By Kunling Zhang
In this interview, two economists and specialists of China discuss the concept of deglobalization, contextualizing it within recent and less recent global processes, from the financial crisis of 2008 to current global and regional political developments affecting international collaboration. Offering an analysis from China, Pompeo Della Posta and Kunling Zhang compare the ways in which Europe and China have reacted to these conditions, notably through the “Open Strategic Economy” policy and the “Belt and Road Initiative,” respectively.
Kunling Zhang: Deglobalization is not a novelty. Some argue that its first signs can be traced back to the global financial crisis of 2008/09, with the contraction of world trade escalating during the COVID-19 pandemic. Based on your observations, what are the facts, patterns, and trends in the development of deglobalization? And what are its causes?
Pompeo Della Posta: The global financial crisis that started in 2008 and the COVID-19 pandemic have certainly played a significant role in determining the decline of economic globalization. However, the current phase of slowbalization (as some probably optimistic observers prefer to call it, rather than deglobalization) is different. While those events reduced the very possibility of engaging in international operations, the current situation is the result of a deliberate political choice by usually right-wing populist governments. This clearly shows that globalization is far from inevitable, as Margaret Thatcher claimed it was when she introduced her famous TINA (“There Is No Alternative”) acronym. This brings us to the second part of your question. Economic factors have certainly played a role in determining the change of direction in the world. The global financial crisis has made it clear that the promises the prophets of globalization made—for example, the famous “trickling down,” according to which globalization would bring benefits to both those at the top and those at the bottom of the economic and social ladder—have not materialized and that globalization has also entailed heavy and unevenly distributed costs, which were deliberately ignored.
Geoeconomic motivations, however, have also played a role. There is a rising country, China, which threatens the hegemonic position of the incumbent world leader, the US. The latter is trying to avoid being overtaken by the former, not only economically but above all politically and militarily—this is probably the major fear the US and its allies have. By looking at the data, however, we can see that unlike the US—with its 750 military bases scattered across 80 countries worldwide—including six of them across the shores of the Chinese territory—China has only one external military base, located in Djibouti, where many other countries also have bases for the purpose of patrolling the world’s most important oil route. Moreover, China’s military expenses with respect to GDP represent less than 1.7 percent, a percentage in line with that of EU countries before the war in Ukraine but representing only half of the US’s 3.4 percent. And if we look at nuclear warheads, we also observe that the US has 5,100 of them, as opposed to China’s 410, this latter number corresponding to the sum of warheads France and the UK possess. In other words, forgive me if I simplify, these figures suggest that globalization was deemed to be acceptable, and in fact China was not perceived as a threat to the West as long as it exported shirts, pants, and simple labor-intensive products; but it is no longer acceptable to the West today that the “Middle Country” exports electric vehicles and technologically advanced products. To justify its position towards China, however, the US (and maybe to a lower extent, also the EU) formally invokes “protection” against the (far from proven) risk of possible future military threats, rather than outright protectionism from economic challenges, as it would be more appropriate to argue instead.
KZ: What role does the US play in determining the EU’s position on economic globalization?
PDP: The pressure the US exerts on European countries is evident. In 2019, for example, the Italian “yellow-green” government (formed by the “5 Star Movement,” a protest-populist party, and the “Lega,” a conservative and partly right-wing populist party), signed a memorandum of understanding (MoU) with China, agreeing to join the Belt and Road Initiative (BRI), a project launched by the Chinese government in 2013 to connect its Western provinces with the rest of Asia and Europe and revive the trade routes active along the Ancient Silk Road before the discovery of the Americas. In 2022, though, a new center-right government came to power in Italy, and in 2023, among its first measures was the decision not to renew the MoU. Anecdotal evidence suggests that this move was partly motivated by an explicit request from the US government to eliminate the anomalous situation of Italy as the only country belonging to both the US-centered G-7 organization and the China-based BRI. The US exerts a similar influence on EU’s economic choices, arguing that the military shield provided by NATO mostly rests on the conspicuous US financial investment (for which Trump now demands repayment from his protégés). Even after Russia’s invasion of Ukraine, it is unclear whether the threats looming over the US and EU are really justified: the military spending of the whole EU is about three times larger than the amount Russia spends on its own military, which is about ten times less than US military spending.
