Sep 28, 2026

How Many College-Educated People Does China Have?

Leon Liao

College-educated people already account for 20% of China’s population. More importantly, over the next decade, their number relative to the labor force will rise from one-third to nearly one-half.

In 2026, China is estimated to have 273 million people with college education, equal to 19.5% of the population. By 2035, that number will reach 357 million, or 26.4%; by 2045, 435 million, or 33.3%. More importantly, the ratio of the college-educated population to the labor force will rise from 34.0% in 2026 to 47.0% in 2035 and 61.1% in 2045.

China’s demographic story over the next two decades will certainly include fewer births, a shrinking population and deeper ageing. But another trend matters just as much and receives far less attention: China is building an enormous pool of highly educated workers at a pace it has never experienced before.

This essay is part of the series of State Governance and Capacity.

Every June, the gaokao (高考) offers the clearest snapshot of how fiercely Chinese families still compete for education. This year, 12.9 million students registered for China’s national college entrance examination. An estimated 11 million will be admitted to higher education, including about 5.2 million to bachelor’s programmes and roughly 5.8 million to junior-college programmes. The overall admission rate will be around 85%.

Thirty years ago, when I entered university, only 2.4 million students took the gaokao. Just 970,000 were admitted. The headline admission rate was already 40%, yet only about 5% of my age cohort actually made it into higher education. China now admits roughly 11 times as many college students each year as it did then. Today, close to 70% of China’s 18-year-olds can enter higher education.

But the more important point is not simply that getting into college has become easier. One of the clearest ways to gauge a society’s human-capital base is to look at the share of the population with college education, or the size of the college-educated population relative to the labor force. For China, a developing economy on a continental scale, the most important demographic change over the next ten or twenty years may not be the peaking and decline of the labor force itself. It may be the speed at which the college-educated population expands, and how that expansion reshapes the workforce, industrial upgrading and China’s long-term growth potential.

Gaokao Applications Will Remain High for Another Decade

In 2025, 13.35 million students registered for the gaokao, down by 70,000 from 13.42 million in 2024. In 2026, the number fell again, to 12.90 million, a decline of another 450,000. Gaokao applications have now fallen for two consecutive years. At first glance, that looks like demographics: fewer teenagers, less competition. It isn’t.

Most students taking the exam in 2025 were born in 2007, when China recorded about 15.94 million births. The 2026 cohort was born mainly in 2008, when births actually edged higher to around 16.08 million. China’s college-entry-age population was therefore about 15.94 million in 2025 and roughly 16.08 million in 2026. The decline in 2026 applications was not caused by a sudden drop in the relevant age cohort.

Policy changes explain much more of the recent decline. In recent years, adjustments to the division between academic and vocational high schools, the expansion of vocational education, tighter rules on repeat test-takers in some regions, and greater use of separate and classified admissions have all affected the number of students entering the unified gaokao system. Repeat test-takers matter especially because they have long accounted for a sizeable share of registrations. When provinces restrict public high schools from enrolling repeaters, or when fewer students return for another attempt, headline application numbers can move materially. The 2026 drop therefore looks more like a temporary policy effect than the beginning of the end of gaokao competition.

Over the medium and long term, however, the size of the relevant age cohort will still matter most. China’s population of 18-year-olds is likely to rise from around 16 million today to more than 17 million over the coming decade. I therefore expect gaokao registrations to remain in a high range of roughly 13.5 million to 15 million.

A clear decline is unlikely to begin until after 2036, when the much smaller birth cohorts start reaching college-entry age. Applications are projected to fall to around 10 million by 2038, around 8 million by 2040 and roughly 7 million by 2045.

College Admissions Will Reach New Highs, but Competition Will Remain Intense

College admissions are expected to rise to 11 million in 2026, pushing the admission rate to a record 85%. Over the next decade, the admission rate could remain above 85%, while annual admissions stay between roughly 11 million and 13 million and may continue to climb gradually.

That means that over the next ten to twenty years, roughly two-thirds to four-fifths of each cohort of Chinese 18-year-olds will enter higher education. China already has a mass higher-education system, and younger cohorts are moving steadily toward near-universal participation.

But that does not mean competitive pressure is disappearing. The reason is straightforward: the entire university system is expanding, but the supply of places at the top institutions is not. Bachelor’s programmes, junior colleges, vocational bachelor’s institutions and private universities have all expanded, while the supply of places at China’s 985 and 211 universities has not grown at anything close to the same pace. The 985 Project covered just 39 universities, the small group China designated for building world-class research institutions. The broader 211 Project covered roughly 100 universities; all 39 of the 985 schools sit inside it. In 2022, the average admission rate for 985 universities was only about 1.62%, while the average rate for 211 universities, including the 985 institutions, was around 5.01%. For the elite educational resources that matter most to many Chinese families, competition at the top has barely eased.

The College-Educated Share of China’s Population Will Rise from 20% to 25% Over the Next Decade

Gaokao numbers move from year to year. The stock of educated people moves in only one direction—for now, sharply upward. In 2026, China is estimated to have around 272.8 million people with college education, close to 20% of the total population. In 2005, the number was only about 85 million. China has therefore added almost 190 million college-educated people in two decades. That is a much bigger change than university expansion alone suggests: it is remaking the country’s human-capital base.

By 2030, the college-educated population is projected to reach 308.7 million. By 2035, it will rise further to 356.7 million, equivalent to about 26% of the population. In other words, China will add another 84 million college-educated people in less than a decade. By 2040, the total will reach 405.6 million; by 2045, 435.1 million, more than one-third of the population.

This is the demographic line that is easiest to miss: China’s population is shrinking while its educated population is still expanding rapidly. Over the next decade alone, China will add almost as many college-educated people as the entire population of Germany.

The Deeper Change Is in the Structure of the Workforce

If the college-educated share of the total population captures the long-term transformation of Chinese society, the ratio of the college-educated population to the labor force gives a better sense of how China’s economic structure itself may change.

