THE US TRADE AND TECHNOLOGY WAR AGAINST CHINA AND THE RESULTING GEOECONOMIC FRAGMENTATION: POTENTIAL IMPLICATIONS AND RISKS FOR THE GLOBAL ECONOMY

Abstract

The aim of the paper is to assess the possible consequences and risks for the global economy due to the increasingly pronounced geoeconomic fragmentation, dominantly determined by the trade and technological war of the US against China. Based on benchmark studies’ findings, we reason that decoupling and trade fragmentation could manifest through several main channels. These are, among other things: the slowdown in the growth of global trade, reduced migration, decreased FDI, and bans on the transfer of certain high technologies. In order to achieve the primary goal of the study, we suggested pragmatic ways to preserve as many of the benefits as possible resulting from trade openness, that is, international economic cooperation. First of all, in addition to more intensive communications of the main global economic actors, in which additional efforts would be made for compromise solutions along the lines of argumentation of the academic community and experts in relevant international institutions, the work of leading multilateral organizations should be revitalized, giving greater importance in their leadership to developing countries, especially China. In the end, we argue that, despite all the risks, it is not realistic that geo-economic fragmentation will lead to a significant decline in most types of economic cooperation at the global level since there are no valid (geopolitical) reasons why Western countries would stop importing price- and qualitatively competitive products from China. Instead, collaboration will primarily be reduced to a limited number of high-tech sectors, perceived in Washington, Brussels, and Beijing as strategically important.