Geoeconomic Rivalry and Trade Realignment: The Impact of US–China Strategic Competition on Emerging Economies

The escalating geoeconomic competition between the US and China is redefining the structure of globalization and creating new systems of trade realignment in the developing world. This theoretical paper is based on the conceptualization of emerging economies as strategic swing states that are relevant in both economic and political spheres of rivalry interacting at the pivotal point. Combining the knowledge of power transition criterion, strategic trade theory, and the idea of geostrategic globalization, the paper claims that trade realignment is not a short-term consequence of tariff conflicts but a structural expression of competition interdependence. The paper constructs an analytical framework that characterizes restructuring of trade by three interconnected processes which include policy-induced restructuring (tariffs, export controls and industrial subsidies), corporate strategic recalibration (hedging and alignment strategies in global production networks) and alignment-based economic clustering (bloc-oriented trade and investment patterns motivated by strategic alliance). The analysis also helps to explain the scope conditions according to which these mechanisms work and why the results are lower in the emerging economies basing on the institutional capacity, industrial strategy, and geopolitical location. The research not only adds to the existing literature on international political economy by linking literatures on both security-focused and trade-focused orientations, but it also reinvigorates the concept of globalization as a system of transformation with partial fragmentation in lieu of collapse. The paper will conclude that, although geoeconomic rivalry can create opportunities of diversification and upgrading in the emerging markets, it also endangers dependency and volatility, and therefore strategic hedging and domestic building capacities might be the key to long-term resilience.