In 2026, China’s labor force is estimated at about 762.4 million, compared with a college-educated population of around 272.8 million, a ratio of roughly 34%. By 2030, the labor force is projected to decline to 743.5 million while the college-educated population rises to 308.7 million, taking the ratio to 39.44%. By 2035, the labor force falls further to 720.4 million while the college-educated population reaches 356.7 million, lifting the ratio to 47.03%. By 2040, it reaches 55.20%; by 2045, 61.14%.

China’s workforce is changing from the bottom up. Workers with less formal education still dominate today; over the next two decades, college-educated people will account for a much larger share of the labor pool. For advanced manufacturing, engineering, R&D, digital services and the occupational structure of China’s cities, that shift may ultimately matter more than the headline decline in population.

The change will appear even earlier in urban China, because college-educated workers are disproportionately concentrated in cities. Urban employment currently accounts for around 65% of total employment. On that basis, the college-educated population is already equivalent to more than 56% of China’s urban workforce.

The first parts of China to enter a labor market in which highly educated workers form the majority will therefore not be the country as a whole, but its major cities, coastal industrial belts and leading metropolitan regions.

Discussions of Chinese demographics often treat low fertility, ageing and a shrinking workforce as a one-directional negative shock. The education structure tells a more complicated story. China will certainly have fewer workers in the future. But those workers will also have much higher average levels of education, stronger capacity to absorb technology and greater ability to perform complex tasks.

China Today Looks Surprisingly Like America Around 1980

China’s college-educated population is currently equivalent to roughly 35% of its labor force, broadly comparable to the United States around 1980. By 2035, that ratio will approach 50%, roughly corresponding to the United States in the mid-1990s and close to the levels seen in Japan and South Korea today. By 2045, when the ratio exceeds 60%, China will broadly resemble the mature, highly educated workforce structure that the United States has maintained since around 2005.

The economic parallel is equally striking. In 1980, when the college-educated population was equivalent to roughly 35% of the U.S. labor force, U.S. GDP per capita was about $12,500. China now sits at almost the same point on both measures: in 2025, GDP per capita was about $13,900, while the college-educated population was also equivalent to roughly 35% of the labor force. By 1990, U.S. GDP per capita had risen to about $23,500, nearly double its 1980 level. That does not mean China will replay America’s 1980s. But over the next decade, the direction of travel—in both education and income—could look surprisingly similar.

If we further take into account that college-educated employment is concentrated in urban areas, China’s current college-educated population is already equivalent to roughly 56% of urban employment. On that measure, urban China today looks closer to the United States in the mid-1990s. By 2035, more than 60% of China’s urban workforce could consist of people with college education, potentially exceeding the current U.S. level.

It also explains an apparent contradiction in China today. On one side, large parts of manufacturing still rely on workers with intermediate skills, while many counties and inland regions continue to have relatively modest human-capital levels. On the other, China already has one of the world’s largest supplies of engineers, researchers and university graduates. There is nothing especially contradictory about this. China is large enough to contain both structures at once: world-class engineering clusters along the coast and much thinner human capital across large parts of the interior.

The question for the next decade is therefore not simply whether education keeps expanding. It is whether the economy can create more sophisticated industries and jobs as quickly as the education system produces more sophisticated workers. If it can, China’s demographic transition will amount to more than an ageing problem. It will also represent a human-capital upgrade on an unprecedented scale.

What Will a Larger College-Educated Population Mean for China’s Economy?

The economic logic is straightforward. Better-educated workers tend to be more productive, absorb technology faster and move more easily into complex jobs. Education does not translate mechanically into growth, but it clearly changes the frontier of what an economy is capable of producing.

The most direct economic value of higher education is not simply that more people possess diplomas. It is that the workforce becomes better able to perform complex tasks, master new technologies, enter higher-value industries and participate in innovation. For China today, this matters particularly because the economy is moving away from a growth model dominated by property and infrastructure toward one that depends more heavily on advanced manufacturing, automation, digitalization, R&D and modern services. In that transition, the scale and density of the highly educated population are themselves a form of infrastructure.

That is why interpreting the rise in college-educated people simply as “more young people going to university” understates its macroeconomic significance. China is building a labor supply with a much higher density of formal education. That labor pool is exactly what industries such as semiconductors, EVs, advanced equipment, software, AI, biotechnology, industrial automation, finance and professional services consume.

But more degrees do not automatically produce more GDP. If industrial upgrading lags behind, if the economy does not create enough sophisticated jobs, or if the labor market cannot absorb enough high-skilled workers, the result can be credential inflation, structural unemployment, youth job pressure and overeducation. The economic value of higher education ultimately depends on whether the industrial system can put that human capital to work.

China will get older and its workforce will shrink. But that workforce will also become dramatically better educated. For a country still climbing the industrial and technological ladder, that is not a demographic footnote. It is part of the growth story itself.

[1] Il Gaokao (高考) è l’esame nazionale di ammissione all’università in Cina, universalmente noto per essere uno dei test standardizzati più difficili e impegnativi al mondo. L’esame si svolge ogni anno all’inizio di giugno (solitamente dal 7 al 9 o 10 giugno) e coinvolge una quantità oceanica di candidati: nel 2026 sono stati 12,9 milioni gli studenti a sostenerlo.

[2] (spiegazione del grafico fornita da Google IA)

• Asse superiore (Stati Uniti): Va dal 1965 al 1990.
• Asse inferiore (Cina): Va dal 2008 al 2026 (stimato).

• Linea Blu (Stati Uniti): Mostra la crescita del PIL pro capite americano nei 25 anni successivi al 1965. Nel 1990 (dopo 25 anni), il PIL pro capite degli Stati Uniti ha raggiunto i $23.835.
• Linea Rossa (Cina): Mostra la crescita del PIL pro capite cinese a partire dal 2008. Il dato evidenziato in rosso indica che nel 2024 la Cina ha raggiunto un PIL pro capite di $13.448.

• Incredibile somiglianza: La linea rossa della Cina segue in modo quasi sovrapponibile l’andamento della linea blu degli Stati Uniti. Questo suggerisce che la transizione economica della Cina sta replicando fedelmente le tappe storiche dello sviluppo americano, solo con circa 43 anni di differita temporale.

