When describing global power politics across nations and regions, most analysts like to keep it simple. The world is often divided into a bipolar world of great powers. There are periods of transition and change, but the general view is that there are dynamics between two great economic systems and the rest of the world aligns itself across this great divide.
In the post-WWII period until 1990, we lived in a bipolar world between the US and the Soviet Union. The period post the end of the Soviet Union turned into a single polar world for the US only to see a new bipolar world between the US and China. There is no single date when there are switches in polarity, but these regime shifts impact investment strategies. The unipolar world was the period of great globalization and now we are seeing a change in trade flows and globalization as countries adjust and realign to the different spheres of power. While this may not be an immediate trade, it does represent shifts that will impact all markets.
Commodity flows will be become more strategic as countries determine how to source raw materials from friendly areas. This is clearly seen in the energy trade flows and the sourcing of rare minerals. Capital flows will change with lower direct investment across poles. The capital flow changes will occur for both equities and bonds as money avoids China and looks for other emerging markets. These shifts will increase in 2025 as alignments, tariff, and sourcing changes continue.
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