Global Power Relations

There are 195 sovereign countries officially recognised by the United Nations, of which 193 are UN member states. The Vatican City and Palestine are recognised as states, but only with observer status in the UN. When analysing your current governance - or business strategy, it will be useful to consider the current Balance of Power in the world to understand where the opportunities and the threats are.

United States and Allies

Not so long back, from more or less the late 1980s, when the Berlin Wall fell, and the USSR collapsed and broken down into fifteen separate independent states, the World was dominated by a single superpower (the era of the so-called “unipolar world order”). That power was the United States of America. The country was economically, militarily and politically dominant.

Until the fall of the USSR, following ideological expansion during the Second World War, when Russian troops conquer vast geographical land masses in driving Nazi troops back over the plains and mountains of Eastern Europe, most of the eastern parts of the Continent were caught up in the grip of communism. This not only hugely impoverish these countries, but it also made them inaccessible, and unattractive, for economic investment.

Business and economic growth at the time were driven by the fact that it was a capitalist ideology that has won the Cold War (that is, the USA and its allies, who were all, essentially, capitalist states). Following 1989, former communist economies were quite rapidly transformed into capitalist ones. More than that, a global wave of globalisation followed, which opened up trade opportunities and economic growth.

Poland’s economy grow by more than 826% since 1989, and increased from &US65,778 billion in 1990 to &USD524,5 billion in 2024. Other former communist countries, such as Romania and Bulgaria, also experienced fast and sustained growth.

In spite of an apparent break (and hostility) in relations between the United States and its traditional NATO allies in Europe and Asia, in terms of global power dynamics, one can probably still cluster them together. From that perspective, Japan and South Koreas increased investments in their militaries strengthen the Western Alliance; that, and also Western Europe's response to the threat posed by an increasingly hostile Russia, and those countries' intention to strengthen their military capacity.

China

However, this is only one side of global events that have shaped the Power Relations in the world of 2025. The other was the rise of Asian communist countries like Vietnam, but specifically China. This growth in influence was the result of economic reforms that have shredded communism as an economic model, in favour of a type of despotic and oligarchical capitalism, as well as dramatic increases in military spending.

The major factor in shaping the current world order, was the rise of China in comparison with the United States of America. Current projection is that China will surpasses the USA as the world's largest economy by the end of the decade, and perhaps somewhere on the 2030's.

This increase in economic capacity, has led to a dramatic rise in China's military spending.

China is confrontational and aggressive in its international policy and expansionary ideals; especially in the South China Sea. This aggression is primarily driven by the country’s prioritisation of its main trade routes along the Strait of Malacca.

The Strait of Malacca is a narrow stretch of water, 900 kilometres (560 mi) long and from 65 to 250 km (40 to 155 mi) wide, between the Malay Peninsula to the northeast and the Indonesian island of Sumatra to the southwest, connecting the Andaman Sea (Indian Ocean) and the South China Sea (Pacific Ocean). As the main shipping channel between the Indian and Pacific oceans, it is one of the most important shipping lanes in the world.

This territorial aggression of China has put it in direct conflict with the Philippines and Australia; as well as, to some, extent, with Vietnam.

Military TV, YouTube -- Why is the Strait of Malacca so Important to the World's Economy & Military

China is using a mixture of economic influence, diplomatic engagement, and cultural soft power to achieve its global power ambitions. It focuses on building alliances, fostering economic partnerships, and promoting its interests on the global stage. A very important strategy in this regard, is the so-called Belt and Road initiative.

The Belt and Road Initiative (BRI), a major Chinese-led infrastructure and investment project, aims to connect countries across Eurasia, Latin America, and Africa through infrastructure projects like railways, roads, ports, and power plants, with the goal of increasing trade and regional integration. While China promotes it as a win-win collaboration, some view it as a way to expand China's influence.

The main risk of China's international growth and growing power, is the nature of its economic and political regime. Western democracies, which have dominated world power over the last 200 years, are largely based on liberal values of capitalism and human liberties. That is not the case with China. China's political culture is autocratic and oppressive in nature, and, with its growing influence, countries and regions falling under its control, will increasingly be forced to introduce centralised, oppressive measures against its populations and interests, to the advantage of China and China's geopolitical interests. Hong Kong is a very good point in case.

In the Chinese model, economic freedom is different from capitalism. Capitalism is required for economic growth. With economic growth comes the institutional ability to achieve the state’s expansionary objectives. But China’s version of capitalism is not equal to what Westerners understand as economic freedom; at the end of the day, in the Chinese model, individuals are allowed to make money, and own property, but ultimately all and everything remain under the tight control and despotism of the state. Personal wealth is allowed as far as the state benefit from it, and allows it.  

China may spend much more than the Western powers in Africa, for instance, but it is also demanding much more. Different from Western investors, Chinese interests are in the habit to send their own people, on mass, to projects they are involved in all over the world. That not only rapidly increases the Chinese diaspora all over the world (and the Chinese “presence”), but it also imply not nearly as many job opportunities are created for local people as envisaged.

China has a business practice of attaching unrealistic and severe financial conditions to loans and funding attached to development projects to other countries, especially in Africa. If these countries are then unable to meet these terms, the Chinese take ownership of valuable assets in other countries. This was the case in respect of Bagamoyo port in Tanzania. 

Western government are attaching ethical, democratic and economic ideological conditions to loans and aid assistance, but they are not claiming national assets of other countries. China is gradually disowning Africa of its assets, in pursue of their expansionary ambitions.