Sept.18, 2026

Arnaud Bertrand

Macron’s former Prime Minister, who is candidate at France’s next presidential elections, proposes to “build the United States of Europe”

I’ve been hearing this discourse ever since I was a child, that we cannot compete with the US and China without a strong Europe.

Which, granted, makes a lot of sense on paper: if you’re to compete against giants, you’ve got to be a giant yourself. Logical, right?

Except, in practice, the exact opposite occurred. Just look at the evolution of relative share of global GDP (https://visualcapitalist.com/ranked-the-top-6-economies-by-share-of-global-gdp-1980-2024/): in 1992, the year of the Maastricht treaty (which officially created the EU), the countries making up the EU used to have 28.8% of global GDP which was actually more than the US (25.7%) and China (1.9%) combined!

Fast forward to today and both the US and China’s shares have grown – in the case of China it’s grown considerably – but Europe’s share has shrunk to around 17%, the same share as China, losing about 40% of its economic weight in a mere 3 decades.

Which means that, very concretely, more Europe – and there has been, treaty after treaty, more and more Europe – has so far meant more and more economic irrelevance. The more we built Europe – this supposed economic giant on paper – the smaller we got economically.

And it’s not a China story, it’s not that simple: if it were, the US’s global share of GDP would have shrunk alongside Europe, but it just didn’t. Which means it’s really a Europe problem.

And, unfortunately, it’s not just the economy. More Europe has meant more irrelevance and weakness in just about all fields that matter.

Take foreign affairs for instance. There used to be a time when Europe’s voice mattered in the world – or at least that of the countries making up Europe.

When, say, De Gaulle could, in the space of a single year, pull France out of NATO (https://adst.org/2014/06/france-has-degaulle-to-withdraw-from-nato/), ask American troops to leave French soil (https://humanite.fr/histoire/general-de-gaulle/21-fevrier-1966-quand-charles-de-gaulle-renvoie-chez-elles-les-troupes-americaines), and then fly to Phnom Penh to tell a packed stadium that the US had no business waging war in Vietnam (https://en.wikipedia.org/wiki/Phnom_Penh_speech). Try to picture a single European leader doing even one of those three things today.

Heck, in 2009 France got **back** in NATO, a sad illustration that the “strong Europe” we were promised as a counterweight to the US has in practice meant ever deeper subordination to it.

It’s even written in black and white in the Lisbon Treaty itself (https://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/DOC_1&format=PDF), which states that NATO “remains the foundation” of its members’ collective defence. So much for the independent giant…

Or take another critical dimension of power: technology. The countries of Europe used to sit at the technological frontier: Concorde, Ariane, the TGV, the World Wide Web invented at CERN, etc. A reminder that as late as 2007 a single European company, namely Nokia, sold 4 out of every 10 mobile phones on the planet.

Today look at the ASPI Critical Technology Tracker (https://aspi.org.au/programs/critical-technology-tracker/): out of the 74 critical technologies of the future, in how many is any European country in the lead? Answer: not a single one of them.

And I’m not even speaking about energy, culture, and a dozen other fields where the story is identical.

On energy alone: European companies now pay 2 to 3 times more for their electricity than their American and Chinese competitors, and just last year Brussels pledged to buy $750 billion worth of American energy as part of a trade “deal” for which it received, in exchange, 15% tariffs on its exports. Some giant…

Long story short, there is the logic on paper and then there is the logic in practice: when you see that the patient has been getting steadily sicker for 3 decades, and that the doctor’s only answer, year after year, is to increase the dose of the very same medicine, at some point you have to question the medicine. Or the doctor.

De Gaulle, coming back to him because he was in my view one of the most prescient statesmen we ever produced, saw it coming clear as day: as early as 1962 he warned that a supranational Europe, having dissolved the only entities capable of having a will and a policy of their own – nations – would have no policy at all, and would end up following someone else’s. He warned that “there would perhaps be a federator, but he would not be European” (https://fresques.ina.fr/de-gaulle/fiche-media/Gaulle00078/conference-de-presse-du-15-mai-1962-questions-europeennes.html).

In the same 1962 press conference he also beautifully said that “Dante, Goethe, Chateaubriand belong to all of Europe to the very extent that they were respectively and eminently Italian, German and French. They would not have served Europe much had they been stateless men and had they thought, written in some integrated Esperanto or Volapük.”

That was his conviction: that Europe’s genius is really the sum of its singular geniuses, and that you cannot add them up by melting them down.

If you make some sort of soup out of French, Italian, Greek, and Spanish cuisine, all thrown in the same pot, you don’t get all the flavors at once. Instead, you’ve destroyed four of the world’s great culinary traditions to produce something no one wants to eat.

I’m not anti-European, by the way, and neither was De Gaulle. I do believe – and so did he – that Europe should be a power in its own right. What De Gaulle called a “European Europe”: independent of Washington, speaking with its own voice, master of its own destiny.

He simply understood that only nations can carry such an ambition, because only nations have a will. Which is the great irony of this whole story: those who claim to want a strong Europe are busy dismantling the only thing that could ever make it one – the sovereignty of nations.

[1] Il volapük è una lingua artificiale ausiliaria creata tra il 1879 e il 1880 dal sacerdote cattolico tedesco Johann Martin Schleyer. Fu il primo vero fenomeno di massa tra le lingue pianificate globali, ideato con l’obiettivo di abbattere le barriere linguistiche e promuovere la pace nel mondo.

Apr 24, 2026

The Deeper Forces Shaping Global Trade

Tiago Devesa, Jeongmin Seong, and Olivia White

LISBON—With conflict disrupting shipping in the Middle East and the future of US tariffs still uncertain, global trade is firmly in the spotlight. But while it certainly matters how these political developments unfold, one must not lose sight of the deeper forces at work in the global economy.

The past year was among the most tumultuous for global trade in living memory, with US tariff rates rising to their highest level in nearly a century and trade between the United States and China—one of the world’s largest trading corridors—falling by roughly 30%. Yet global trade did not decline. On the contrary, it continued to grow, rerouting in ways consistent with patterns we began measuring three years ago in McKinsey Global Institute research on geopolitically driven shifts in trade.

