Geoeconomics: Global Crises and Economic Order

Course Introduction

• Geoeconomics is being examined

Current Geoeconomic Trends

• Lessons learned from the pandemic, the invasion of Ukraine, and the Hamas attacks are considered

Economic Order Analysis

• The current world economic order is analyzed based on global crises

Geoeconomics Defined

• In the 20th century, geopolitics aimed to avoid war
• In the 21st century, it shifted to the "revenge of geoeconomics"

Recent Crises

• The COVID-19 crisis started in China before affecting the EU and US
• Vaccines were initially created in the US before the EU adapted them
• The EU depends on Russia for energy imports in the Russia-Ukraine war
• The US was not as affected by the war as the EU
• Inflation, the Israel conflict, and November 5th are among the crises
• China is seen as a challenging superpower
• Book recommendation on China is "The Twocidited Strap"
• China's rise is creating instability, with the US as the greatest power
• The EU is facing challenges in technological development and defense

Sources for Assessing Geoeconomic Trends

• IMF forecasts tend to be too pessimistic
• Other sources include the World Bank, OECD, and African Development Bank
• These are good sources to assess countries and regions

Development Trends

• The US demonstrates persistent growth
• China is currently experiencing a lack of growth

World Bank and IMF

• The IMF is always led by a European
• The World Bank is always led by a US person
• The World Bank specializes in analyzing developing economies

OECD

• The Organisation for Economic Co-operation and Development publishes reports and statistical data

Global Trends and Lessons Learned

• The US is experiencing stagflation in 2023, which means inflation and stagnation in economic growth
• The longest economic expansion in the US between 2009 and 2020 ended with COVID-19
• The source of American power is its capitalistic system, technology, and development

China's Economic History

• Was once super poor and isolated during the era of Mao Zedong

China's Economic Transformation

• Changes include liberalization, opening of the economy and high achievements in less than 50 years

China's Political Structure

• The party plays a dominant role and rules the government

China's Economy Since COVID

• China has struggled to adjust its economy since COVID
• It is striving to reach 5% growth by framing GDP growth around 5% to ensure political and social stability

Unreliable Data

• Data published by the Chinese party is usually biased

China's Economic Status

• Now considered a developed economy

Structural Problems in China

• Decline in domestic investment
• Real estate problems, with many unsold apartments
• Local debt across three levels is higher than officially recognized
• High unemployment among young people in urban areas is at 23% in 2024 for those aged 16-24
• Public debt is critical

China's Rescue Plans

• Plans are in place for local debt
• Measures include protecting banks, raising salaries in public administration, and subsidizing foods and technology

Structural Issues

• A declining population means that the population is predicted to decline from 1.4 billion to 700 million

Global Contributions

• Other countries are also important

World Economic Growth Forecast (2024-2029)

• India is expected to grow a lot and has a 14.8% contribution
• Russia is economically unimportant but has relevance due to oil, gas, diamonds, and nuclear power

Isolating China

• It is difficult to isolate China

Geoeconomics and Geopolitics

• TSMC (Taiwanese Chipmaker) presents a high risk for both

Nearshoring Strategy

• Entails paying more for lower risk by depending less on China/Asian countries
• It is developed mainly in the US/EU as a result of the pandemic
• Batteries are an example of high dependency, as they are all developed in Asia

Deglobalization or Fragmentation

• Markets require rationality to build supply chains and prices

Deglobalization

• This is considered not probable
• Blacklists, bans, sanctions, and tariffs are not desirable as they make economies poor
• North Korea is an example

Trade Agreements

• Trade continental agreements like RCEP, AfCFTA, and MERCOSUL exist

Fragmentation

• This is considered probable
• Chinese EVs are tariffed at 100% in the US
• This is bad for consumers, as they pay the tariffs

Tariffs

• Were a tool to balance trade, now a threatening tool

Global Growth Drivers

• These are trade, investment, and innovation

Trade

• There is a trend for protectionism, with 95 discriminatory measures versus 40 liberating measures

BRICS (Brazil, Russia, India, China, South Africa)

• The G7 is an old-fashioned northern sphere
• In 2019, BRICS combined GDP adjusted PPP surpassed the G7
• BRICS has its own development bank
• Indonesia joined BRICS in 2025

