In her speech delivered at the People's Bank of China on June 11, 2025, Christine Lagarde, President of the European Central Bank (ECB), highlighted the evolution of global economic relations and the imperative for international cooperation amidst escalating geopolitical tensions.

Lagarde drew parallels between historical events and the current global economic landscape, recalling the Ming Dynasty's ‘Kunyu Wanguo Quantu’, a hybrid map symbolizing cooperation between Europe and China, and the substantial changes since China joined the World Trade Organization (WTO) in 2001.

Lagarde noted that China’s accession to the WTO marked a pivotal moment in its integration into the global economy, facilitating unprecedented trade growth that has significantly benefited various nations, particularly China itself.

However, she acknowledged that recent years have witnessed increasing trade tensions and a fragmented international environment that complicates cooperation.

Examining past economic frameworks, Lagarde outlined a historical overview of the international economic system over the past century, dividing it into three distinct periods.

The first, during the inter-war years, was characterized by the gold exchange standard, which ultimately failed due to persistent tensions between surplus and deficit countries.

This period exemplified the dangers of one-sided adjustments in response to economic imbalances, leading to widespread protectionism.

In contrast, the Bretton Woods system established post-World War II brought a more cooperative framework, whereby the United States played a central role alongside the International Monetary Fund.

Trade flourished during this period, although tensions resurfaced as the United States transitioned to a balance of payments deficit.

The end of Bretton Woods was marked by President Nixon's suspension of dollar convertibility into gold, reflecting the system’s inability to sustain cooperation amidst geopolitical divides.

Lagarde underscored a transition to a third period since the Cold War, highlighting the remarkable expansion of global trade, which has quintupled to over USD 30 trillion, with significant growth in global supply chains.

Nonetheless, she pointed out that the contemporary landscape lacks the unified geopolitical alliances seen in earlier periods, leaving the global economy vulnerable to fragmentation.

Trade restrictions, as reported by the International Monetary Fund, have seen a threefold increase since 2019, with recent months witnessing trade policies previously deemed unthinkable.

Lagarde attributed this fragmentation to two primary forces: geopolitical realignment and perceptions of unfair trade practices, which have intensified calls for coercive policies that threaten to erode the benefits of globalization.

The concentration of current account imbalances has also evolved, with deficits increasingly concentrated among a small number of countries, while surpluses are distributed more widely.

This imbalance has led to rising trade tensions and potential disruptions to global supply chains.

Lagarde cautioned against coercive trade measures as a sustainable response to these tensions, emphasizing the importance of cooperative solutions, which historically have proven vital in preserving global prosperity.

She stressed that both surplus and deficit countries must take responsibility for fostering a resilient trade environment, advocating for structural policy adjustments to mitigate trade tensions.

In closing, Lagarde called for upholding multilateral agreements and enhancing cooperation through bilateral and regional frameworks, reinforcing the necessity for central banks to act as pillars of international cooperation.

The overarching message encapsulated in Lagarde's address resonates with the necessity for sustained collaboration in the face of an increasingly fragmented global economic landscape.