But there’s no use arguing these points in most of Africa; the emotional response to “Western colonialization” and Chinese “good neighbourliness” are too firmly entrenched in the African physic. One thing I'm sure of: If China manage to take control of the governance regime of a country, very little freedom will remain.

A Strategic Perspective on Global Trade Routes

Trade routes are pathways, both on land and sea, used for the commercial transport of goods. They facilitate the exchange of commodities, ideas, and cultural practices between different regions, and can be major arteries for global trade.

Key Characteristics:

Logistical Networks:

Trade routes are more than just paths; they are organized systems with established pathways and stopping points (e.g., ports, trading posts).

Long-distance & Local:

They can encompass vast distances, connecting continents, or be smaller networks within a region.

Historical Significance:

Many prominent trade routes have shaped history by facilitating cultural exchange and economic development.

Types:

Trade routes can be overland (e.g., the Silk Road), maritime (e.g., the Spice Route), or a combination of both.

Google AI

Major global trade routes

Global trade routes have always, throughout history, been key determinants of global power relations; economically, politically and militarily. Trade routes not only means access to lucrative markets, and therefore economic prosperity, but also to geographically strategically important regions and landmasses.

There are currently five major trade routes in the world. These are:

The English Channel, The Malacca Strait, the Hormuz Strait, The Suez Canal, and The Panama Canal. However, economically and strategically, a sixth must be added, although it is not technically speaking a trade route. That is the Chinese Belt and Road initiative.

English channel

The English Channel is the busiest ocean shipping lane in the world. More than 500 vessels go through it every single day to get from the North Sea to the Atlantic and from the United Kingdom to continental Europe – and vice versa.

Currently there are no foreseen geopolitical risks related to the English Channel. It is not situated in a conflict point in the world, and is under the control of Western (European) powers with no interest in disrupting trade across the channel. I assume, theoretically at least, that the risk profile may rise considerably should Russia attack NATO countries and NATO interests in Europe.

Malacca Strait

Located between Sumatra Island in Indonesia and the Malay Peninsula, the Malacca Strait interconnects the Indian and Pacific Ocean. It extends from the Andaman Sea through the Strait of Singapore to the South China Sea, and connects many of Asia’s major economies, including Japan, Taiwan, South Korea and India.

Around 94,000 ships pass through the Malacca Strait every year or use its more than 40 ports. Together, the ships carry around 30% of all traded goods globally.

The Malacca Straits are critically important for China’s global power and trade economic ambitions. The trade route, together with the Taiwan question, is at the heart of China’s military build-up in the South China Sea, and its growing conflict with the Philippines and Australia.

Hormuz Strait

The Hormuz Strait is wedged between Iran and Oman, and links the Persian Gulf with the Gulf of Oman and the Arabian Sea. As the main shipping route for oil from the Middle East, the strait sees a fifth of the world’s oil consumption passing through it daily – around 21 million barrels. It also carries 20% of global liquefied natural gas every year.

To help manage capacity and avoid collisions, the strait operates a two-lane traffic system, in which inbound vessels use one lane and outbound vessels use the other.

Like shipping in the nearby Red Sea, security and geopolitical tensions have been a concern for shipping companies operating in the Hormuz Strait.

It was in this strait that the Yemen Houtis blockaded trade traffic, especially from the United States and Western nations, in support of Palestine in their fight against Israel.

The Suez Channel

The Suez Canal in Egypt connects the Mediterranean with the Red Sea and is a dividing line between Africa and Asia. The canal, which is at the opposite end of the Red Sea and Gulf of Aden's Bab Al Mandeb strait, is the shortest maritime route from Europe to Asia and allows ships to avoid the long trip around South Africa's Cape of Good Hope.

The Suez Canal has long played a strategic role in both trade and geopolitics. In recent months, the canal has been affected by attacks on commercial ships in the Red Sea, causing canal revenue to plummet.

The Red Sea

The Red Sea; that is, the sea area between the Suez Channel in the north and the Hormuz strait in the South, is one of the strategically most important shipping routes in the world. If the Red Sea became inaccessible, huge volumes, and a large percentage, of the world’s trade will have to be channelled towards the route around the Cape. This may potentially implies enormous economic benefits for South Africa. However, the recent crisis in the Red Sea, when the route was blocked for certain trade ships by the Yemen Houthi, has proven that South Africa’s collapsing port – and related infrastructure will prevent the country from gaining any meaningful benefits from such a scenario.

123RF

Why is the Red Sea so Important?-Himfact, YouTube

Panama Canal

The Panama Canal connects the Atlantic and Pacific Ocean and has been a significant waterway for global trade since its completion in 1914.

The geography and construction of the Panama Canal require locks to lift and lower ships as they make their way across the Isthmus of Panama. It has been expanded over time to help even-larger vessels avoid a long journey around Cape Horn at the tip of South America. The canal connects nearly 2,000 ports in 170 countries and facilitated more than 14,000 transits in 2023.

The Panama channel has been the subject of a geopolitical row in 2024, when the US President-elect, Donald Trump, threatened to occupy the channel in order to prevent it from falling into China hands (by way of speaking). In reality, in spite of the backlash against these utterances, his fears in this regard is not that far-fetched. China is indeed, through soft diplomacy, busy to gain influence in the country Panama, which controls the Panama channel.

Image source:123RF