Amid growing fears of global recession stemming from fluctuations in the US bond markets, the ongoing US-China trade war, Brexit, US-Iran trade sanctions, instability in the Persian Gulf and the consequent fluctuation of oil prices, both mature and emerging economies seem to have altered their approach to international trade shifting their focus from mature markets of US and Europe to search for new partners, increase trade with non-traditional economies and prioritize trade over political ties.

This shift can be best demonstrated by looking at China, India, Brazil and the different trade patterns and initiatives these countries embarked on in 2019. After injecting funds in Southeast Asia as a part of the Belt Road Initiative, 2019 saw China reaffirm its drive to global investment by renewing its commitment to inject funds in Iran and further increase investment and cooperation with African nations. August 2019 saw China commit $400mn in Iran's oil and gas sector aimed to bolster Iran's domestic logistics and manufacturing sector. At a time when the US is lobbying to exclude Iran from global markets, the Chinese investment strikes as an example of a shrewd trade policy and a drive to look at 'alternative' economies to increase foreign trade in return for geopolitical strength.

Furthermore, China has also increased its footprint in Africa by investing heavily in Egypt, Algeria, Morocco and Kenya. Heavy investment has also seen an overall increase in trade volume between China and its various non-traditional trade partners. 2018 saw the trade volume between Egypt and China exceed 13.8 billion U.S. dollars- the highest ever. In Morocco, since 2017, Chinese investment has seen a year-on-year increase of 5.3%.

Across the border, the story is different in India. Unlike China, India does not have a generous sovereign wealth fund to fund foreign investment programmes and gain geopolitical footholds. Domestically, the country's state banks are burdened with huge non-performing assets rendering the banking system in urgent need of capital. Therefore, with foreign funding not an option, the country has instead opted to stay relevant in international trade by inviting foreign talent and capital inwards as a way of staying relevant in international trade. In the last few years, India under Mr. Modi has made efforts to revamp its foreign direct investment policy and legal system to attract foreign capital such as opening up foreign direct investment upto 100% across various sectors and introducing the Bankruptcy Code in 2016 aimed at providing a streamlined insolvency processes for large and small businesses. These legislative changes and the promise of long-term growth and profits could be the reason why despite the decline in domestic growth rate, foreign investors continue to remain bullish on India.

Overseas, 2019 saw several Indian trade delegations across Europe and Africa. The recent trade delegation organized by ASSOCHAM, one of India's largest trade associations, led by the President of India to Iceland, Switzerland and Slovenia is an indicator of the country's initiative to attract European talent and start-ups to Indian soil particularly in the field of Renewable Energy, Biotechnology and the Pharmaceutical sector.

In South and Latin America, Brazil's recent slashing of import tariffs on more than 2,300 products signals the country's move from a 'protectionist' economy and the opening up of another emerging economy to foreign investment and trade from mature trading partners.

Lastly, 2019 was also a year that witnessed development of cracks in established trade partnerships. The ongoing talks between Japan and South Korea to contain collateral damage are one such example. Furthermore, countries such as UK, Germany and France also acted in ways that signal a shift in priorities. The launch of a Germany based payments system by UK, Germany and France to enable payments to be made to and from Iranian businesses to side-step US-imposed Iranian sanctions is a clear indicator of prioritizing trade over political allegiances. Although the year has seen a shake up of traditional trade partnerships, the promise of long-term returns allows emerging markets to remain relevant. It seems that diversification towards Renewable Energy, Research and Development in the Pharmaceutical, Healthcare and Biotechnology and a focus on 'volume-based' trade are likely to be the main focus areas in international trade in 2020.

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