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

The geopolitical tectonic plates are moving again, and early tremors are already visible across the global landscape, with significant consequences for traditional alliances, global markets, and the realignment of national power.

What we see unfolding in the first quarter of 2026 feels more and more like one of historic seismic moments, not because of a single moment like a single headline about President Donald Trump, or Canadian Prime Minister Mark Carney’s “break” in his world order speech in Davos, or any bilateral meeting or state visit. But taken together, with the cumulative weight of the high-level diplomatic gambits against Beijing now underway, and with so much more on the horizon, something structural is happening that requires attention.

For markets and policymakers alike, the diplomatic foot traffic tells a striking story: The world is coming back to China.

This is not an unprecedented situation. In the years following China’s accession to the World Trade Organization in 2001, global leaders and corporate executives made annual visits to Beijing, similar to those made by eager statesmen and merchants during the Qing Dynasty with the promise of market access, manufacturing prowess, scale and scope of production, and the sheer pace of China’s GDP growth during that period. This gravitational pull extended through much of Xi Jinping’s first five-year term; At that time, China still envisioned the promise of profit and opportunity rather than political restraint and economic contraction.

Momentum shifted significantly in the years leading up to 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 Western attitudes towards Beijing. The language of “de-risking” and “decoupling” has moved from policy circles in Washington to boardrooms across the US and Europe. Diplomatic traffic has not stopped, but has slowed significantly as governments and firms readjust exposure to what is increasingly seen as both a geopolitical rival and an economic rival.

What makes the current moment so striking is that this trend now appears to be reversing, carefully and without the excessive exuberance that has defined the post-WTO era. The catalyst for this change is not a transformation in China’s governance or economic structure, political systemic change, or Beijing’s view of the West. As difficult as it is for many in Washington to accept, it is a growing sense of volatility coming from Washington itself, a troubling realization for the US national security establishment and an even harder one for allies to stomach.

This realignment became particularly visible in Davos, where Trump openly mocked French President Emmanuel Macron, criticized Canada for not being grateful enough, and dismissed NATO as a money pit. His false claim NATO allies are not serving on the front lines of Afghanistan, Then I walked backit reinforced a broader sense that times and realities were changing. But the disdain for Europe didn’t start here. This situation has been developing since Vice President J.D. Vance’s harsh speech at last year’s Munich Security Conference, where European partners were publicly condemned. Since then, this change in tone has been reflected in European capitals.

public opinion data suggests that this paradigm shift is not taken lightly. Recent polls in Germany show that 71% of respondents now view the US as an enemy, while polls across the continent show only 16% still describe the US as an ally. These numbers indicate more than disappointment; they represent a recalibration of allied risk perception. Risk is one of the most important currencies in geopolitics, and Washington has spent years creating an elaborate risk architecture around China. Now this architecture seems to be reversed.

European leaders and the ‘middle power’ imperative

Beijing did not engineer this paradigm shift, but it is in a position to benefit from it if it plays its cards right. Over the past year, a steady parade of allied leaders has marched towards China. Each visit was based on national economic interests, and while trust in China remains limited, trust in Washington now feels less certain, or rather riskier.

French President Macron’s courtship of Beijing reflects his call for Europe’s “strategic autonomy”. King Felipe VI of Spain Sets the tone for China-Europe visits heavy on “partnership” symbolism. British Prime Minister Keir Starmer visited Beijing and in London reopened strategic-level dialogues and deepened financial cooperation, including the expansion of the Renminbi clearing infrastructure, commitments to encourage cross-listing through mechanisms such as the China-UK Stock Linkage scheme, and institutional plumbing that shapes global capital flows while strengthening China’s global financial influence.

Ireland’s leaders also travelled, while Australia sought stability after years of intense trade frictions, recriminations and reprisals. India and Beijing interacted at the summit level despite ongoing border tensions along the Himalayan border. Next up is German Chancellor Friedrich Merz, whose visit is particularly important given Germany’s central role in Europe’s industrial supply chains, its automotive industry hanging by a thread and its loss of global market share to Chinese rivals.

