The global system is entering one of its most fragile phases in decades, with geopolitical rivalries, economic confrontation, and fast-moving technological change converging to heighten uncertainty heading into 2026, according to the World Economic Forum’s latest Global Risks Report.

The assessment suggests the world is no longer dealing with isolated shocks, but with a dense web of overlapping threats that reinforce one another and steadily erode resilience.

Surveying about 1,300 leaders across government, business, and civil society, the report captures a striking collapse in near-term confidence. Half of respondents expect turbulence over the next two years, while just 1% believe calmer conditions lie ahead.

The WEF’s central conclusion is stark: the global economy and political order are “sitting on a precipice,” vulnerable to miscalculation, escalation, and policy paralysis.

At the core of these fears is the rapid rise of geoeconomic confrontation, which has jumped to the top of business concerns for the immediate future. Countries are increasingly using tariffs, export controls, sanctions, regulatory barriers, supply-chain pressure, and capital restrictions as strategic tools. What was once primarily economic policymaking is now openly intertwined with national security objectives, turning trade, technology, and finance into instruments of power.

The report warns that this shift could significantly contract global trade, disrupt investment flows, and fragment markets. Instead of a single global economy governed by shared rules, leaders increasingly see a splintering system defined by competing blocs, selective decoupling, and “friend-shoring.”

This environment raises costs for businesses, reduces efficiency, and increases the risk that economic disputes spill into broader political or even military conflict.

“It’s very much about state-based armed conflict and the concerns around that,” said WEF Managing Director Saadia Zahidi, speaking on CNBC.

She noted that nearly a third of respondents are deeply concerned about the potential impact of geopolitical tensions on global growth, financial stability, and social cohesion as early as 2026.

Economic risks have risen faster than any other category in the survey. Concerns about recession, stubborn inflation, volatile capital markets and high public debt burdens are intensifying at the same time governments have less room to respond to shocks. Many economies are still absorbing the aftershocks of the pandemic, energy price swings, and aggressive monetary tightening, leaving them exposed if another major disruption hits.

Real-world developments underline these concerns. China’s rare-earth exports surged in 2025 to their highest level since at least 2014, even as Beijing began restricting shipments of several medium to heavy elements from April. Analysts interpreted the move as a calculated demonstration of leverage over Washington at a sensitive moment, as negotiators grappled with soybean purchases, a potential Boeing aircraft deal, and the future of TikTok’s U.S. operations.

Rare earths are critical inputs for defense systems, electric vehicles, and advanced electronics, making them a potent pressure point in strategic competition.

At the same time, China imported a record volume of soybeans in 2025, largely from South America, as buyers avoided U.S. crops for much of the year amid lingering trade tensions. Rather than reducing trade overall, geopolitical rivalry is reshaping its geography, redirecting flows and creating new dependencies that carry their own risks.

Economists expect China to keep expanding its global market share in 2026, aided by overseas manufacturing hubs that offer lower-tariff access to the United States and European Union, as well as strong demand for lower-grade chips and consumer electronics. Yet Beijing has also shown signs of recalibrating its industrial strategy, including scrapping export tax rebates for its solar industry last week, a long-standing point of friction with EU states concerned about unfair competition.

The role of U.S. President Donald Trump continues to loom large in the global risk landscape. Analysts say the challenge his trade posture poses to China and other major economies is unlikely to fade quickly. Even as the U.S. Supreme Court considers legal challenges to tariff measures, Trump has continued to wield trade threats as a policy tool.

On Tuesday, he said China could open its markets to American goods, a day after warning he might impose a 25% tariff on countries trading with Iran — a move that risks reopening tensions with Beijing, Iran’s largest trading partner.

“Trump’s threat to impose a 25% tariff on countries doing business with Iran underscores the potential for renewed trade tensions between the U.S. and China,” CNBC quoted Zichun Huang, China economist at Capital Economics, as saying.

Such signals reinforce the WEF’s warning that economic policy is increasingly unpredictable, amplifying risk for global businesses.

Beyond geopolitics and trade, the report highlights deepening social and informational fractures. Misinformation and disinformation rank second among near-term risks, closely followed by societal polarization. Leaders fear that manipulated information ecosystems and widening ideological divides are undermining trust in institutions, weakening democratic processes, and making coordinated responses to crises harder to achieve.

Inequality stands out as the most interconnected risk over the next decade, linking economic instability, political unrest, health outcomes, and technological disruption. The WEF argues that persistent inequality acts as a force multiplier, intensifying the impact of other shocks and feeding cycles of resentment and fragmentation.

Artificial intelligence has emerged as one of the fastest-rising concerns in the survey. The potential for adverse outcomes from AI vaulted from 30th place among short-term risks last year to fifth place among long-term risks. The report points to the convergence of machine learning and quantum computing, warning that accelerating capabilities could outstrip governance frameworks and human oversight.

Labor displacement is also a central worry. The WEF warns that large-scale automation could drive sharp increases in income inequality, weaken consumer demand, and fuel social discontent, even as productivity gains soar. Without effective policy responses, these dynamics could create feedback loops in which economic contraction and social instability reinforce one another.

