Global Perspectives

For several years, the prevailing view has been that globalisation is in retreat. There is certainly evidence for that. Tariffs have returned. Sanctions have become an increasingly important foreign policy instrument. Governments are subsidising strategic industries, screening foreign investment and seeking greater control over semiconductors, energy and critical minerals.

Yet globalisation has proved remarkably difficult to unwind. Goods still cross borders in extraordinary volumes. As Ed Conway observes, so dramatic has the increase in shipping capacity been that one of today’s largest container ships can carry more cargo than the hundred-ship fleet of the British East India Company once could.

Supply chains remain deeply international, and capital continues to seek opportunity across jurisdictions. Even where established trading relationships have weakened, new ones have emerged in their place.

Conway’s recent exploration of the physical world of trade is a useful indication of just how linked modern economies have become. Follow something as ordinary as a loaf of bread, a fish finger or a motor car back through its supply chain, and the idea that products belong neatly to one country quickly begins to break down.

The more interesting question, then, is not whether globalisation is ending. It is what kind of globalisation is now taking shape, and who is best placed to prosper within it.

A different kind of G2

This connects with an argument I have been developing for some years around the emergence of a G2 world, shaped increasingly by strategic competition between the United States and China.

The Cold War comparison is tempting but imperfect. The United States and Soviet Union were strategic competitors operating largely separate economic systems. America and China are strategic competitors embedded within the same global economy. That is a fundamental difference.

Four decades of investment, trade and specialisation cannot simply be dismantled without cost. Instead, we are seeing a reorganisation of economic relationships.

Direct trade between the United States and China has weakened in important areas, while China’s links with ASEAN and other developing markets have expanded. Production is shifting, Chinese companies continue investing in third countries and supply chains are being redesigned around tariffs, technology restrictions and geopolitical risk.

Recent IMF work distinguishes between simple rerouting of Chinese exports and genuine trade reallocation, where third countries increase their own production, sometimes using Chinese intermediate goods and investment. This is not simply deglobalisation. It is reconfigured interdependence.

That also helps explain the growing importance of countries between the two great powers. India, the Gulf states, ASEAN economies and others have little reason to make a permanent binary choice between Washington and Beijing. They can attract American investment, trade extensively with China, raise capital through Western markets and pursue their own interests at the same time.

What appears to be emerging is not a world divided neatly into two camps, but two powerful gravitational centres surrounded by a large and increasingly influential transactional middle.

From efficiency to resilience

Globalisation may survive, but it may become economically quite different. For much of the post-Cold War period, efficiency was the organising principle of the world economy. Production moved towards comparative advantage, supply chains lengthened, and inventories were pared back.

China’s entry into the global economy added an enormous pool of productive capacity. Consumers benefited from cheaper goods, competition restrained prices, and lower inflation helped support lower interest rates and inexpensive capital.

Then came a succession of shocks that exposed the difference between efficiency and resilience. Covid revealed the risks of concentrated supply chains. Russia’s invasion of Ukraine exposed Europe’s energy dependency. Taiwan is at the centre of a critical semiconductor ecosystem. In contrast, China’s position in rare earths and critical minerals has shown how a relatively obscure link in a supply chain can become an instrument of national power.

The disruption in the Red Sea provides an unusually clear illustration of the economics involved. A container ship travelling from Shenzhen to Rotterdam covers around 10,000 nautical miles through the Suez Canal, a passage of about 31 days. Diverting around the Cape of Good Hope adds roughly 3,000 nautical miles and ten days.

The goods still arrive. But doing so requires more fuel, more shipping capacity, more working capital and more time. Just-in-time is giving way to just-in-case.
That is resilience in practice. It also comes with a price.

The resilience premium

A durable economic system deliberately contains some of the things an efficiency-driven system tries to remove: alternative suppliers, higher inventories, spare capacity, strategic reserves, domestic production, duplicated infrastructure, energy security, cyber resilience along with defence capability. Just-in-time is giving way to just-in-case.

These are all forms of insurance, and insurance carries a premium.

That may become a defining feature of the next phase of the world economy: the resilience premium.

It does not require global trade to contract dramatically. The world may continue trading enormous volumes while doing so less efficiently. Supply chains may become more complicated while companies navigate tariffs and sanctions. Strategic production may be duplicated throughout regions. Governments may subsidise capacity that once would have been located elsewhere, while businesses may accept higher costs in return for greater supply security.

For 30 years, the central question was largely where something could be done most efficiently. Increasingly, the question is where it can be done safely and reliably.

That change has consequences for inflation, interest rates and public finances. Governments already face difficult choices around ageing populations, defence, energy security and infrastructure. The resilience premium adds another claim on scarce capital.

The old sequence was broadly straightforward. Globalisation encouraged efficiency, which helped restrain prices and inflation, supported lower interest rates and made capital inexpensive.

The emerging sequence may be different. Strategic competition encourages resilience, resilience requires greater investment and duplication, and that can mean higher costs, more inflationary pressure, higher nominal interest rates and greater strain on public finances.

The scale of the investment challenge is considerable. McKinsey estimates that Europe needs to close an annual investment gap of around €800 billion. Its wider work also points to a striking divergence in productive investment, with China now adding substantially more productive assets each year than Europe and the United States.

That gives the resilience premium a harder edge. It is not simply an abstract cost of security. It represents a call on capital at a time when many advanced economies are already struggling to generate sufficient productive investment.

The question is therefore deceptively simple: who will provide the capital, and at what price?

