Global economy is on the move away from Trump and towards China

Geopolitical tectonic plates are beginning to move again, and early tremors are already evident across the global landscape, with dire consequences for traditional alliances, global markets, and the realignment of national power.

What we are witnessing during the first quarter of 2026 increasingly looks like a historic earthquake moment, and not because of any headline associated with it. President Donald Trumpor one moment like the Canadian Prime Minister Mark Carney’s “rupture” in world order discourse In Davos, or in any bilateral meeting or state visit. But combined, along with the cumulative weight High-level diplomatic maneuvers by Beijing Something structural is happening now – and with many other events on the horizon – that requires attention.

For markets and policymakers alike, the diplomatic movement tells a startling story: the world is turning back to China.

This is not without precedent. In the years following China’s accession to the World Trade Organization in 2001, world leaders and corporate executives have been making annual trips to Beijing, much like those made by statesmen and eager merchants during the Qing dynasty, attracted by the promise of market access, manufacturing skills, the scale and scope of production, and the sheer speed of Chinese GDP growth at the time. This gravitational force extended across a lot of things Xi JinpingThis was the president’s first five-term term, when China still expected more the promise of profits and opportunity than political constraints and economic downturn.

The momentum shifted dramatically in the years before the pandemic, and especially after it. Supply chain shocks, coercive trade practices, intellectual property theft, data restrictions, a focus on human rights, and intensifying geopolitical competition have hardened the Western stance toward Beijing. The language of “de-risking” and “decoupling” has moved from policy circles in Washington to boardrooms in the United States and Europe. The diplomatic movement did not stop, but it slowed significantly as governments and companies readjusted their exposure to what was increasingly seen as a geopolitical and economic rival.

What makes the current moment so striking is that this trend now appears to be reversing, cautiously and without the over-exuberance that characterized the post-WTO era. The catalyst for this shift is not a shift in Chinese governance or economic structure, political systemic change, or how Beijing itself views the West. As difficult as it is for many in Washington to admit it, there is a growing perception of volatility emanating from Washington itself, an uncomfortable perception for the US national security establishment, and one that is more difficult for allies to deal with.

The reorganization became particularly evident in Davos, where Trump was publicly visible He mocked French President Emmanuel Macron criticized Canada for not being grateful enough, calling NATO a money pit. for him Invalid assertion And that NATO allies did not serve on the front lines in Afghanistan, He came back laterIt reinforced a broader perception that times and facts had changed. But the disdain for Europe did not start there. I’ve been building since cum J.D. Vance’s scathing headline At last year’s Munich Security Conference, where European partners were publicly criticized. Since then, the shift in tone has reverberated across European capitals.

Public opinion data He points out that this paradigm shift is not being received lightly. In Germany, recent polls indicate that 71% of respondents now view the United States as an adversary, while continent-wide polls show that only 16% still describe the United States as an ally. These numbers indicate more than just frustration; It represents a recalibration of the perception of allied risks. Risk is one of the most important currencies in geopolitics, and Washington has spent years building a complex risk architecture across China. Now it seems that this architecture has been turned upside down.

European leaders and the inevitability of “middle power.”

Beijing did not design this paradigm shift, but if it plays its cards right, it is positioned to benefit from it. Over the past year, a steady procession of Allied leaders has made its way to China. Each visit was grounded in national economic self-interest, and while trust in China may be limited, reliance on Washington now seems less certain — more nuanced and more dangerous.

French President Macron’s courtship of Beijing It reflects his call for European “strategic independence.” King of Spain Felipe VI Setting the tone for Chinese-European visits Heavy in “partnership” symbolism. British Prime Minister Keir Starmer visited Beijing It reopened strategic-level dialogues and deepened financial cooperation, including expanded renminbi clearing infrastructure in London, commitments to promote cross-listing through mechanisms such as the China-UK Equity Linkage Scheme, and an institutional architecture that shapes global capital flows while strengthening China’s global financial influence.

The Irish leadership also traveled, while Australia sought stability after years of intense trade frictions, recriminations, and retaliation. India has dealt with Beijing at the summit level despite the ongoing border tensions along the Himalayan border. Then comes German Chancellor Friedrich Merz, whose visit carries special weight given the central role that Germany plays in industrial supply chains in Europe, where the automobile industry remains hanging by a thread. Losing global market share to Chinese competitors.