Environmental risks, while still severe, have slipped down the near-term priority list as leaders grapple with wars, inflation, and technological upheaval. Zahidi said environmental threats have been “deprioritized” in the short run, though extreme weather remains the top concern over the next decade. Global insured losses from natural disasters are estimated to hit $107 billion in 2025, exceeding $100 billion for the sixth consecutive year and far above early-2000s levels.

John Doyle, CEO of Marsh, the world’s largest insurance brokerage and a partner on the report, described the current environment as one of overlapping crises rather than a single defining shock.

“Today is not a moment of a big global crisis, it’s a moment of poly-crises,” he told CNBC, citing trade wars, cultural divisions, rapid technological change, and extreme weather.

Doyle pointed to the California wildfires of early 2025 as an illustration of how climate risk, regulation, and financial markets intersect. He said insurance systems need regulatory frameworks that allow pricing to reflect underlying risks accurately, alongside stronger building codes and wider deployment of mitigation technologies to attract capital back into high-risk areas.

Despite slipping down the rankings, environmental threats remain profound. The report warns that extreme heat, drought, and wildfires are likely to become more intense and frequent, while longer-term dangers such as biodiversity loss, ecosystem collapse, and pollution continue to build.

Zahidi noted that leaders remain aware of climate risks, but are increasingly distracted by immediate crises.

“That big looming existential risk around climate is still there,” she said, adding that the world’s collective capacity to act has diminished.

The report concludes that cooperation is the only viable path through this risk-laden landscape. It calls for “coalitions of the willing” involving governments, businesses, academic institutions, and civil society to strengthen resilience and craft workable solutions. Yet it also warns that a retreat from multilateralism and the emergence of a new age of competition are undermining the trust and coordination needed to manage shared threats.

China’s trade surplus surged to an unprecedented $1.2 trillion in 2025, a figure that captures more than just export strength. It tells the story of an economy recalibrating under pressure, redirecting its industrial might away from the United States and deeper into emerging markets, while leaning heavily on external demand to offset persistent weakness at home.

Customs data released Wednesday showed the surplus reached $1.189 trillion for the full year, a level comparable to the entire economic output of a top-20 global economy. The threshold was first breached in November, cementing 2025 as a watershed year for China’s trade model.

The headline number reflects a deliberate policy shift that has been years in the making. As trade, technology, and geopolitical frictions with Washington intensified after President Donald Trump returned to the White House, Beijing pushed exporters to look beyond the world’s largest consumer market. Southeast Asia, Africa, and Latin America became priority destinations, not just as alternative outlets, but as platforms for Chinese firms to build global scale.

That strategy paid off. While exports to the United States slumped 20% in dollar terms last year and imports from the U.S. fell 14.6%, Chinese manufacturers made significant inroads elsewhere. Shipments to Africa jumped 25.8%, exports to the ASEAN bloc rose 13.4%, and sales to the European Union increased 8.4%.

In contrast to the sharp bilateral slowdown with Washington, China’s broader trade with the rest of the world barely skipped a beat.

“China’s economy remains extraordinarily competitive,” said Fred Neumann, chief Asia economist at HSBC.

He pointed to productivity gains and rising technological sophistication across Chinese manufacturing. But he also highlighted a less flattering driver behind the export surge: weak domestic demand and excess capacity pushing firms to seek buyers abroad.

That imbalance is becoming more visible. Monthly trade surpluses exceeded $100 billion on seven occasions in 2025, compared with just once the previous year. A softer yuan helped underpin the trend, making Chinese goods cheaper overseas and amplifying export momentum even as consumption and property investment at home remained subdued.

December’s data underscored the pace. Exports rose 6.6% year on year in value terms, beating economists’ expectations of 3.0% growth and accelerating from November’s 5.9%. The stronger-than-expected numbers steadied the yuan and lifted Chinese equities, with the Shanghai Composite and CSI300 indices both gaining more than 1% in morning trade.

For policymakers, the export performance offers short-term relief. “Strong export growth helps to mitigate the weak domestic demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

He added that, alongside a buoyant stock market and relatively stable U.S.-China relations, the government is likely to keep its macroeconomic policy stance unchanged at least through the first quarter of 2026.

Officials were quick to frame the surplus as proof of resilience. “With more diversified trading partners, China’s ability to withstand risks has been significantly enhanced,” said Wang Jun, a vice minister at the customs administration, at a briefing following the data release.

Yet the record surplus also sharpens longer-term questions. As China ships ever-larger volumes of goods abroad to counter a property slump and sluggish household spending, concerns are growing in other capitals about overcapacity and competitive distortions. Countries that rely on manufacturing exports of their own are increasingly wary of China’s expanding footprint, particularly in sectors tied to industrial policy and state support.

“Rising Chinese trade surpluses could raise tensions with trade partners,” Neumann warned, noting the risk of backlash as reliance on Chinese inputs and finished goods deepens.

However, heading into 2026, Beijing faces a delicate balancing act. The $19 trillion economy has shown it can reroute exports and absorb U.S. pressure, but doing so has intensified frictions elsewhere and exposed the limits of an export-heavy growth model. How long China can sustain growth by selling more goods to the rest of the world, without reigniting broader trade conflicts, is now one of the defining questions for the global economy.