Taken individually, these trips are pragmatic exercises in economic statecraft. Viewed collectively, these reflect the growing agency of what Carney describes as the rebalancing imperative of “middle powers,” states large enough to shape global outcomes and who do not want to be trapped in the instability of great powers. The promise of this hedging strategy lies in diversification, diplomatic optionality, and insulation from tariff shocks. The danger of this lies in global fragmentation, weakened alliances, and a China pocketing newfound influence without offering openness or generosity in return.

Distrust of China and an important Munich meeting

As the Munich Security Conference gets underway, there are signs of tension involving both the United States and China. German Chancellor Merz said: In his speech on the first day of the conference on Friday, he said “the international order based on rights and rules is currently being destroyed”, and in English he said that the USA “cannot do this job alone” and called the Americans “friends”.

History warns of international realignment towards China. In 2017, Xi Jinping went to Davos and gave a speech that was as welcome and celebrated as Mark Carney’s; This speech was a strong defense of free trade and globalization in the face of the protectionist Trump 1.0 agenda. For a short time, China was portrayed as an alternative and safe haven, but Beijing failed to fulfill this promise; instead, it ushered in an era of wolf warrior diplomacy. It’s certainly possible that China will squander this moment, too.

Signs of friction It is already visible with China. The report ahead of this year’s Munich Security Conference highlighted strained institutional relations between Brussels (EU institutions) and Beijing, including limited diplomatic access, unresolved disputes over industrial overcapacity and accusations of China’s alignment with Russia. While bilateral interaction is seen to increase in 2026, the EU’s institutional mistrust towards China continues.

For this reason, Munich gains great importance. Both Washington and Beijing will need to reassure wounded Europeans. Secretary of State Marco Rubio will lead the official U.S. delegation and will be under intense scrutiny after Vance’s performance last year. China, however, needs to do more than offer rhetorical warmth on the podium if it hopes to maintain its 2026 momentum.

Staying on top of all this is something President Trump expects Visit to Beijing in early AprilFor China, it is the jewel in the crown of diplomatic visits. After hosting America’s allies, Xi Jinping will also host the American president, reinforcing China’s narrative that global diplomacy is still moving closer to Beijing. In Beijing’s narrative, the Middle Kingdom is back.

But substance will be more important than symbolism. Chinese officials were already signaling a crackdown on Taiwan’s arms sales. Under previous administrations, including my time in the Obama administration, such pressure faced legal hurdles under the Taiwan Relations Act, which required the United States to provide defense capabilities to Taiwan. Trump’s more discretionary approach complicates this dynamic.

If Beijing is making its demands, Washington should be making its own, from tolerance for Jimmy Lai to substantive and measurable cooperation on Ukraine. Participation without reciprocity signals that oppression provides access at minimal cost.

All of this underscores why the geopolitical rebalancing now underway extends far beyond diplomacy. The global system is not being realigned wholesale toward China, but as allies hedge and middle powers assert authority and the United States puts pressure on allies rather than enemies. History shows that the world has turned to China before with the belief in growth and endless opportunity, then quickly pulled back due to geopolitical tensions and shocks. It now appears that businesses are being cautiously and pragmatically dragged backwards once again, out of limited options and strategic necessity rather than out of trust in China’s good will.

As this drift gathers momentum, it is reshaping the space in which global trade must operate; It affects how firms re-enter China while guarding against overexposure, how they engage with middle powers in pursuit of strategic optionality, and how they compete in third markets against Chinese companies that are now globalizing. It is changing capital allocation across geopolitical spheres, forcing a readjustment of alignment, leading to a redesign of supply chain architecture, and introducing a more complex form of dual-state exposure involving both the United States and China. Businesses cannot afford to misread or misrepresent this milestone or dismiss it as a temporary Trump phenomenon. True, he started this trend, but the geopolitical fault lines will likely continue to shift, and if it fully materializes, this will be the biggest one.

—With Dewardric McNealmanaging director and senior policy analyst at Longview Global and CNBC contributor