The writer is a senior fellow at Harvard Kennedy School
When the Covid-19 pandemic hit, as China locked down and countries around the world struggled to source personal protective equipment, many wrote an obituary for China-focused globalisation. It seemed a logical view, given the economic nationalism of Donald Trump and Brexit and the US-China trade war. But there is little evidence that the pandemic has prompted companies to abandon China en masse or sparked deglobalisation.
A rough metric of globalisation is the ratio of world trade to world goods. After rising significantly from 1970 until the financial crisis, this has broadly moved sideways since. Overall trade balances cannot give us granular information on supply chains or globalisation. But if companies are pulling out of overseas locations and moving back home, we might expect trade balances to shrink. The US trade deficit hit a record as imports reached an all-time high of $288.5bn in September. China’s trade surplus, meanwhile, has exceeded pre-pandemic levels.