The attacks in the Red Sea have threatened to throttle a vital part of the global economy that is already under pressure.
A senior International Monetary Fund executive has warned that the rivalry between the US and China could lead to Cold War II and reverse decades of global integration and growth.
Cash is out of favour on China’s shopping strips where convenient home-grown payment systems are helping sanction-proof the economy.
It is too early to tell whether the ugly flare-up in the Middle East will add to the prospect of a “de-globalisation” of trade and geopolitics.
In future,the strongest growth in global trade may be between blocs of aligned economies rather than free-flowing trade around the world. That’s a threatening prospect for China,and Australia.
Despite $20 billion in trade strikes over the past four years,the superpower remains Australia’s largest export market and a key engine of economic growth.
A weak domestic economy and structural shifts in global trade since the pandemic have triggered a massive slump in China’s trade performance.
Australia has benefited enormously from globalisation. But Treasurer Jim Chalmers says the old models don’t apply as well as they did.
“So much of who we are and how we understand the world is related to the stories we receive. If we are vulnerable to bad stories,we can do horrendous things,” he said.
Splitting the trading world into good guys and bad guys would not suit us,nor our region.
Economics may seem more about impersonal concepts than people,but models and theories can sometimes miss the bigger picture.