For decades, a reassuring belief has shaped international politics: Economic interdependence makes war costly. When capital flows freely and supply chains crisscross borders, nations should reject conflict because of the damage to themselves.
Yet, America’s experience of the “China shock” well illustrates how rivalry does not dissolve but can sometimes intensify with integration.
Trade with China has generated enormous aggregate benefits to the US, but concentrated loss in specific parts of the population, displacing workers and hollowing out some US industries. The anger of those sidelined by globalisation has fuelled populist movements and turned economic grievance into nationalism and protectionism.
Today, geopolitics and economics no longer jointly drive greater integration. They are working together to pull the world apart.
The United States, long the architect of the rules-based open global economy, is now actively redefining and bending the rules it urged the world to follow. Tariffs, sanctions, industrial policy and technology restrictions have become central instruments of US international strategy.
The strategic reality is no longer about who has the most power to keep the system going but who has the most incentives to do so.
For further reading, please visit Channel News Asia (CNA) here, where this article was first published on 1 July 2026.