De-Globalization Reshapes The Logic Of Global Growth – Analysis
In general, major economies around the world are now facing significant development challenges. Although U.S. economic growth in the third quarter of 2025 exceeded expectations, persistently high unemployment and structural inflation continue to pose problems to it, as its K-shaped divergence in income and consumption patterns is becoming more pronounced. Europe’s economy remains mired in prolonged stagnation, and its key economies, such as France and Germany, are hampered by weak innovation and shrinking manufacturing sectors, resulting in extremely limited growth momentum. China is also confronting slowing economic growth, mounting pressures from industrial upgrading, and rising deflationary risks.
Many economists and scholars attribute this situation to cyclical economic fluctuations or the disruptive effects of U.S. tariffs. However, at a recent annual forum, ANBOUND’s founder Kung Chan pointed out that the root cause of the global economic slowdown lies fundamentally in the ongoing evolution of “de-globalization” in recent years. Measures such as U.S. tariff hikes, restrictions on chip exports, the European Union’s trade protectionism, and even Mexico’s tax increases are all concrete manifestations of de-globalization. These phenomena are in fact the effects, not the causes. The globally integrated economic order that took shape over the past several decades is disintegrating at an unprecedented pace, and this is the central factor dragging down global economic growth.
Over the past several decades, the world has developed into a unified mega-market characterized by deep interconnectedness and highly efficient division of labor. Advanced economies in Europe and the United States, leveraging their advantages in capital, technology, and management, allocated resources and expanded markets on a global scale, reaping substantial capital returns and consumer dividends. At the same time, emerging economies such as China, Southeast Asia, and Latin America seized the historic opportunity of industrial relocation. By capitalizing on their cost advantages in labor and other factors of production, they successfully integrated into global value chains and achieved a certain degree of economic takeoff. Overall, many economies worldwide benefited from this wave of globalization, reaching a stage where the economic pie was significantly expanded and conditions for sustained growth were firmly in place.
In contrast to globalization, de-globalization refers to a global and structural process of reversal. It involves a retreat in international trade, investment, technology flows, and the integration of industrial and supply chains, as countries increasingly shift toward protectionism and regional insulation. Its main manifestations include the erection of trade barriers, the reconfiguration of supply chains, technological containment, exclusionary rule-making, and direct geopolitical intervention across multiple fronts. The Nexperia semiconductor incident in the second half of 2025, where a Dutch court directly intervened to alter corporate control, was an extreme measure that would have been difficult to imagine under the former framework of economic globalization. The direct use of state power to intervene in the economic activities of a multinational corporation is a clear example of de-globalization in action.
Mr. Kung Chan emphasized that in the course of de-globalization, the once unified global mega-market will be broken up into regionalized, fragmented, and relatively smaller “mini-markets”. From an economic perspective, this amounts to a systemic contraction of the effective size of global markets, which will inevitably lead to lower efficiency in resource allocation, higher transaction costs, and weakened economies of scale, ultimately harming the overall welfare of the vast majority of participants. This process resembles a “balance-sheet contraction” of the global production system, as the economic foundations that once supported the global mega-market are progressively eroded.
Researchers at ANBOUND believe that once de-globalization reshapes the international economic system, a decline in external demand, the friend-shoring of supply chains, a shift in production and supply chains toward more tightly clustered manufacturing, or even outright localization, will all follow suit. Together, these trends lead to the withdrawal of foreign capital, increasingly concentrated production layouts among multinational corporations, and contractions in multilateral financing and assistance that create fiscal gaps. The fragmentation of the global trading system will push many economies to the margins, making it difficult for them to remain deeply embedded in global value chains. This is an inevitable process in the era of de-globalization. However, the shocks faced by major economies and the logic of their responses differ markedly.
For China, the challenges are the most direct. The fragmentation and closure of external markets have placed the long-standing export-oriented growth model under pressure, creating a dilemma of “higher volumes but lower returns”. On the one hand, supported by the resilience and completeness of its industrial chains, export volumes may remain stable or even expand. On the other hand, amid intensifying global competition and mounting protectionist constraints, firms are often forced to rely on low-price strategies to defend market share, leading to a deterioration in overall terms of trade and a severe squeeze on profit margins. This makes it imperative for China’s economy to accelerate its transition toward demand driven more by domestic consumption and upgrading toward higher positions in the value chain.