We find that the world is not “deglobalizing” so much as reconfiguring—like water finding new channels. As geopolitical tensions escalate and economic security concerns grow, companies redirect investment and redesign supply chains.

In our latest analysis of 2025 trade flows, what stands out most is how resilient US demand for foreign goods remained. Still, while Americans kept buying from abroad, what they purchased was different. The US imported more chips and data-center equipment, but fewer autos and less energy. Sourcing shifted from mainland China to Vietnam, Taiwan, and other Asian economies.

It would be natural to assume that tariffs were the driving force behind these and other shifts. But that explanation is incomplete, because the race to develop AI has also emerged as a powerful new factor, accounting for about one-third of the growth in global trade in 2025. This development has received far less attention than AI’s implications for economic growth, financial markets, or jobs, perhaps because much AI-linked commerce is concentrated among geopolitically aligned economies.

Another underappreciated factor is the extent to which China’s economy has changed. It is still the world’s export engine, but it has leaned further into its role as the “factory to the factories”: a supplier of the machinery and components that power manufacturing elsewhere, particularly in emerging economies. Shipments of Chinese-made industrial inputs rose by more than $175 billion in 2025, led by exports of intermediate goods such as chips or smartphone parts, which grew by 9%—twice as fast as China’s overall exports.

Meanwhile, as access to the US market shrank for some industries, firms sought new markets for consumer goods. To keep volumes growing, exporters of consumer products cut prices by an average of 8%, and these changes cascaded unevenly through regional economies.

For example, the ASEAN region expanded its role as a critical manufacturing hub, creating new connections in the shifting geopolitical landscape. All told, its trade with every major region increased, with exports growing by 14%—more than twice the pace of global trade. At the same time, India captured a large share of US smartphone demand once met by China; and Brazil expanded its commodity exports as China shifted purchases away from the US.

Europe, by contrast, struggled to adjust. The European Union faced intensifying competition from Chinese imports, while higher US tariffs constrained key exports. Excluding a rush of gold and pharmaceutical sales ahead of anticipated tariffs, Europe’s trade balance with the US and China deteriorated by roughly $80 billion. Stronger trade with other markets offset only around half that decline. The strain was especially visible in autos. For the first time ever, Germany, Europe’s auto powerhouse, imported more cars from China than it exported there.

It is understandable that today’s headlines feel like proof that geopolitics now sets the rules of trade. But, again, the story is incomplete. Geopolitics is indeed reshaping the trading map, but longer-term shifts in technology and economic development are determining what the world builds and buys—as the surge in trade linked to the AI boom attests. Amid tariff hikes, legal uncertainty, and growing trade restrictions, firms raced to secure chips and servers, along with cooling systems and the other equipment required to build and power data centers.

Fundamentally, global trade is being reshaped by long-term forces, from technology to shifting production networks and emerging-market growth. Making sense of what comes next requires a broad view that accounts for how these forces interact under different scenarios, rather than focusing on any single disruption.

Of course, geopolitical shocks will remain a feature of the system. The ability to adjust as conditions evolve will matter just as much as long-term positioning in a world where trade is still expanding, but along more contested lines.

[1] Tiago Devesa è ricercatore senior presso il McKinsey Global Institute di Lisbona.

Jeongmin Seong è ricercatore senior presso il McKinsey Global Institute di Shanghai.

Olivia White, socia senior della sede di San Francisco di McKinsey & Company, è direttrice del McKinsey Global Institute.

[2] L’ASEAN (Association of Southeast Asian Nations) è l’Associazione delle Nazioni del Sud-est asiatico, un’organizzazione politica, economica e culturale istituita l’8 agosto 1967. Il suo obiettivo principale è promuovere la cooperazione, la crescita economica, il progresso sociale e la stabilità regionale tra i 10 paesi membri.

Membri (10): Brunei, Cambogia, Indonesia, Laos, Malaysia, Myanmar, Filippine, Singapore, Thailandia e Vietnam.

Jan 19, 2026

Is There Life After the Dollar?

Paola Subacchi

PARIS – US President Donald Trump’s relentless attacks on Federal Reserve Chair Jerome Powell, together with his destabilizing foreign policy – notably the seizure of Venezuelan President Nicolás Maduro and subsequent threats to bomb Iran and invade Greenland – have called into question the entire postwar international order, including the dominance of the dollar. There has never been a more appropriate moment to reflect on the dynamics that have kept the international monetary system relatively stable over the past half-century.

Stability has persisted despite a fundamental asymmetry inherent in the dollar’s role as a global reserve currency: to supply the world with dollar liquidity, the United States must run a current-account deficit, buying more from abroad than it sells. At the same time, it issues debt that foreign governments and investors are willing to use as a reserve asset.

As a result, US borrowing costs have remained consistently low, enabling the federal government to expand its fiscal space on the back of foreign savings. This is what France’s then-finance minister Valéry Giscard d’Estaing had in mind when he famously complained in the 1960s about the dollar’s “exorbitant privilege.”

He was not wrong. As former People’s Bank of China Governor Zhou Xiaochuan observed in the aftermath of the 2008 financial crisis, global monetary stability depends on a currency issued by a sovereign state whose policies are ultimately driven by domestic priorities. The spillovers from Trump’s “America First” policies illustrate what happens when those priorities diverge from the interests of the rest of the world.

In 2009, Zhou proposed exploring a global currency decoupled from the domestic concerns of any single issuer. At the same time, he began promoting the renminbi’s internationalization. Until then, China – the world’s largest exporter – had relied almost entirely on the dollar to invoice and settle its external trade. That dependence led to a massive buildup of dollar reserves, which peaked at $3.8 trillion in 2014.

Reducing reliance on the dollar and diversifying away from a single reserve asset made sense for China then, and it still does. As a large, export-driven economy, China assumes persistent risks by effectively outsourcing its payments system and savings to the US. That helps explain why Chinese holdings of US federal debt have fallen to about $700 billion from roughly $1.3 trillion in 2015.