Achievements of Globalization

• The reduction of extreme poverty has been achieved

Debt in EU Zone

• Newcomers are France and Belgium

Invasion of Ukraine

• Shift in EU mindset is demonstrated by liberal, tolerant democracies
• Russia has a long history and initially broke due to the Soviet Union
• Book Recommendation: The Romanov
  • Overestimation:
  • Putin thought he would be welcomed in Ukraine

Putin's Flaws

• Underestimation:
• The President decided to stay and fight for the country instead of leaving
• American military and financial aid
• Attacks inside Russia

Counter Offensives

• Mistake of Selinski:
  • These have failed
  • There is division in the U.S. Congress
  • It is hard to recruit youth

Deadlock from War in Ukraine

• Russia has a high income tax of 21%
• Diversification of energy imports in the EU away from Russia, but Russia is still selling oil
• Russia is still selling oil to China and India for a discount but is still making revenue
• Geopolitics are sensitive to energy and food supply

Interpretation of the Gaza and Lebanon War

• Hamas made the mistake of attacking in the first place
• Netanyahu has the responsibility to recognize and free Gaza from Hamas
• Palestine needs to be self-directed and led

Interpretation of Iran

• Has a moderate new president, Khamenei
• Iran lost the south of Lebanon to Hezbollah
• It has been indirectly lost in Gaza
• Has only loyal members
• The majority is Sunis (85% of Islam), while Shias constitute 12-13%

Red Sea Crisis

• The cost of insurances has increased
• Risks to trade correlate to more energy, cues, and disruptions

Experts

• Juliano Delempoli has a book recommendation
• Top Risks Report by Eurasia Group (G-Zero world)
• Erik Schmidt can provide more information

Final Notes

• The US is largely ahead in AI Patents, followed by China, with the EU lacking behind
• An AI Summit is scheduled in Paris on November 2, 2025

Geopolitical Leader

• The US is leading in Geopolitical competition

Economic Growth

• Seven magnificent companies are contributing
• S&P 500 average growth is at 23%

Factors of Countries Growth

• Technology from Research & Innovation
• Productivity
• Demographics

Comparison of China and the EU

• China spends more on R&D than the EU
• Lower spending leads to consequences
• China overcame the US in 2019
• There is war in patents that shows that there is disinvestment into the US

Innovation Budgets

• Huawei (Chinese) has the biggest budget for innovation
• The EU was much better during the industrial era, and now the pattern has changed

Restructuring

• Order from the Group of 5 to the G of 8 to the G of 7
• G20 is very powerful: South-Africa's president led the G20
• China is trying to build a military zone around it and is creating the Shanghai Cooperation Organization

3 informal organizations

• Aukus (UK, Australia, US)
• QUAD (US, Australia, India, Japan)
• Five Eyes (+ Canada, New Zealand)

International

• India wants to be next China
• The Epicenter and Risks migrated to Asia and India-Pacific: major crises and growth successes are moving to Asia
• Problems of Bitcoin: Privacy (0 regulation from regulators), Volatility Trump set up a Minister for Krypto
  • The positive effect of bitcoin, that no regulators are involved, might be gone
  • Risk: if govs incentivice using krypto, they must also insure those consumers

Geoeconomics Intro

• This is the introduction to International Relations and Geoeconomics

Geoeconomics

• Concept from the 1990s
• Diplomacy is a continuation of war by other means
  • Intended to promote and defend national interests
  • Intended to produce beneficial geopolitical results
  • Intended for effects of the other nations’ economic actions on a country’s geopolitical goals

Global Growth Outlook

• Projected Economic Growth for 2024-2026

2024-2026

• The global economy shows a slight increase, and advanced economies are mainly stable
  • The US economy shows an increase
  • The EU Area economy is not sure
  • Emerging Markets show a slight increase
    • China shows a decrease
    • EMs growth is weakening

Forecast: 2023

• The US is above expectations
• China is in trouble
• The EU modestly is out of recession, but there is a gap between China and the US regarding GDP

Forecast: 2024

• The US growth is positive
• China will not be able to keep up 5%
• Germany shows a 2nd year recession
  • Trends suggest that geopolitical and economic tensions have impacted growth
  • Persistent growth in the US, and no growth in China, and the EU is unsure

