US-China Tensions Fragmenting Trade and Investment, IMF Finds

The global economy is showing signs of dividing between US- and China-centered blocs, though the dynamics differ from the Cold War with less overall fragmentation and a greater role for non-aligned economies, an International Monetary Fund study found.

Trade flows between a US-aligned group and another linked more closely to China have declined by about 12% more than trade between countries within the same bloc since Russia’s full-scale invasion of Ukraine in 2022, according to a new working paper by IMF economists including First Deputy Managing Director Gita Gopinath.

Foreign direct investment projects fell by around 20% more between ...