Concerns about global imbalances – now back on the G7’s agenda under France’s leadership – are hardly new. They featured prominently in G20 discussions in the early 2010s, when Chinese policymakers saw a more balanced international monetary system as one that would spread adjustment burdens more evenly, reduce China’s reliance on the dollar, and offer greater choice in payments and investments, thereby enhancing stability. The underlying rationale was straightforward: a systemically important economy like China should have a genuinely international currency.

Crucially, this vision rested on post-crisis policy cooperation through the G20. It was supported by multilateral financial institutions, particularly the International Monetary Fund, which encouraged the renminbi’s internationalization as a way to integrate China more fully into the global economy.

The 2016 addition of the renminbi to the basket of currencies that comprise special drawing rights (the IMF’s reserve asset) was seen as a step toward a multicurrency monetary system. During China’s G20 presidency in 2016, such a shift was widely regarded as beneficial not only for China but also for global stability.

Over the next decade, however, that consensus largely unraveled amid rising geopolitical tensions. The prevailing view, reflected in the Center for Economic and Policy Research’s latest Geneva report, is that a multicurrency system under such conditions could deepen fragmentation and exacerbate systemic risks. Without robust coordination mechanisms, currency competition can prove destabilizing.

But heavy dependence on the dollar carries its own risks, especially given Trump’s erratic and often transactional policymaking. With global financial stability effectively held hostage by US domestic policies, China is developing an international currency commensurate with its growing economic footprint. The case for an international monetary system that does not hinge on a single dominant currency remains as compelling today as it was a decade ago. The path forward lies in a carefully coordinated transition toward such a system. But without policy cooperation to hold it together, instability and further fragmentation are likely to follow.

To be sure, as the current chair of the G20 and the principal shareholder of both the IMF and the World Bank, the US must continue to play a leadership role. But under Trump, the G20 risks devolving into a forum for transactional politics and division rather than multilateral cooperation, leaving it ill-equipped to manage – let alone prevent – global crises. Such an outcome would mark the end of the rules-based international economic order as we know it.

While the US retains outsize influence over international finance, that concentration of power is itself a vulnerability, as global stability depends on a single player setting the rules and upholding them. Given the Trump administration’s growing willingness to flout those rules whenever they constrain its immediate interests, this arrangement can no longer be taken for granted.

That said, credible alternatives have yet to emerge. Absent a change in American policy or the emergence of a viable form of multilateralism that can function without the US, the global economy will remain plagued by uncertainty and instability.

Nov 26. 2025

India’s Strategic Autonomy Is Now Reading as Aloof.

By Chietigj Bajpaee

Nothing captures India’s long-standing commitment to strategic autonomy more than the country hosting the leaders of three major global powers—Russia, China, and possibly the United States—in short succession. Russian President Vladimir Putin is scheduled to visit India in December, making it his first visit to the country since the Russian invasion of Ukraine. Chinese President Xi Jinping is likely to be in India next year when the country hosts the BRICS summit. This year’s summit of the Quadrilateral Security Dialogue—a grouping that includes the United States—was scheduled to take place in India this month but was postponed amid the downturn in India-U.S. relations. If the meeting is rescheduled to next year, U.S. President Donald Trump could also visit India.

There is a flip side to this narrative, however. India’s equidistant foreign policy is often perceived as distant or aloof. This became apparent when Trump levied 50 percent tariffs on India, punishing the country for its trade imbalance and purchases of Russian crude. Meanwhile, other countries that maintain a larger trade surplus with the United States or a significant dependence on Russian crude were not targeted to the same degree because of their importance to global supply chains (e.g., China) or their status as U.S. alliance partners (e.g., Japan, Turkey). The differing treatment reflects India’s lack of strategic indispensability in the international system. A key lesson for India is the need to develop a more proactive, rather than passive, strategic autonomy.

2025 has arguably been the most difficult foreign-policy year for Prime Minister Narendra Modi since he assumed power in 2014. A terrorist attack in Indian-administered Kashmir in April was followed by a four-day conflict between India and Pakistan in May. While brief, the conflict marked the worst period of hostility between the two countries in decades.

The India-Pakistan conflict also became a catalyst for the downturn in the India-U.S. relationship as Trump claimed credit for the cessation of hostilities—a narrative refuted by New Delhi but one that Islamabad was only too happy to echo. Adding insult to injury, relations deepened between Islamabad and Washington, with the White House hosting Pakistan Army chief Asim Munir twice since the conflict. Modi and Trump had a phone conversation in June, during which Trump reportedly offered to host Modi and Munir at the White House. Modi rebuffed Trump’s offer in line with New Delhi’s long-standing aversion to third-party mediation on India-Pakistan tensions and the Kashmir dispute in particular. This was followed by a cooling of the India-U.S. relationship, as evidenced by the two leaders not speaking again until September.

In the interim, the bilateral relationship underwent a rapid deterioration as both countries were unable to seal a trade deal by a stipulated deadline in August, which was followed by India facing the highest of Trump’s tariffs. Trump’s insults of India as a “dead” economy that does very little business with the United States, which was supplemented by his trade advisor Peter Navarro’s acerbic comments referring to India as a “laundromat for the Kremlin,” further eroded trust in the bilateral relationship.

Recent conciliatory statements by both leaders alludes to a de-escalation of tensions and a trade deal eventually being reached between both countries. However, the earlier irrational exuberance in New Delhi about the India-U.S. relationship, as evidenced by Indians being among the most positive about a second Trump term, has faded. So have claims that Modi and Trump maintained a special or privileged relationship. Modi prided himself on maintaining a personalized foreign policy of cultivating close relations with key world leaders. However, this was unable to deter the wrath of Trump’s fickle and transactional foreign policy.

At a more fundamental level, recent developments point to broader challenges facing India’s foreign policy. India’s long-standing commitment to strategic autonomy has been both a boon and a burden for the country’s foreign policy. On the one hand, it provides India with flexibility. This became apparent when China-India relations deteriorated following border clashes in 2020. New Delhi responded by deepening cooperation with Washington, as evidenced by India embedding itself more deeply in the U.S.-led institutional architecture—through its upgraded engagement with the Quad, for example.

