In 1914, the world’s economic order collapsed because its most powerful nations went to war. A century later, the great powers are averse to shedding blood — and perversely, that could be the trigger for another unravelling of the global economy.
Rulers once sent in the cavalry when they wanted to redraw the map. Now, the main battleground is economic. In many theatres, sanctions have taken the place of military strikes. Competing trade regimes becoming as important as military alliances. The American historian Edward Luttwak calls this a contest of geoeconomics, defined by the “grammar of commerce but the logic of war”.
Companies, therefore, are in the crosshairs. They can find themselves caught in the backwash of decisions made by their home governments. In 2012, Chinese citizens, angered at the dispute over the ownership of islands in the East China Sea, protested at factories in China owned by Toyota, Honda, Nissan and other Japanese companies. A survey at the time found that 41 per cent of Japanese firms in the country were considering moving their operations elsewhere. In turn, anti-China demonstrators in Vietnam, protesting against the presence of a Chinese oil rig in disputed waters, last year ransacked Chinese-owned factories in the country.