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China and the West: growing apart as geopolitical tensions grow
The model of increasing economic interdependence between the West and the emerging world was built on assumptions that no longer hold.
The model of increasing economic interdependence between the West and the emerging world (especially China) was built on assumptions that no longer hold. The West assumed that keeping high-value production at home would create growth-stimulating wealth, and that this wealth would be shared to keep the middle class thriving. However, while multinationals have generally benefitted from globalisation, the middle class in the developed world, especially in the United States, lost purchasing power as manufacturing jobs were shifted overseas. Furthermore, developed world tax bases have shrunk as multinationals have relocated to low-tax jurisdictions, encouraged by a shift towards supply chains that create loopholes in the allocation of profits.
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