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Geopolitics
Strategy
Navigating a world without a center: What the end of the postwar order means for business
To navigate this turbulence, business leaders must decentralize operations, plan for worst‑case scenarios, and embrace the new world order....
Great power competition is reshaping global supply chains and the broader economy. To navigate this turbulence, business leaders must embrace the new world order, decentralize operations, and plan for the worst-case scenario, says Qiyu Xu.
In China, within business circles, we are all too aware of the noisy, unpredictable impact that the current geopolitical trajectory is having on business. From rising costs and supply chain disruptions to volatile financial markets, restricted market access, and payment challenges, geopolitics’ impact is real and decisive. The reality is that we must learn to live with it.
There are three main geopolitical risks that business leaders around the world cannot ignore: the strategic competition between China and the US, the Ukraine war and its geopolitical implications, and the global implications of the Iran conflict.
China–US competition
In May 2026, the president of the United States, Donald Trump, made a state visit to China. This visit was Trump’s second state visit to China; the first was in 2017, and the result was to work toward a constructive strategic stability relationship. Our foreign minister Wang Yi described the relationship as an active stability featuring cooperation as the mainstay, a sound stability with well-defined competition, a regular stability where differences are manageable, and a lasting stability promising peace.
People have asked me what the real meaning of this is. My answer is low-level stability, which is better than uncertainty, but it’s still limited. It means we recognize that competition exists, and we agree to manage and regulate it. We accept that there will be difficulties, and we acknowledge that some issues are too complex and too significant to ignore. Rather than letting them escalate, we understand that action is necessary.
Competition between China and the US is focused on three key issues: Taiwan (Chinese Taipei), cutting-edge technology and its supply chains, and critical minerals supply chains. The main issue right now between the two is cutting-edge technology and its supply chains. As a friend of mine, an American admiral, said to me so clearly in 2019, “Even if China gets ahead of the US in just one field of cutting-edge technologies, it would mean the end of the US’s current international position.”
There are currently two diverging views on this: “small yard, high fence,” or “two separate tech systems.” I don’t think either is likely on its own. The first is unlikely because China’s technology is improving. The small yard has a chance to expand. The second is also unlikely because in the past, when there was cooperation, the US did the innovation and China the application. Now, because of competition, China has had no option but to improve on innovation and the US has seen how this plan has backfired, so I don’t think the US will push it very hard. My sense is that the future will be somewhere between these two.
The Liberation Day Tariff in 2025 was a historical event between China and the US when the world’s two biggest economies almost stopped their direct trade for the first time in the post-Cold War era. I think the meaning of what happened here is much more than the US–China trade war; the most favored nation principle was undermined. This principle is crucial to today’s global trading system. This time, the US administration overrode this principle, and we doubt whether the next US administration will go back to its previous position.
The November 2025 National Security Strategy of the US government included a key sentence: “The days of the United States propping up the entire world order like Atlas are over.” What I think is that the United States is not abandoning its rights or power, but its global responsibility. This is crucial to all of us.
Which brings me to the question, in the next 15 to 20 years, what is the most probable risk for the world order, the Thucydides Trap or the Kindleberger Trap? The Kindleberger Trap is what I am hearing most and I think this is noteworthy. Kindleberger’s Trap is where no country wants to assume leadership of the world. When there is a crisis, no single country will provide for the public good, and every country will have to do it by itself. This will lead to chaos.
The Ukraine war and its geopolitical implications
The  war in Ukraine has now lasted longer than the First World War. This is a war of attrition. Ukraine’s problem is a lack of resources and manpower and its dependence on the US for information and intelligence. The Russian troops are still moving forward.
Russia’s problem is less about its military and more about its economy; it faces declining growth, growing deficits, and rising taxes. One of the main risks of this war is the collapse of one of the belligerents. If Russia loses, there will be significant implications in terms of its huge nuclear arsenal. The second is a peace at the cost of Ukraine’s territory, because that will mean that for the first time in 80 years, the principle that no country should have its borders changed by force will be overruled. This will spell the end of the post-World War II system.
This situation demonstrates a failure of mutual deterrence between Iran and the US.
The Iran conflict and its global implications Â
This situation demonstrates a failure of mutual deterrence between Iran and the US. One result of this war is the failure of freedom of navigation. It is the first time since 1945 that the US has failed to guarantee the security and free passage of a strategic sea lane, and the world has been impacted by it with a rapid rise in the cost of fuel globally.
Globalization still exists, but it is becoming more difficult and more complex.
How to navigate the turbulence?
The reality is that the post-World War II global system is dissolving. So, what should we do?
What follows is some advice that I give to Chinese businesses on how to navigate a world without a center.
- Strike a balance between efficiency and resilience. In the current environment, resilience is becoming an increasingly important part of a company’s strategy.
- Localize and embrace a new form of globalization. Globalization still exists, but it is becoming more difficult and more complex. Companies must adapt and transform, particularly by localizing their supply chains.
- Decentralization. Traditional, highly centralized systems are becoming outdated. Companies need to move toward more flexible, decentralized structures in order to respond effectively.
- Plan for the worst-case scenario. My perspective is shaped by decades of military experience, where this kind of planning is fundamental. Businesses should have clear contingency plans in place. You may hope never to use them, but having them provides security and preparedness in an uncertain world.
Authors
This article is inspired by a keynote session at IMD’s signature Orchestrating Winning Performance program, Lausanne (2026), which brings together executives from diverse sectors and geographies for a week of intense learning and sharing with IMD faculty and business experts.
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