De-Risking Trade Policies May Increase Conflict Risk, New Research Finds

Recent findings from researchers Ling Feng, Qiuyue Huang, Zhiyuan Li, and Christopher Meissner, released by the Centre for Economic Policy Research, dispute the common de-risking perspective. Their analysis leverages advancements in aviation technology to reveal that a doubling of bilateral trade can decrease the likelihood of militarized conflict by approximately 30%. This peace benefit is particularly evident in East and Southeast Asia, especially among continental nations with significant sea-to-air distance ratios. The effect became noticeable post-1980, coinciding with the transformation of global supply chains due to modern aviation. The authors caution that de-risking strategies, aimed at curbing trade to mitigate economic coercion, might overlook trade's security advantages and inadvertently increase the risk of expensive international disputes. They reference the EU's ongoing reliance on China for strategic goods and its de-risking from Russian energy as potentially counterproductive strategies. Additionally, the World Bank's 2024 shift on outsourcing highlights the difficulties of reindustrialization in a neoliberal context.