Moreover, it cannot be ruled out that Russia might have perceived NATO’s eastward enlargement as a threat to its own security (we, Westerners, often make the mistake of thinking that we are the only ones entitled to feeling threatened, while others should automatically feel reassured by our undoubted good faith). That said, of course, I find Russia’s reaction unacceptable, not only because every war can and should be avoided through diplomacy, but also for the utter indifference it shows towards the dramatic toll of human lives imposed on both sides, as if the tragic experience of previous wars, in Europe and elsewhere, had been in vain.
KZ: Do you think that the European Union will have anything to say on the world stage if it continues to be so fragmented, that is, if it does not move forward with political integration?
PDP: I certainly believe that the EU has the potential to play a positive and significant stabilizing role on the world stage, if only because of the memory of the two dramatic world wars that were fought on that continent. To do so, however, it must overcome the obstacles that limit the exploitation of this potential. It should not be too difficult to understand that only by joining forces can we make our voice heard around the world. Let us consider the fact that in 2050, the EU population will be only 4 percent of the world’s population: what then will the population of each European country represent as a fraction of the world’s population? What can each of them hope to achieve by acting alone? But of course, this is a problem we have been facing since the beginning of the integration process and which started during the Cold War, partly based on the desire to avoid seeing again horrors such as those experienced during World War II.
Over the past 70 years, though, we have not been able to take the necessary steps to build a European federation of states, somewhat like the US did. Of course, we cannot compare the American states with those of the EU, which differ from each other in terms of language, history, legislation, culture, and traditions—unlike US states. What is really striking is also that not even the (right or wrong) perception of a military threat arising from Russia makes Europeans understand the need to join forces or at least coordinate individual countries’ military expenses: I find that there is a clear disconnect between the repeated alarms about the (presumed) threat to the EU coming from Russia and the myopic response of each European country that individually increases military spending for a national army, with Germany being the most active in this field (its military spending has increased by 23.2 percent in 2024 compared to 2023, and it plans on spending a total of €400 billion on the military over the next few years, not only for defense but most likely also in an attempt to compensate the economic difficulties its industries are experiencing).
KZ: How do you assess the feasibility and limitations of the EU’s “open strategic autonomy”? What are the main internal constraints (such as the different interests of Member States) and external pressures to be addressed in the process of pursuing it?
PDP: The expression “open strategic autonomy” is an apparent oxymoron, by which the EU wants to assert its strategic autonomy without giving up the openness of its economy. In other words, the EU recognizes that the position of total openness and lack of policy intervention it pursued in the past has severely limited its ability to keep pace with the many technological advances that other large countries have been able to accomplish. For example, in the US, large capital inflows into the Silicon Valley provided the necessary funding for numerous privately owned high-tech start-ups, while in China it was thanks to the combined action of private actors, state-owned enterprises, and public subsidies.
I welcome this paradigm shift, leading to the novel EU’s strategic autonomy approach. It should be remembered, though, that so far, to abide fully by the principle of market openness, the EU has been monitoring in each of its Member States every slight deviation from free market principles and preventing as much as possible any public subsidy that might impair the maintenance of a plain level field across EU countries, while at the same time discouraging trans-European cooperation at the community level. However, both Enrico Letta and Mario Draghi—former prime ministers of Italy—in their recent reports encourage such cooperation, which is partly already taking place, for instance through the creation of inter-European “alliances” in some specific industrial areas. Letta even proposes the introduction of a fifth freedom (in addition to the free mobility of goods, services, labor, and capital), namely the free movement of research, knowledge, innovation, and education. He also proposes the “28th virtual state” legislation, which, by complementing the legal regimes of the 27 EU states would allow European companies to invoke it in place of the national legislation, thereby overcoming the bureaucratic obstacles that limit cooperation between businesses at the European level. To understand the current situation, just think of Letta’s comments on the state of railways in Europe, where high-speed trains in most cases operate within each country but not across borders.
Letta’s propositions thus are good and promising, but we should not forget that, for example, the Airbus project was launched thanks to government subsidies and the joint effort of companies in four European states (France, Germany, the UK, and Spain), but against the will of the EU. Boeing, the EU, and the WTO would have preferred to preserve a global aviation monopoly rather than violate the sacred precept of no government subsidies and free markets (although operating in a regime of monopoly). I am therefore very pleased that the EU has now changed position. It would be fair, however, to explicitly acknowledge this change of direction—even if it means saying “sorry, we were wrong”—and explicitly renouncing the neoliberal economic theory that has been followed until now, which, they do not seem willing to do.
