Globalization or Deglobalization — What's Your Take? | FreeS Fund Reading Recommendations

Yesterday, we published a piece exploring how the pandemic is reshaping global supply chains(👈 click to read), which sparked some discussion. It's true — everyone has their own take on whether the post-pandemic world will move toward greater globalization or deglobalization. We'll let time be the judge.

Our view leans toward globalization remaining the dominant trend. And as we examined the facts and data to consider what actually drives where global supply chains locate and relocate, we also reassessed China's competitiveness within those chains.

In yesterday's post, we left two open questions. Here are our current answers. Many readers already saw them early by replying with the keyword "globalization" in the FreeS Fund WeChat backend. Kudos to every curious mind out there.

Q1: Compared to before the pandemic, how might the US-China trade war look different after COVID-19?

A: To deflect domestic pressure from the Trump administration's handling of the pandemic and economic/employment challenges, the US may become more politically hostile toward China. But the biggest difference from 2018–2019 is this: due to the pandemic and other factors, large American companies now face greater survival and operational challenges, and their appetite for consumer markets (with China being one of the largest and most important) will likely grow. This could deepen the divide between the US government and its major corporations — the starkly contrasting attitudes of Bill Gates and Trump toward the WHO these past few days illustrate this dynamic. Over the medium to short term, this may gradually decouple trade-war tensions from political targeting. In other words, the US may intensify its political pressure on China while simultaneously easing up on the trade war front.

Q2: Foreign trade is currently in a difficult period with weak external demand. Do you think trade could follow a "dip then rebound" pattern this year?

A: It's possible. Once developed economies begin recovering, that will certainly benefit China's economic growth.

Right now, everyone is anxious about the demand-side contraction. But when demand returns, it will likely recover faster than supply — probably significantly so. Most products rely on long supply chains, so production depends on the entire chain coming back online. Because China experienced the pandemic first and recovered first, combined with its relatively complete industrial chain, when demand in developed countries gradually picks up, China stands to benefit earliest and most substantially, capturing orders that overflow from regions where supply chains haven't fully recovered. The global supply-and-demand dynamics for pandemic protection equipment over the past month have partially borne out this assessment.

Beyond pandemic supplies, entrepreneurs in foreign trade — whether in production, distribution, or platform businesses — should consider: assuming demand in various countries recovers step by step, which of your product categories will be the first to benefit? Given that supply chain recovery will be slower, this requires advance preparation and timely adjustments.

Tomorrow is the weekend. If you're interested in globalization topics, welcome to read our full-length piece — scan the QR code below.

(Scan to read 👆)

You're also welcome to share your views on globalization in the comments section of "A Single Diagram to Understand Globalization or Deglobalization | Li Feng Column".

▍Q: After the pandemic, do you think the world is moving toward globalization or deglobalization?

By 9 PM on April 23, the 6 readers with the most thoughtful comments will each receive a copy of Samuel Huntington's The Clash of Civilizations and the Remaking of World Order. We found it immensely helpful for understanding the world order of both past and present.

Looking forward to enjoying the pleasure of thinking with you. Have a great weekend ❤

▲ A Single Diagram to Understand Globalization or Deglobalization | Li Feng Column ▲ 2020: The Travel Industry's Reset and Restart | Frees Fund ▲ After the Pandemic: Education's Survival Elimination Round | Frees Fund ▲ After the Pandemic: The New Landscape for Fresh Food, Dining, and Food Products | Frees Fund ▲ After the Pandemic: A New Era for "Good Companies" | Frees Fund ▲ Li Feng Column 16 | Fresh Food Retail — Learning Early-Stage Investing from the Secondary Market ▲Li Feng's New Year Outlook | A Single Diagram to See China's Opportunities in 2020