Modi-Xi Meet Heralds Shift To Multipolar Global Economy

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The fact that Modi and Xi could engage in a substantive dialogue after the deadly 2020 Galwan Valley clashes illustrates how rapidly strategic calculations are shifting under external pressure.

The broader consequence is that the post-war consensus, which placed the United States at the center of the global system, is steadily eroding.

The tariff program, by design or not, is accelerating the development of parallel networks of trade, finance and security. Where globalization once implied convergence toward shared standards, it now increasingly produces separate systems of rules and practices.

Countries subject to tariffs or sanctions aren't waiting for negotiations to bring them back into the fold. Instead, they're building alternative institutions and regional frameworks designed to reduce their dependence on Washington.

This isn't an academic debate for investors around the world. It's a fundamental reorganization of how capital is allocated and how markets function.

Supply chains are being redrawn around regional resilience rather than global efficiency. Long-established correlations between markets are weakening as political risks begin to outweigh the traditional drivers of performance. The assumptions that guided portfolio construction for a generation can no longer be relied upon.

Central banks have been quick to recognize the change. Reserve diversification away from the dollar is gathering pace, supported by record gold purchases and a shift into non-dollar assets. Regional payment systems are being developed to handle trade settlement without relying on Washington's financial infrastructure.

The dollar remains dominant, but its share of global reserves is gradually declining – along with it the United States' unchallenged role in global finance.

The impact is already visible across various sectors. Tech supply chains, once structured for cost efficiency, are being reorganized around political reliability. Semiconductor hubs are being developed in multiple regions to limit the risk of exclusion from US-controlled markets.

Energy partnerships are being restructured as sanctions and tariffs force producers and consumers to find new channels for investment and delivery. Infrastructure financing, historically led by Western-backed institutions, is increasingly sourced through regional banks and sovereign initiatives.

The SCO meeting encapsulates these developments. India and China remain wary competitors, but the logic of economic survival compels them to consider cooperation.