At the same time, I welcome the desire to balance the finally recognized need for “strategic autonomy” with the need to preserve a certain degree of openness. Of course, as your question already suggests, this dual approach will not be an easy exercise, as the economic interests of different European countries will push in one direction or another, but it is certainly something worth trying. Such a compromise between two opposing needs—preserving the autonomy of a given geographic area in the interests of its citizens while not foregoing the benefits resulting from maintaining a certain degree of economic openness—could even provide the direction for an “economic globalization 2.0,” which I also call “enlightened globalization.”
KZ: China is one of the major driving forces of globalization, as its many international initiatives clearly prove: the Belt and Road Initiative (2013), the Global Development Initiative (2021), the Global Security Initiative (2022), the Global Civilization Initiative (2023), and the Global Governance Initiative (2025). How do you judge the impact of China’s efforts on globalization? How is the EU responding to China’s global initiatives?
PDP: The initiatives you mention deserve, in my opinion, absolute respect. The mere fact that China continues to reiterate its aim of “building a community with a shared future for mankind” (as opposed to the “Make America Great Again,” MAGA, or “America First” approach adopted by the US) is indicative of the fact that—no matter what the often very biased image Western media conveys to its audience is—China envisions a multilateral world in which the interests of all countries are taken into account. It is often forgotten, for example, that the infrastructure China is providing through the Belt and Road Initiative is much needed by the countries receiving it, as certified by the respective regional banks in Africa, Latin America, and Asia. The problem, however, remains the perception that other actors have of these initiatives. If their bias is negative, whatever the reason for such a presumption, then these initiatives will not find a welcoming environment, as is most likely the case in developed countries. Of course, this does not mean that China is isolated in the world. The BRI, for example, has been joined by more than 150 of the 194 countries belonging to the United Nations, so China’s impact on economic globalization certainly remains significant. After all, China needs the rest of the world both as a destination for its production and as a source for its imports of oil, raw materials, agricultural products, and technology, which are necessary for the survival of its people. One should also observe that most Chinese imports must pass through the bottleneck of the Strait of Malacca, guarded by Singapore and the American military ships that are based there and around. This sole fact might explain most Chinese policies, if we only tried to exercise empathy and for a moment put ourselves in the shoes of the Chinese government—something Western media very rarely does.
KZ: The process of globalization that emerged after 1980 and began to reverse after the global financial crisis of 2008/09 was largely based on the theory of comparative advantage and profit maximization by multinational corporations. In the current context of deglobalization, instead, it seems that international cooperation is increasingly negatively influenced by politics and ideologies. Do you think a new theoretical framework for globalization is needed? If so, compared to the traditional theoretical basis, what has changed or should be revised?
PDP: As I said earlier, the current paradigm seems to be based on the idea that the US and the EU are protecting their respective countries from some external threat, rather than introducing legitimate trade protection measures. This is a very important point, because it suggests that the political change that has taken place in recent years, leading for example to a “new industrial policy” in the EU, does not stem from managing the economy along a revised theoretical approach, since the latter unfortunately, is still believed to be valid despite its proven failure. For this reason, the new measures adopted are not explicitly recognized as “protectionist” but rather as “protective,” since the explicit adoption of protectionism would imply a denial of the validity of the neoliberal approach.
The refusal to explicitly acknowledge that failure is precisely what I dispute. Several economists (including Dani Rodrik, Joseph Stiglitz, Jeffrey Sachs, and Mariana Mazzuccato, to name the most famous of them) have harshly criticized the neoliberal approach priming in globalization processes in the past. They have taken a stand against the supposed virtues of self-balancing and efficient markets and in favor of public intervention in the mitigation of the problematic consequences of such processes. Therefore, in the face of the failure of economic globalization, I would find it more than fair to explicitly acknowledge the shortcomings of the approach adopted in the past—what has been called the “Washington consensus”—which, to simplify, involved one-size-fits-all restrictive fiscal and monetary policies and a full belief in the efficiency of free markets, under the assumption that “any free market is preferable to any government intervention.”
