Germany is facing significant economic challenges as it approaches an election that could see Chancellor Olaf Scholz ousted. The country is grappling with fears of deindustrialisation, an energy crisis, and increased competition from China, alongside potential tariffs from the U.S. These issues are seen as symptoms of a collapsing business model, exacerbated by underinvestment during a period of low interest rates.
Chinese President Xi Jinping positioned China as a leader in globalisation and liberalised trade during a speech at the Asia-Pacific Economic Cooperation summit in Peru, contrasting with the inward-focused policies of the US under President-elect Donald Trump. Xi emphasized the inevitability of economic globalisation despite rising protectionism and geopolitical tensions, warning against isolationist policies.
The World Economic Forum in Davos concluded with a panel discussing the state of the global economy, acknowledging that while most countries have outperformed expectations, there are challenges ahead. The global economy is facing fractures, with a grim struggle for economic supremacy between Washington and Beijing, widening gaps between north and south, and challenges to liberal democracy. Despite this, globalisation is not dead, but is evolving into "glocalisation," characterized by shorter supply chains, emphasis on domestic manufacturing, and a more strategic role for government. The shift towards onshoring previously outsourced production has been accelerated by recent events, leading to a growing interest in industrial policy and green growth plans.