Factors on US

• The Trump Factor and Competition with China and EU on the US

Expansion

• The longest expansion in the US between 2009 and 2020 ended because of COVID-19

Stagflation

• The US is experiencing in 2023 leads to inflation and stagnation in economic growth
  • Economic condition that experiences stagnation
    • Economic growth is stagnant, and high inflation, including high unemployment
    • Source of American power, including an American capitalistic system and its technology development

Factors on China

• The Trump Factor and Competition with China
  • China's historic background:
    • Previously poor
    • There have been positive changes, including the liberalization of China and opening of its economy

Political System

• Dominant role of the party so that the party rules its government
• China has never adjusted to economy since Covid, strugeling to reach 5% growth
  • GDP Growth around 5%, which ensures political and social stability
  • Data published by a Chinese party/ gov shows bias, so be aware
    • Now considered developed

Issues with the Chinese Economy

• The 4 structural problems include a
  • decline in domestic investment
  • real estate issues
  • local levels of debt
  • high levels of unemployment

Other plans for issues

• These include
  • issues for for local debt, and protect banks
    • Raised salaries on administration
  • China declines in population
  • Prediction shows other countries are also facing the same issues

Important Countries

• Ranking of world economic growth contribution 2024-29:
  • 1. China (21.7%), 2. India (14.8%), 3. US, 4. Indonesia, 5. Russia, 6. Brazil, 7. Turkey, 8. Egypt, 9. Germany, 10. Japan
  • The population in India is high, and it is only growing
  • Russia has gas, and is important for oil, but nothing else

Relationship between Geo

• The growing relations means a desire to become independent
  • Some trends for this include:
  • China has shown growth because of production
  • US & EU strive to decrease dependance on China by being eco friendly

Negshoring Trends

• Being safer lowers the price to depend lesser on China
• China has risen because of their lower prices

Risks

• Deglobalization can come with risks, and regulations - Opportunity - A way to promote relations could be the promotion of goods through media, ex RCEP

Sanctions and Economy

• Sanctions can come from global trade or the EU

Trade Deficits

• China and the US make trade deficits more normal - Trade relations has strengthened but is becoming more difficult

Global Changes

• Reduction in 3rd nations and have caused poverty
  • The lack of imports had caused the world to come together but has now gone down

Relations

• Alliances between all companies and greater relationships through groups have given birth to success. - Sovereign ratings have boomed

Energy Prices

• Wholesale energy prices soared, and the Ukrainian War had a large hand in the world war

Global Debt Crisis

• Global public debt has boomed, by 2024, almost 250% of the world will be in some sort of deficit - Bond yields are greater in debt than in developed markets

Deficit Numbers

• Debt markets show more than .5% in the united states compared to the world

Problems in Russia

• They believed that their citizens in Ukraine would turn on each other (Putin was wrong

Consequences of War

• Ukraine had suffered the most, but Russia poured the most money into the battle - Budgets had been split on all sides
• However Russia has now lost its buyers - These issues in policy between countries has strained communications

Conficts

• Axis of resistance, with each state being more independent
• Iranian networks that control each level of the army and power that comes from it - Iran losses their allies, as their power gets diminished

Red Sea Crisis

• Increase disruptions in the Suez Canal increased trades

China Economy

• Asia increases their share of world trade by almost 50% - Almost all areas see dramatic increases too

China Reform

• China under Deng Xiaoping allowed more economic freedom - Reforms for free trade policies allowed new areas to grow.

International Markets

• Trade relations showed some major growth in the markets - New market policies allowed China to grow with ease from its new low- cost labor.

Disputes

• Trade areas are now becoming major disputes with countries failing to come to a consensus.

FDI

• Direct Foreign Investment causes China to fail and now they promote their old policies

Regulations

• Overregulation has now shown decreases, and more friendly zones will see major increases in their areas.

Trade Policies

• Trade policies and the world market as time goes on
  • The partnership that promotes them shows what the market is showing

Trading relationships

• Relationships show decreases in China because policies promote - A reduction on Chinese trade

A.I

• A.I shows to have a massive increase in global usage around the 2020's - The increased popularity from people caused it be used more - Decreases Africa to only 30%

Security Changes

• Different regions all show different security standards - China's and US' policy changed in some areas

Development In Technologies

• Each countries now has their own laws to help increase their development of A.I