Taken individually, these journeys are practical exercises in economic statecraft. Taken collectively, they reflect the growing power of what Carney called the “middle power” imperative for rebalancing by those states large enough to shape global outcomes and unwilling to be caught up in the vagaries of great powers. The promise of this hedging strategy lies in diversification, diplomatic options, and insulation from tariff shocks. Its danger lies in global fragmentation, weak alliances, and a China that is gaining new influence without offering openness or magnanimity in return.

Mistrust in China and the pivotal Munich meeting

As the Munich Security Conference begins, there are signs of tension between the United States and China. German Chancellor Merz said In his remarks on the conference’s first day on Friday, he said that “the international order based on rights and rules is currently being destroyed,” but speaking in English, he also said that the United States could not “move forward alone” and described Americans as “friends.”

History offers us some caution about international realignment toward China. In 2017, Xi Jinping traveled to Davos and gave a speech as highly regarded as Mark Carney’s, in which he strongly defended free trade and globalization against Trump’s 1.0 protectionist agenda. China was briefly portrayed as an alternative and safe haven, but Beijing has failed to deliver on this promise; Instead, it ushered in the era of wolf warrior diplomacy. It is entirely possible that China will squander this moment as well.

Friction marks With China already visible. Reports leading up to this year’s Munich Security Conference have highlighted tense institutional relations between Brussels (the EU institutions) and Beijing, including restricted diplomatic access, unresolved disputes over excess industrial capacity, and recriminations over China’s alliance with Russia. While 2026 saw an expansion of engagement at the bilateral level, institutional mistrust of the EU in China remains.

Therefore, Munich is of great importance. Both Washington and Beijing will need to reassure the affected Europeans. Secretary of State Marco Rubio will lead the official US delegation and will be under intense scrutiny after Vance’s performance last year, while China must do more than just offer rhetorical warmth from the podium if it hopes to maintain its momentum in 2026.

Looming above all of this is what President Trump expects Visit to Beijing in early AprilThe crown jewel of diplomatic visits to China. After hosting America’s allies, Xi Jinping will host the US president, reinforcing China’s narrative that global diplomacy is still converging with Beijing. According to Beijing’s narrative, the Middle Kingdom has returned.

However, substance will be more important than symbolism. Chinese officials have already indicated pressure Arms sales to Taiwan. In previous administrations, including during my time in the Obama administration, this influence has run into legal barriers under the Taiwan Relations Act, which requires the United States to provide defense capabilities to Taiwan. Trump’s more discretionary approach complicates this dynamic.

if Beijing expresses its demandsWashington must express its own opinion Compassionate to Jimmy Lai To substantive and measurable cooperation on Ukraine. Participation in the absence of reciprocity suggests that pressure leads to access at the lowest cost.

All of this highlights why the geopolitical rebalancing now underway extends beyond diplomacy. The global order is not completely realigning toward China, but it is recalibrating as allies and middle powers assert their effectiveness, and the United States pressures allies more than adversaries. History shows that the world has gone to China before, driven by growth and belief in endless opportunity, and then quickly backed away amid geopolitical tensions and shocks. Now companies appear to be pulling back again, cautiously and pragmatically, driven less by confidence in China’s good faith than by limited options and strategic necessity.

As this drift gains momentum, it is reshaping the terrain in which global companies must operate, affecting how companies return to China while hedging against overexposure, how they engage middle powers seeking strategic choice, and how they compete in third markets against Chinese companies that are now going global on a large scale. It is changing the allocation of capital across geopolitical domains, forcing a recalibration of compliance, driving another redesign of supply chain architecture, and introducing a more complex form of dual risk exposure involving both the United States and China. Businesses cannot afford to misread, exploit, or dismiss this turning point as a temporary Trumpian phenomenon. It is true that he launched this path, but the geopolitical fault lines will likely continue to shift, and if fully realized, that will be the greatest risk.

—by DeWardrick MacNeillmanaging director and senior policy analyst at Longview Global, and a CNBC contributor