The End of Globalization: How the U.S. and China are Shaping a New Hierarchical World Order

Shifting Global Trade Dynamics and the Rise of Deglobalization

At our recent IMAP Fall 2025 Conference in Copenhagen, we were delighted to hear from our resident expert, Krisztián Orbán, Founder & Managing Partner at Oriens, who explored the emerging economic order and the end of globalization reshaping global trade and investment flows, examining how shifting power centers - the U.S. and China - are redefining globalization and driving deglobalization dynamics in geopolitics and global trade. In this video, he discusses the current geopolitical situation, the end of globalization as we knew it, and what to expect over the coming months in terms of geopolitics and global trade.

From Globalization to a Fragmented Dual-Pole World Order

Globalization, he argues, is effectively over. The integrated, horizontal global market that defined recent decades is giving way to a more fragmented global economy and a dual-pole world order. The key question is what will replace that model and how the main economic powers intend to shape the next phase of this emerging economic order.

Washington’s Post-Globalization Strategy

From Orbán’s perspective, Washington believes it has a clear plan for the post-globalization era - one that relies on the rest of the world effectively paying for the continuation of U.S. dominance. In this vision of Washington economic policy, the world is asked to tolerate tariffs and trade barriers, accept regulatory pressure, and align with U.S. strategic goals.

Economic Influence Through Tariffs, FDI Flows, and Technology Transfer

In the U.S. model, this “payment” can take multiple forms. It may mean accepting tariffs and customs measures that favor American interests or committing to foreign direct investment trends and indirect investment flows that support the U.S. economy in this new dual-pole world order. It can also involve buying U.S. Treasury bonds or agreeing to various forms of technology transfer that consolidate America’s technological edge.

The Rise of a More Interventionist U.S. Presidency

Overlaying this is what Orbán describes as an increasingly imperial presidency in Washington. Executive power is becoming more deeply involved in the fabric of the economy, cutting deals. At the same time, this presidency is more and more unshackled from the traditional controls of Congress.

China’s Manufacturing Overcapacity and the Search for Captive Markets

On the other side of the emerging system is a second pole centered around Beijing. China’s challenge is very different from that of the United States as it grapples with massive overcapacity in its industrial base. As Orbán highlights, China accounts for around 32% of the world’s manufacturing capacity, but only about 14% of global consumption. This structural imbalance lies at the heart of China manufacturing overcapacity and drives Chinese export strategy as Beijing looks for new outlets in a fragmented global economy.

How China Builds and Maintains Captive Markets

Because of this, China is focused on creating and maintaining captive markets. These are markets where access for Chinese goods is guaranteed, helping absorb China’s excess capacity and provide predictable outlets for its production. However, for countries on the receiving end of this order, the implications can be stark. If domestic manufacturing has to compete with large-scale Chinese overcapacity, local industrial bases can find themselves in mortal danger.

Europe’s Strategic Dilemma Between Two Global Power Centers

Security Dependence, Economic Pressures and Limited Autonomy

For a region like Europe, which sits between these two poles, neither the American nor the Chinese proposition is particularly appealing. Yet, as Orban stresses, Europe does not, in practice, enjoy a fully free choice between these options.

Europe’s strategic reality is shaped above all by security concerns. The continent is extremely dependent on the United States for its defense against the emerging Russian threat, effectively compelling it to continue pleasing the U.S. In concrete terms, this means commitments such as dedicating a 5% share of GDP to NATO defense spending and accepting so-called reciprocal tariffs.

Steps Toward EU Strategic Autonomy

At the same time, Europe is not simply acquiescing. While maintaining its alignment with Washington, the region is also beginning to build its own capacities in pursuit of EU strategic autonomy. Orbán expects that over the next five to ten years, Europe will see the emergence of a more substantial European Defense industry and there will likely be a reinvigoration of European infrastructure investment.

A Fragmented Future: Navigating a Dual-Pole Economic System

Orbán’s conclusion is clear. In ten years, things could look very different, but until then, forget the horizontal markets you were used to. The coming period will be defined by two core poles, one in Washington, D.C., and the other in Beijing. Both will be highly hierarchical systems, structured in ways that are largely disadvantageous for every other player except the two central powers themselves, leaving everyone else to navigate this new landscape.