At the latest annual meeting of the World Economic Forum in Davos, United Nations Secretary-General Antonio Guterres offered an unusually frank assessment of the international order’s current predicament. With the world “plagued by a perfect storm on a number of fronts,” he said, “we need cooperation, yet we face fragmentation.”
In fact, the perfect storm is better likened to a tsunami. Its components — including supply-chain disruptions, an energy crunch, a cost-of-living crisis, slowing global growth and a lurch toward climate disaster — are all at least partly consequences of the tectonic rift between China and the United States.
If what Guterres calls the “Great Fracture” plays out, the world will have “two different sets of trade rules, two dominant currencies, two internets and two conflicting strategies on artificial intelligence.” The costs would be tremendous. World gross domestic product would shrink by 1.5%, or more than $1.4 trillion in annual terms; prices would rise virtually across the board; and the delivery of global public goods would be severely diminished.