However, compared with other countries, China’s greatest advantage lies in a different starting point. As a beneficiary of the previous wave of globalization, China has built a larger and more advanced platform from which to move forward, giving it a degree of voice and influence in global markets that would have been difficult to imagine in the past.
For Europe, de-globalization is likely to bring systemic shocks. Mr. Kung Chan stated plainly that Europe’s economic prosperity, both historically and in the present, has been highly dependent on the global allocation of resources, i.e., securing inexpensive energy, raw materials, and primary goods through global trade networks, while exporting high–value-added industrial products, technology, and financial services to the world. In the past, this model was first sustained through colonial systems and later by globalization. Once the process of globalization goes into reverse, the foundations of this operating model will inevitably be shaken. Europe will not only face rising input costs that erode industrial competitiveness, but will also see the limitations of its relatively small internal market and the economic divergence among member states become more pronounced, potentially leading to a marked weakening of growth momentum.
In addition, under the backdrop of de-globalization, Europe also faces a structural dilemma in balancing social welfare and defense spending. Public expenditure in Europe already accounts for over 40% of total fiscal spending, with healthcare alone consuming roughly 40% of that. Without external support, Europe may struggle to maintain both high levels of social welfare and the necessary defense capabilities, making the future economic outlook exceptionally challenging.
From both historical and contemporary perspectives, Europe’s economic prosperity has long depended on the inflow of external resources. Whether through the colonial systems of the past or the later exploitation of cheap labor in Eastern Europe, there has always been an element of “exploitation” embedded in the model. At its core, the underlying issue is insufficient innovation-driven economic development, and Europe lags significantly behind the United States and struggles to lead global transformations in key industries. Researchers at the ANBOUND are of the opinion that as de-globalization continues to advance, the European Union, as a bloc of nation-states, will become particularly vulnerable, with internal restructuring, reform, or even disintegration all representing plausible scenarios.
Mr. Kung Chan believes that, by contrast, the United U.S. may demonstrate stronger structural resilience. Its vast domestic market, leading capabilities in technological innovation, and traditional economic influence across the Americas provide important buffers against de-globalization. The U.S. economic foundation is built on an innovation-driven model, which relies relatively little on traditional global supply chains and may even benefit in the short term from technological blockades and market fragmentation. As a result, in the wave of de-globalization, the direct impact on the U.S. is likely to be comparatively limited, and the country may even proactively leverage this trend to reshape the international rules-based system.
However, the U.S. economy is not without its vulnerabilities. From the perspective of financial markets, while U.S. stock indices repeatedly hit new highs, this performance is largely supported by a handful of tech giants. This structural imbalance is itself a warning sign, indicating that the foundation of economic growth is not broad-based and that pressures from economic weakness persist. Strategically, the U.S. is refocusing on the Americas, aiming to consolidate its economic base under de-globalization by strengthening its dominance over markets and policies within the region. With its large population, abundant resources, and immense consumption potential, the Americas serve as a key strategic anchor for the U.S. in the global economic shifts.
Mr. Kung Chan believes that, while global growth continues, the underlying logic driving that growth has already undergone profound and fundamental changes, and this is a fact that must be recognized clearly. Beneath old problems, a new logic has emerged, and the reasons behind it are now entirely different.
Final analysis conclusion:
De-globalization has evolved from a short-term disruption into a long-term, key variable affecting the center of global growth. By fragmenting markets, raising costs, and suppressing efficiency, it imposes sustained downward pressure on the world economy. In this ongoing structural shift, the development prospects of major economies are directly linked to their internal economic structures, market sizes, and innovation capacities, leading to an accelerated divergence in growth paths. For China, this means continuously expanding domestic demand, building a strong and resilient domestic circulation, breaking through in critical core technologies, and actively positioning itself within the restructured global trade and economic framework.