okonjo-Iweala has put the cost from a break-up to trading blocs at 5%.
“The international community must be more wary of the challenges and risks brought about by protectionism and uncontrolled globalisation." Premier Li Qiang
It seems that together with Premier Qiang's opening address to the same summit, these warnings are a cry for help with a system that these bodies exist to serve. President Biden's policies aim to reassert the US's position as a globalised manufacturer.
However, there are concerns that this could affect China's already unbalanced economy. US companies have already responded with sizeable reductions in both inbound investment and sourcing from Chinese manufacturers.
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