This multialigned and diversified foreign policy has offered India the advantage of not being beholden to any one country. Asked about this at the Munich Security Conference in 2024, Indian External Affairs Minister S. Jaishankar noted that India should be admired for maintaining “multiple options” in its foreign policy.

However, the events of the last year demonstrate the hubris of this position. Sustaining strategic autonomy becomes more challenging when India is forced to choose between major powers. This is what happened when the Trump administration imposed secondary tariffs on India for its purchases of Russian oil as a means of applying pressure on Moscow to agree to a peace deal in Ukraine. As Russia-U.S. relations soured, New Delhi’s relations with Moscow came under growing scrutiny in Washington.

Strategic autonomy has its roots in the Cold War concept of nonalignment. When India joined the global community of independent nation-states in 1947, the scars of colonial rule made the country’s first prime minister, Jawaharlal Nehru, eager to avoid any entanglements that threatened the country’s autonomy and independence. At its essence, nonalignment and strategic autonomy are about maintaining flexibility while pursuing relations with all major poles of influence in the international system.

Nonalignment did not always work in practice. During the Cold War, India’s strategic flexibility eroded when it faced any existential threat, which forced it to turn to one of the superpowers for support. This became apparent in 1962, when New Delhi contemplated closer alignment with the United States at the height of its war with China. It happened again in 1971, when India concluded a peace treaty with the Soviet Union ahead of a war with Pakistan in which Islamabad aligned with China and the United States.

In the post-Cold War period, strategic compulsions forced India to abandon the principle of nonalignment. New Delhi recognized that it needed to reorient its external relations as the collapse of the Soviet Union led to the loss of key markets and preferential barter arrangements. This fueled New Delhi’s rapprochement with the United States. But India’s commitment toward maintaining an omni- or multialigned foreign policy remained unchanged. If anything, it became more urgent as the unipolar moment following the end of the Cold War faded and great-power competition returned to the fore.

But the recent downturn in relations with the United States shows the need for India to develop a more proactive strategic autonomy. Modi’s participation in the recent G-20 summit in South Africa and the conclusion of a trilateral technology and innovation partnership with Australia and Canada demonstrate New Delhi’s ambition to be a voice of the global south, a key partner of the West, and bridge between both. The Modi government has referred to India as a “Vishwamitra,” or friend of the world. Yet there is a difference between being a friend to the world and helping the world make friends with one another. Despite maintaining close relations with both Russia and the United States, and both Iran and Israel, New Delhi has played a limited role in trying to de-escalate recent conflicts in Ukraine and the Middle East (unlike other countries such as Qatar, Turkey, Brazil, and even China). Were India to play such a role, it would be in line with the important mediating role it once played when it was ironically a much weaker power. In the 1950s, India was a prominent voice in numerous global conflicts—from the Korean War to the Taiwan Strait crises.

Instead, India has chosen to remain distant. This became evident with Modi’s absence from two important gatherings in October: the Gaza peace summit in Sharm el-Sheikh and the East Asia Summit in Kuala Lumpur. Despite being invited to both, Modi chose not to attend. The fact that both meetings took place in what India refers to as its “extended neighborhood” of East and West Asia (the Middle East) illustrates New Delhi’s aloofness on the world stage.

Interestingly, India’s archrival Pakistan offers a lesson in how to conduct a more proactive foreign policy. Islamabad is practicing its own form of strategic autonomy, with outreach to China, the United States, Russia, Iran, and the Gulf Arab states. Whereas New Delhi seeks to keep its distance from geopolitical flashpoints, Islamabad is happy to jump in—from its role in helping to facilitate the Sino-U.S. rapprochement in the late 1960s to allying with the United States to counter the Soviet invasion of Afghanistan in the 1980s and in the global war on terrorism in the 2000s to supporting the Middle East’s security architecture through its recently concluded defense pact with Saudi Arabia.

Whether Pakistan has the means to sustain this is another question, given the inherent contradictions of its foreign policy—offering port projects to both China and the United States, for example. Given instabilities internally and along its borders, how does Islamabad expect to offer extended deterrence to countries in the Middle East? Nonetheless, this offers an example of how to practice a more proactive form of strategic autonomy than what is often seen by New Delhi.

India needs to redefine what strategic autonomy means in a world of growing geopolitical uncertainty. This year’s downturn in India-U.S. relations revealed that even the perceived certainty of India as a “natural ally” of the United States cannot be taken for granted. India is under growing pressure to make choices that it has so far been reluctant to make. Making itself more strategically indispensable to the international system will make India less vulnerable to the whims of the United States under Trump—or any other country. The Trump administration’s absent and sometimes destabilizing role in global forums, including at the recent COP30 and G20 summits, has created a void in global leadership. It could not be a more opportune moment for India to step up.

Nov 25, 2025

Ukraine Loses Again

Nina L. Khrushcheva

NEW YORK – The “28-point plan for peace in Ukraine” that the United States has put forward is not for Ukraine. It is not even for Russia, though it was drafted with Russian input. Instead, the proposal seeks to benefit just one person: US President Donald Trump.

Like the Trump administration’s peace plan for Gaza, the Ukraine framework aims to deliver a quick foreign-policy “victory.” For a president who loves nothing more than portraying himself as a peacemaker, this is an opportunity not only to take credit for a ceasefire, but also to position himself as the linchpin of its implementation. Just as the Gaza ceasefire (which Israel has repeatedly violated) is being overseen by a Trump-led “Board of Peace,” the Ukraine peace would be “monitored and guaranteed” by a “Peace Council,” with Trump at the helm.

This does not mean Trump is committed to ensuring a durable peace. The plan is short on detail, meaning that hostilities are all but guaranteed to resume. But that is in the future – a region that does not much concern Trump. All that matters to him is distracting the US electorate from his association with the convicted pedophile Jeffrey Epstein.

As expected, the peace plan is skewed heavily in favor of Russia, meeting many of Russian President Vladimir Putin’s demands for ending the war: Crimea, Luhansk, and Donetsk would become Russian territories, with Ukraine withdrawing its forces from the part of Donetsk that it currently controls, and Ukraine would be prohibited from joining NATO. Meanwhile, Russia would be “reintegrated” into the global economy.

