The collapse of the neo-liberal consensus

Nations including the US, Japan and India are preparing for a global economy characterised by gated globalisation, plurilateral or regional blocs, and competing industrial policies

- Dhruva Jaishankar

The Asia-Pacific Economic Cooperation (APEC) summit in San Francisco was, as expected, overshadowed by a bilateral summit between the US President, Joe Biden and general secretary of the Chinese Communist Party, Xi Jinping. It is somewhat ironic that their meeting should have occurred at an occasion intended to promote international economic cooperation, just when the post-Cold War international economic consensus appears to have crumbled.

For at least three decades, some basic assumptions informed major decisions pertaining to the global economy: Essentially, the liberalisation of international trade and economic activity would benefit everyone, making all countries and peoples richer; global growth, while initially uneven, would be staggered, with industry and manufacturing jobs moving to lower wage countries as others grew richer and transitioned into service-oriented and consumer economies; such interdependence would also mitigate international conflict, at least among the world’s major economies, and would contribute to civic empowerment, democratisation, and cosmopolitanism.

By this logic, there was no problem then with natural resources in, say, Australia being processed in Southeast Asia for goods that were manufactured in China, marketed in the US, and sold in Europe. Or, for that matter, China producing pharmaceutical ingredients for drugs developed in Europe, made in India, and supplied to North America. Or the US and Russian scientists collaborating on various civilian technologies with potential military applications.