Abstract: Recently, the Sixth Bund Summit was co-hosted by the China Finance 40 Forum and the China Center for International Economic Exchanges. A closed-door seminar was held during the summit on the topic of Fragmentation of Global Trade and Finance: Decoupling and Rebuilding Relations.
The seminar concluded that, in recent years, many countries have sought to reduce their dependence on China, but China’s production capacity remains irreplaceable in the short term. At the same time, although global economic integration remains highly advanced, it has become more unbalanced: trade surpluses are concentrated in China, while deficits are concentrated in the U.S., exacerbating global imbalances. Much of the global flow of investment and goods is driven by tax avoidance rather than production needs.
European countries, represented by Germany, has long relied on global supply chains for their economy, the United States for defense and Russia for energy. Currently, it faces significant challenges in transitioning, leading to a rise in protectionist tendencies and a shift toward political extremism in Germany. International experts pointed out that as China’s trade surplus with Europe increases, Europe will feel a profound sense of challenge. China should mitigate the risk of a rising “China shock” narrative in Europe.
Moreover, the restructuring of supply chains could lead to divergent global inflation trends. With the U.S. and Europe facing high inflationary pressures, while Eastern countries may experience low inflation, this divergence in global monetary policies is expected to widen. In response to inflationary pressures, the experts at the meeting believed that central banks in the U.S. and Europe should maintain their 2% inflation targets.