KZ: How should all parties work together to avoid a “lose-lose” or “many lose” situation and guide globalization towards a more inclusive and beneficial outcome?
PDP: I believe that countries should remain open to exchanging with each other, provided that the necessary attention and care are granted to the losers of globalization. The latter have determined, with their votes, the change of direction that developed countries—starting with the US and the UK (think about Brexit)—including EU members, are currently operating. A more careful look at the data for the US, however, shows something apparently rather surprising: Both its total GDP and per capita GDP, both in nominal and in PPP terms, have steadily increased over time more than the EU’s and the rest of the world’s. It can hardly be claimed, then, that globalization has caused a loss to the US, as Trump keeps otherwise claiming.
By looking at the Gini coefficient, an indicator of economic inequality, however, we see that this coefficient has by far been the highest and increased the most in the US, implying much higher economic inequality there than in other developed countries. This means, therefore, that the problem posed by globalization does not lie in opening domestic economies and engaging in international trade, given that doing so has led to increases in the income of many countries. This has been true in China, which in the last 40 years, also thanks to the economic policies it has pursued, has been able to lift about 800 million people out of extreme poverty, roughly the populations of the US and the EU put together. Instead, the problem lies in the high level of inequality resulting from the lack of sufficient redistributive policies. This certainly plays a role in the US, for example when people there seek health care and are required to pay the highest out-of-pocket expenses compared to all other countries. The data also show, for example, that, in line with the findings of Branko Milanovic and his famous elephant curve, a middle class has emerged in China, hence reducing the Gini coefficient, i.e., showing reduced inequality within the country.
In addressing issues related to globalization, therefore, we may be “barking up the wrong tree” if we blame economic globalization alone, the main culprit being instead the lack of appropriate accompanying and redistributive policies: economic globalization cannot be left unchecked, as Dani Rodrik, Joseph Stiglitz, and many others have long argued. A new version of economic globalization would therefore be necessary, one that I referred to before as “economic globalization 2.0” but that I would prefer to call “enlightened globalization,” characterized by both internal and external policies that protect those hurt by globalization. The internal losers of globalization are those who lose their jobs because of globalization. These people should not be forgotten. Protecting them by making it possible for them to retain their jobs might actually be beneficial because it would also imply not abandoning entire productive sectors of the economy and not relying exclusively on imports from abroad to meet domestic needs. This strategy would be in contrast to countries specializing fully their production, an approach that was invoked during the heydays of economic globalization. After all, this is what the EU has already done with its own integration process, where competition has been based on product differentiation rather than the principle of comparative advantage, so that consumers buy the products they find most attractive and the most efficient national producers in all productive sectors keep playing a role.
Of course, arguing in favor of protecting the losers of globalization could leave room for criticism. One might ask, for example, why those who lose because of economic globalization should be compensated while those who lose because of technological change should not. Why haven’t newsstands been supported, in Italy as in many other countries, as information was moved online and people stopped buying newspapers? One possible solution to both problems could be to guarantee a basic income for all citizens, although the details would of course have to be carefully worked out to avoid providing the wrong incentives to people. Moreover, a return to a more reasonable degree of progressiveness (while still incentive-compatible) in income and wealth taxation is the first policy measure that comes to mind to find the necessary monetary resources to restore an acceptable degree of effective redistribution, together with a whole series of industrial policies to create a basis for new jobs.
An additional dimension of inclusiveness, however, should relate to all regions of the world, none of which should be left out. The previous wave of economic globalization excluded most of Africa and Central Asia. One of the merits of China’s BRI is precisely that it involves many countries in these regions, an approach I am pleased to see the EU trying to emulate through its Global Gateway program.
For Pompeo Della Posta’s interview of Kunling Zhang on China’s path to economic globalization and response to Western accusations of unfair competition, democratic deficit, and hegemonic ambitions, click here.
Pompeo Della Posta is Professor of Economics at the Belt and Road School of Beijing Normal University. He was the 2019 President-Elect of the International Trade and Finance Association and is the editor of the scientific journal Scienza e Pace/Science and Peace. His research focuses on international economics, international monetary economics, economic globalization, and Chinese international economics.
Kunling Zhang is Assistant Professor of Economics at the Belt and Road School of Beijing Normal University. Previously, he was a visiting fellow at the Australian National University and Harvard Kennedy School. His research focuses on the fields of international development and political economy.