But Trump’s plan is hardly the resolution of Putin’s dreams. For starters, it requires Russia to enshrine in law a policy of non-aggression toward Europe and Ukraine, and it recognizes Ukraine’s eligibility for membership in the European Union. Moreover, $100 billion of Russia’s frozen assets would be invested in US-led reconstruction efforts in Ukraine, with the United States receiving 50% of the profits.

While sanctions against Russia would be lifted “in stages,” this process would be at Trump’s discretion, and the country’s oil revenues would be unlikely to recover any time soon. Trump is serious about establishing the US as a major global oil and gas dealer, so Russia would have to coordinate with the US to revive its beleaguered economy.

For now, Putin has welcomed the US plan as a basis for further discussion, but has made clear that he considers the war’s “current dynamic” favorable toward Russia, and thus that it will continue fighting if Ukraine does not agree to its terms. Putin knows that Russia can keep up the fight for a few more years, if necessary. Like his hero Joseph Stalin, he is perfectly willing to let ordinary Russians suffer in service of power.

Ukraine, for its part, has no good options. While the Trump administration is working with Ukrainian officials to “refine” the plan – incorporating priorities like security guarantees and political sovereignty – the country’s negotiating leverage is limited. After all, Ukraine remains wholly dependent on the West to finance and arm its defense; the situation on the ground currently favors Russia; and Ukraine faces severe manpower constraints. Making matters worse, Ukrainian President Volodymyr Zelensky’s government is now enmeshed in a high-level corruption scandal.

Ukraine’s fight is widely portrayed, including by Zelensky, as a defense of democratic values and international law – and for good reason. But Ukraine has long grappled with corruption. While progress was made on this front following the 2014 Maidan revolution, the war opened up new opportunities for graft, particularly among Zelensky’s inner circle.

Many members of this elite club were under investigation by Ukraine’s independent corruption watchdogs, the National Anti-Corruption Bureau of Ukraine (NABU) and the Specialized Anti-Corruption Prosecutor’s Office (SAPO), in July, when Zelensky pushed through legislation that would hobble them. He probably figured that Ukrainians and their European allies would be too focused on the war to take much notice. But he was wrong. The popular backlash was so powerful that the government had little choice but to reverse course.

Now, the NABU and the SAPO have uncovered an embezzlement scheme at Energoatom – the state-run consortium that manages Ukraine’s nuclear power stations – led by Zelensky’s former business partner Timur Mindich. Several high-ranking officials are implicated, including the now-dismissed justice minister, German Galushchenko, former Deputy Prime Minister Alexei Chernyshov, and current Secretary of the National Security and Defense Council Rustem Umerov. Zelensky claims he knew nothing about the scheme.

After the scandal broke, some European officials called for greater transparency regarding how Ukraine allocates funds. But EU leaders have so far refrained from condemning Zelensky harshly, for fear that the revelations will be used to force unacceptable peace terms on Ukrainians at a time when formal democratic processes in Ukraine are suspended by martial law. Instead, the EU has focused on delivering a counter-proposal to Trump’s plan, which does not rule out the possibility of NATO membership and postpones negotiations on territorial exchanges until after a ceasefire is in place.

The conspiracy theorists are working overtime. Despite acting surprised by Trump’s peace plan, German Chancellor Friedrich Merz knew about it a month before its release, which some have used to suggest that corruption revelations were all part of a European plot to increase Zelensky’s dependence on the EU. There are also conflicting reports about Umerov’s influence over the US proposal – specifically, the clause that would grant “full amnesty” to all parties for their “actions during the war.”

Zelensky may well be able to convince European leaders to remain focused on the “real enemy”: Russia. But further corruption revelations will only weaken his position within Ukraine, where protests are already brewing, and in negotiations with the US. Ultimately, it is ordinary Ukrainians who will pay the price. Putin will secure significant gains, if not everything he wanted, and Trump will get to declare that he and he alone ended a grinding war of attrition.

Ora, tutto questo è inconsueto e in questo lavoro, nella scelta dei suoi strumenti, c’è una idea di fondo: si può ripensare la politica, la si può rendere maggiormente verificabile, spogliarla di retorica logora ma anche rivestirla di idee e di sfide, non essere costretti ad accettare  i luoghi dove la politica si incancrenisce e perde il requisito di essere verificabile, avere il coraggio di rifondarla non attraverso scorciatoie letterarie, ma anzitutto attraverso il confronto con i fatti ordinati con metodo scientifico. E in questa ambizione si può fare molta strada sul semplice terreno della “battaglia delle idee”, anche perché la rivoluzione dell’informazione apre uno spazio senza precedenti al potere delle idee. Questo è quello che io capisco del suo tragitto dalla teoria economica “pura” alla politica: la sua intuizione dello spazio che si è aperto nella trasmissione di idee da un versante all’altro, sino a costituire una vera e propria ipotesi di riforma della politica. Un tema grande ed anche, ammettiamolo, inatteso.

