Tag: Blocs
Bi-Weekly Geopolitical Report – Update on the US-China Military Balance of Power (May 12, 2025)
by Daniel Ortwerth, CFA | PDF
In early 2021, we published a series of reports assessing the overall balance of power between the United States and China in military, economic, and diplomatic terms. In early 2023, we provided an update to our analysis. The current report is the next in what we intend to be a biennial series on the subject. Looking comprehensively at both countries’ power and sources of power, we assess that, while the US retains the greater military capacity to influence the world and protect its interests, China continues to close the gap, perhaps at an accelerating pace. For example, China continues to expand its lead in the number of combat-capable ships in its navy, it has gained valuable operational experience, and it can deploy enormous forces to the South China Sea, the East China Sea, and the Taiwan Strait. China’s coastal military forces are now strong enough to potentially deter the US from intervening in a crisis around Taiwan.
In this report, we provide an update to the numerical comparison and our analysis of China’s military development over the last two years. We emphasize critical areas such as China’s continuing buildup of its strategic nuclear arsenal and how that could spur a destabilizing new global arms race. We conclude with the implications for investors.
Don’t miss our accompanying podcasts, available on our website and most podcast platforms: Apple | Spotify
Bi-Weekly Geopolitical Report – Growing Fragility in the US Bloc (April 7, 2025)
by Patrick Fearon-Hernandez, CFA | PDF
We at Confluence have written extensively on the end of post-Cold War globalization and the fracturing of the world into various geopolitical and economic blocs. We’ve noted that the large, rich bloc led by the United States is an attractive place for investors, but fractured supply chains and rising international tensions may produce a range of economic and financial market problems, from elevated consumer price inflation to higher and more volatile interest rates. In this report, we explore what could happen to the US bloc as President Trump pursues his aggressive policies to push the costs of Western security and prosperity onto the US’s traditional allies. As we’ve noted before, those policies run the risk of reducing US influence with its allies and undermining cohesion within the US bloc. We assess in this report that reduced cohesion probably won’t splinter the US bloc in the near term. Nevertheless, we begin laying out how the world could change if the US bloc does disintegrate, and we discuss the economic and market implications if it does.