| To the global economic heavyweights gathering in Washington this week, it's been a familiar refrain ever since 2016: Protectionism is leading to a fragmenting of the global economy and that's bad for everyone. Here's the good news. Eight years on, it's fair to say the obituaries written for globalization have been premature. What we've learned since 2016 and that populist revolt is that economic pragmatism can register wins even if populists keep winning elections. And, most importantly, that companies and countries have figured out how to adapt to the new rules of geopolitics and the division of the world into pro-US and pro-China/Russia blocs. To the growing pile of evidence for that we add the New Neutrals. Working with our colleagues at Bloomberg Economics and Bloomberg Businessweek, we've given that name to the 101 economies out there hedging their bets and refusing to take sides in a new Cold War. - On the Terminal, click here to read the full analysis by Nicole Gorton-Caratelli with Bloomberg Economics.
What matters most, perhaps, is the evidence that there are economic benefits to be had in that hedging. The New Neutrals are drawing a growing share of foreign direct investment in greenfield projects — the build-from-scratch and typically long-term commitments. Increasingly, companies are making such bets on those ceuntries as production sites sheltered from the impact of geopolitics. One factor driving the trend is Chinese businesses spending more heavily to put factories in other countries to sidestep import tariffs and other protectionist measures from the US and the European Union. But there's something bigger happening, too, we suspect. If last year we identified The Connectors and five economies that were benefiting from playing both sides, this year we're pointing you to a bigger family. The 101 countries that make up the New Neutrals have more than half of the world's population and 18% of global GDP. There's also data that might give pause to policymakers in both Beijing and Washington. Hedging Their Bets China's leadership might fret that inbound foreign investment in greenfield projects has been collapsing and that Chinese companies are sending more FDI outward into the New Neutrals. Especially as those leaders are trying to jump-start a slowing Chinese economy. In Washington, whoever wins the election should dive into the burgeoning trade links between China and other members of the pro-China bloc and the New Neutrals. The hedgers have seen their trade with the pro-China bloc rise as a share even as trade with the pro-western bloc has declined. Some of that is driven by countries in the middle importing more Chinese-made goods and discounted Russian oil. There's also the concern expressed in Europe and the US that China is once again dumping its excess industrial capacity on the rest of the world. But trade and investment are at the heart of economic relationships and the battle for influence and alliances. And in the version of the world we see unfolding, everyone should want to be friends with the New Neutrals. —Shawn Donnan in Washington Click here for more of Bloomberg.com's most-read stories about trade, supply chains and shipping. | 
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