Modi-Xi meet heralds shift to multipolar global economy

The meeting in Tianjin between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping, their first in seven years, carries significance far beyond protocol. 

It took place just as Donald Trump’s expanding tariff program, which began in April and has steadily intensified through the summer, has reshaped global trade flows. 

The timing underscores an increasingly unmistakable reality: The world economy is no longer organized around a single dominant center but is moving toward a multipolar structure with competing sources of power and influence.

Trump’s tariffs are the most visible driver of this shift. The initial 10% blanket duty on imports, announced in April, has since evolved into a far-reaching framework of penalties affecting nearly every trading partner, from allies in Europe to major suppliers in Asia and Latin America. 

In late August, India was hit with a 50% tariff on sectors ranging from textiles to jewellery and seafood – despite being described by Washington as a close ally. The underlying message: No relationship is exempt when the White House sees economic advantage at stake.

While Washington raises trade barriers, other capitals are increasingly drawn together by necessity. The Shanghai Cooperation Organisation summit, held between August 31 and September 1 in Tianjin, China, provided a stage for this process. 

The presence of India, China, Russia and Central Asian nations, joined by Iran and Pakistan, was more than a show of diplomatic solidarity. It reflected the start of deeper economic coordination among countries that, in many cases, share only a limited history of cooperation. 

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. 

Russia, locked out of Western markets, is deepening its reliance on non-Western partners. Smaller states, from Central Asia to the Middle East, are aligning with whichever constellation offers the most reliable access to trade and capital. 

These are pragmatic calculations, not ideological choices, reinforcing the trend toward a more fragmented yet more balanced global economy.

For markets, this fragmentation is not likely to be a temporary disruption. Tariffs are becoming embedded as long-term policy tools, not short-term bargaining chips. 

Countries are planning as though barriers will remain in place for years, building resilience into their economic models accordingly. 

This means investors must also shift their perspective. It’s no longer realistic to expect a return to the highly integrated system of the past. What is emerging is a more regionalized structure in which influence is shared across multiple centers of power.

The image of Modi and Xi meeting in Tianjin, however brief, crystallises what Trump’s tariffs have already set in motion. 

What unfolded in China this week, and what is unfolding in Washington’s tariff schedules, are two sides of the same story — a story of fragmentation, resilience and new centers of economic gravity that will define markets for years to come.