E’ chiaro che quel progetto è possibile se si mette al centro, se si rilegge e si fa propria, quella critica dell’economia che si produsse con John Maynard Keynes. Ma in questa condizione c’è qualcosa che è niente affatto, diciamo così, ‘scolastico’; non dovremmo avere il timore di doverci nuovamente iscrivere ad una ‘lettura del mondo’; dobbiamo solo avere la curiosità di leggere quello che accade alla luce di pensieri già espressi. Pensieri, però, che non è mai stato facile assimilare in modo organico. Perché Keynes non fu semplicemente un teorico dei ‘rimedi’ alle crisi economiche, come in genere ritengono tutti coloro che non lo hanno letto. Keynes fornì una lettura dei difetti iscritti geneticamente nelle società economiche moderne, indicandoli nelle loro manifestazioni più elementari (le società fondate sulla costruzione gregaria delle aspettative, come nei concorsi di bellezza sui giornali di un secolo fa; le economie-casinò esposte ai rischi degli eccessi finanziari ed immobiliari, ed anche agli eccessi delle ineguaglianze; più in generale una economia nella quale la domanda non è mera conseguenza dell’offerta, la decisione di investire e di consumare non dipende in modo semplicistico dalla capacità di produrre) e in quel modo ci suggerì il tema del possibile ritorno delle grandi crisi. I decenni dei trionfi del liberismo, sono stati anche l’epoca di grandi squilibri, all’interno dei quali la lunga recessione giapponese aveva caratteri che dovevano far riflettere, come se si fosse nuovamente prodotto un guasto nei meccanismi che presiedono alla volontà di crescita (al “magnete”, ovvero al sistema elettrico, disse Keynes). Di quei decenni, occorreva capire quello che si preferì non vedere; ovvero che  la storia del mondo, almeno per alcuni aspetti fondamentali,  era ancora quella che aveva prodotto la grande crisi degli anni Trenta. Non solo nel senso che le economie avanzate erano ancora esposte allo scoppio delle bolle finanziarie ed immobiliari, ed alle conseguenti  crisi di panico; soprattutto nel senso che, dopo il panico, dopo le enormi dilapidazioni di risorse nei salvataggi della finanza, si sarebbe riprodotto un guasto nei meccanismi della volontà di crescita. Saremmo nuovamente stati messi alla prova di una ‘trappola di liquidità’, ovvero di una situazione nella quale qualcosa si blocca nelle aspettative ordinarie e dunque negli investimenti delle imprese e nella spesa delle famiglie; nella quale i deficit si accompagnano a tassi di interesse vicini allo zero, la crescita della base monetaria si accompagna ad una bassa inflazione e lo stesso strumento della politica monetaria non può bastare, se non è accompagnato da un forte stimolo della spesa pubblica. L’austerità non porta fiducia ma depressione. L’incertezza nel sostegno pubblico all’economia porta a nuove cadute recessive, come nell’America del 1937.  Occorre disinnescare il guasto per far ripartire il meccanismo, fare le riforme che avrebbero potuto  evitare  la crisi globale, assumere in via (più) definitiva un metodo di giustizia sociale e di eguaglianza delle opportunità senza il quale non si coesiste col capitalismo.

Può darsi che da questo elenco di concetti traspaia come una esagerata presunzione di verità. Vien fatto di chiedersi: è dunque tutto così chiaro? In realtà, non mi pare che ci sia niente di più lontano da Krugman, quanto la pretesa di risolvere i problemi di oggi ricorrendo ad ideologie, a racconti non verificabili. La sua difesa è semplice, perché il suo metodo è quello della messa a confronto trasparente delle idee in campo. Era sufficiente lo “stimulus” di Obama? C’era un altro modo per affrontare il dramma della Grecia? L’austerità europea avrebbe prodotto espansione? L’ampliamento della base monetaria avrebbe fatto schizzare in alto l’inflazione? Avevano ragione o torto quegli economisti che vedevano grandi rischi nell’esperimento dell’euro, se non si fosse avuto il coraggio di riforme più grandi? Se si mettono insieme tutti questi capitoli ed altri ancora, è arduo sostenere che il problema sia, come è stata chiamata, la “trasgressività” di Krugman: è abbastanza evidente che il problema di questi anni non è stato il suo racconto, ma l’economia “magica” che hanno preteso di raccontare coloro che avevano la responsabilità di riparare i danni. Ed è evidente che questo è stato, in un certa misura, anche il problema delle forze progressiste. E’ difficile non vedere che in questi anni siamo stati di continuo sopravanzati da fatti che mostravano la fragilità del nostro impianto di idee. Possiamo negare che l’interesse che oggi sentiamo vivo per quegli argomenti, derivi fondamentalmente dal fatto che avrebbero dovuto essere i nostri argomenti?

Ma qua mi fermo, perché con questo spazio non si vuole fare niente di più che favorire una conoscenza più completa e diretta di quelle idee. Questa presentazione voleva essere una spiegazione di questo lavoro che faccio da un po’ di anni, al quale mi ha spinto una curiosità politica viva e non certo una competenza specialistica. Per questo ho deciso di rendere pubblica questa attività, superando la forma di “samizdat” che ha avuto sinora, con un centinaio di pazienti amici che ricevevano via via questi lavori.

Mi pare, infine, superfluo fornire delucidazioni e consigli sulle cose che vengono pubblicate su questo blog. Con poca curiosità si possono facilmente comprendere le caratteristiche dei vari settori. Le note sulla traduzione, sia quelle a fondo pagina che quelle della apposita rubrica, possono essere utili, se credete. Lo spazio per la discussione è aperto, purché sia chiaro, naturalmente, che è una discussione tra noi tutti e non con me in particolare, che ho già il mio daffare a tradurre (per la quale ultima attività sono invece apertissimo a critiche e consigli). Devo però fornire un chiarimento finale sul titolo di questo blog: perchè “La Fata Turchina”?

“Confidence fairy” – “la fata della fiducia” – è il nomignolo con il quale da anni Paul Krugman definisce le politiche economiche dell’austerità; l’idea magica secondo la quale, dinanzi alla caduta della domanda privata, tagliando la spesa pubblica e riducendo la crisi ad una sorta di racconto morale sugli sprechi presunti degli Stati assistenziali, si possa esserne compensati con la fiducia degli investitori, delle imprese e dei consumatori, dunque con la ripresa. A conti fatti, la “confidence fairy” non pare si stia materializzando. Forse per nostalgia collodiana, mi venne fatto sin dall’inizio di tradurre con “la Fata Turchina”, senza pensare che questa è tutt’altro genere di fata: non propone racconti magici, semmai è dotata di sconsolato realismo, pur nella affettività materna vede le disgrazie che si annunciano per il suo protetto. Ed ha “compassion” verso chi ha sfortuna, si sforza di aiutare i più deboli a vedere le trappole. Ad una certo punto decisi che non potevo continuare  a confondere due storie così diverse.

Dunque, oggi le dedico  il titolo di questo spazio. Non è evidente che, a modo loro, anche i progressisti hanno bisogno d’una fata? E poi, se non altro,  a titolo di modesto risarcimento per quella citazione impropria.