The first is from efficiency to security in global supply chains. This is reflected in new industrial policies that in recent years have prioritised geopolitical goals over efficiency concerns. Many advanced economies are coming to see their past de-industrialisation as a vulnerability, leading to a push to “re-shore” or “friend-shore” industries seen as strategic.
That is likely to increase costs and affect production while supply chains are adjusting. At the same time, this shift could question China’s role as a source of global demand, depressing investment and equity values for European firms.