Capital is becoming strategic

G2 competition is increasingly a competition not only over trade but over capital and the assets that capital creates.

Nowhere is this more visible than in semiconductors. The desire to build greater geographic resilience into cutting-edge chip production is translating into commitments measured in hundreds of billions of dollars. TSMC’s planned investment in the United States, centred on Arizona, has risen from an initial US$12 billion pledge to US$265 billion.

That is an extraordinary expansion by any measure. It also makes the resilience premium tangible. Recreating strategic productive capacity in different locations is neither quick nor cheap.

Artificial intelligence tells a similar story. AI may appear almost weightless to the user, but the infrastructure supporting it is anything but. The International Energy Agency expects electricity consumption by data centres worldwide to more than double to around 945 terawatt-hours by 2030, slightly more than Japan’s total electricity consumption today.

Behind the algorithms sit semiconductors, data centres, electricity generation, grids, cooling systems and communications infrastructure. The digital economy is, in that sense, becoming remarkably physical.

Add the investment required for energy, defence, critical minerals, transport and other strategic infrastructure and the scale of the capital requirement becomes apparent.

Governments cannot finance all of this themselves. Private capital will therefore play an increasingly important role in areas once considered largely the province of the state. Sovereign wealth funds, pension funds, infrastructure investors, private equity, private credit and family capital will all participate.

Capital is not simply becoming more important, it is becoming more strategic and that matters for International Finance Centres.

A changing role for IFCs

International Finance Centres have spent much of the past two decades responding to international taxation, transparency, financial crime regulation and market access. Those changes were necessary and, for the strongest centres, ultimately beneficial. But the strategic conversation now needs to move forward.
If the world is shifting from an efficiency economy to a resilience economy, IFCs should ask what part they can play in financing that transition.

Their traditional proposition remains valuable: political stability, legal certainty, tax neutrality, sophisticated professional services, proportionate regulation, and efficient international intermediation. Increasingly, however, these are foundations rather than a complete strategy.

The wider opportunity is to become part of the trusted infrastructure through which international capital is raised, governed, protected and deployed.

That suggests five priorities:

• First, follow the new geography of capital. IFCs should think less about individual source markets and more about the corridors linking the Gulf, Europe, Asia, India and the United States, alongside the continued expansion of South-South flows.
• Second, build capability around the assets the next economy will require, including energy, digital infrastructure, data centres, artificial intelligence, transport and logistics, critical supply chains, transition finance and appropriate defence and security-related industries.
• Third, treat geopolitical competence as a core financial skill. Sanctions, export controls, investment screening, beneficial ownership, technology restrictions and financial crime obligations increasingly overlap. Understanding how these regimes interact will become increasingly important for investors, advisers, boards and fiduciaries operating across borders.
• Fourth, understand the economics behind the assets being financed. The decisive questions are no longer purely legal or tax questions. Can a project secure power and obtain permits? Is its supply chain resilient? Can it attract credible counterparties and reach market quickly enough to justify the capital being committed? An IFC that understands those commercial realities will be more useful than one that regards structuring as detached from the underlying investment.
• Finally, make agility and trust competitive advantages. Legal certainty, independent courts, sound governance, effective regulation, strong financial crime controls and political stability become more valuable, not less, in a disunited world.

Prosperity in a G2 world

The central conclusion from my earlier work on the G2 was never that globalisation was about to disappear. It was that the architecture within which globalisation operates was changing.

Commerce has a remarkable capacity to adapt. Governments can erect barriers, but businesses find alternatives, capital finds new routes and supply chains evolve. The diversion of ships around Africa, the building of semiconductor factories in Arizona and the extraordinary physical infrastructure now being constructed to support artificial intelligence are different manifestations of the same underlying change.

Adaptation has a cost, and that may become the defining characteristic of globalisation’s next act.

We are moving from a world organised predominantly around efficiency towards one prepared to pay more for resilience. For governments carrying high debt levels, that transition will be uncomfortable. For businesses, it will require investment. For investors, it will create both risk and opportunity.

For International Finance Centres, it presents an important decision. They can continue to process the flows created by yesterday’s version of globalisation, or they can anticipate where capital is going next and build the capabilities, relationships and regulatory infrastructure needed to serve it.

The successful IFC of the next decade will do more than provide a home for international capital. It will help connect, protect and deploy that capital in a more fragmented world.

That is a more demanding role, but it may also prove much more valuable.

Endnotes and sources

1. Ed Conway, Trade World: The Ties That Bound Our Past and Could Unravel Our Future, and accompanying analysis, September 2026
2. UN Trade and Development, Review of Maritime Transport 2024: Navigating Maritime Chokepoints. The Shenzhen to Rotterdam comparison gives approximately 10,000 nautical miles and 31 days via Suez, against 13,000 nautical miles and 41 days via the Cape of Go
3. Tatjana Schulze and Weining Xin, Demystifying Trade Patterns in a Fragmenting World, IMF Working Paper 25/129, June 2025.
4. McKinsey Global Institute, Catalyzing Competitiveness: Where Investment Happens and Why, June 2026.
5. TSMC and US National Institute of Standards and Technology, announcements on TSMC’s US semiconductor investment programme, July 2026.
6. International Energy Agency, Energy and AI, 2025. Base-case projections put global data-centre electricity consumption at approximately 945 TWh by 2030, slightly above Japan’s current annual electricity consumption.
7. Bank for International Settlements, Annual Economic Report 2026.
8. UN Trade and Development, World Investment Report 2026: International Investment in a Turbulent Era.