Geopolitics Quarterly

Geopolitics Quarterly

Investigating the Impact of the U.S.–China Tension Index on the Economic Growth of Countries

Document Type : Original Article

Authors
Bakhtiar Javaheri 1
Ramin Amani 2
Mahdis Latifi 3
1 Associate Professor, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.
2 Ph.D. Candidate in Economics, Department of Economic Development and Planning, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran.
3 M.Sc. Student in Economics, Department of Economic Sciences, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.
10.22034/igq.2026.548006.2093
Abstract
Economic growth is one of the most important indicators of development and welfare, influenced by factors such as investment, technological innovation, productivity, international trade, political stability, and institutional quality. Using the Generalized Method of Moments (GMM), this study examines the impact of the U.S.–China tension index on the economic growth of low, middle, and high income countries over the period 1993–2024. The results show that rising U.S.–China tensions have a negative and significant effect on economic growth across all income groups. This effect is stronger in high income countries, as advanced economies are more dependent on global supply chains, trade, and capital flows. A considerable negative effect is also observed in middle income countries, reflecting the vulnerability of their growth to geopolitical shocks, while in low income countries the effect is weaker but still significant. Furthermore, country-specific elasticity rankings reveal that in the high income group, South Korea, Germany, and Japan exhibit the highest vulnerability, with elasticities of –0.78, –0.74, and –0.71, respectively; in the middle income group, Vietnam, Malaysia, and Thailand are the most vulnerable, with elasticities of –0.92, –0.88, and –0.85; and in the low income group, Ethiopia and Uganda experience the strongest negative effects, with elasticities of –0.48 and –0.45. These findings underscore that trade dependence on the United States and China, along with the volume of foreign direct investment inflows, are the primary determinants of cross-country differences in vulnerability.
Keywords
U.S.&ndash
China Tension Index, Economic Growth, Generalized Method of Moments (GMM)
Subjects
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Geopolitics Quarterly
Volume 22, Issue 3
Summer 2026
Pages 109-158

  • Receive Date 11 November 2025
  • Revise Date 02 May 2026
  • Accept Date 05 May 2026