South Africa’s bonds and currency have held up better than many markets in a period of mounting global strain, and economist Natale Labia argues that resilience opens a rare window: the country can afford to treat both the United States and China with caution rather than align with either. His warning, delivered in an interview with CapeTalk, is that the pressures now building in the world economy, from elevated debt to concentrated bets on artificial intelligence, demand a deliberate and independent economic posture.
Labia’s case rests on a reading of how the 2008 financial crisis reshaped the global system. The collapse, which culminated in the failure of Lehman Brothers, did more than expose excessive risk-taking by banks. In his view, the response, bank bailouts, years of austerity and what he calls the socialisation of capitalist losses, left ordinary citizens carrying the costs of failures they did not cause. There was, he argued, “zero accountability for the bankers that got the global economy into this mess in the first place.”
That grievance, he contends, fed the populist wave that gathered force in 2016, including Brexit and Donald Trump’s first election victory. He traces the deeper roots to the post-Cold War period, a “neoliberal honeymoon” in which, after what he calls the end of history “quote unquote, by Francis Fukuyama,” the free-market camp believed it had won and debate about the limits of markets largely disappeared.
Labia does not blame populism’s rise solely on conservative politics. He points to centrist and liberal leaders, citing former US president Barack Obama and former British prime minister Gordon Brown, who presided over the crisis response but failed to restore confidence or hold powerful interests to account. “These centrist politicians, these liberal politicians, have ended up being the ones that have effectively encouraged voters to move to the extremes,” he said. Yet he also questions whether populists have delivered on promises of restored sovereignty, arguing that efforts to weaken the European Union may ultimately serve powerful interests, including the United States, China and major technology firms. The EU, he said, is one of the few actors with the influence to hold those powers to account: “It’s no coincidence that the EU is kind of enemy number one of the Trump administration and of Big Tech, because it’s the only thing that could hold them to account.”
The accountability deficit, in his analysis, extends to the international system itself. He argues that the response to the Hamas attacks of 7 October 2023 and the devastation in Gaza has further eroded confidence in the world’s commitment to human rights and international law, a problem he stresses goes beyond one conflict. He contrasts today’s climate with the era of the Oslo Accords in the 1990s, suggesting the global response might have differed had the events of October 2023 occurred in 1993, the period associated with Israeli prime minister Yitzhak Rabin and the peace process. For developing countries, weakened international law is especially costly, since they have less power to defend their interests when raw economic and military strength governs relations. He cited South African jurist Navi Pillay as evidence of the country’s potential contribution to the rule of law, and said South Africans should draw confidence from their history of apartheid and political and legal transformation.
On the economic fundamentals, the vulnerabilities are converging: rising borrowing costs, elevated debt across governments, households and companies, and financial markets increasingly dependent on future profits expected from artificial intelligence. Labia cautions against reading market strength as evidence of economic health. “It’s becoming increasingly obvious that there are a bunch of things happening in the macro economy which are just unsustainable,” he said. He highlighted highly leveraged investors, companies and governments, questioned whether AI-driven productivity gains can justify current valuations, and flagged the concentration of market performance in a small group of technology and AI firms at a time of rising borrowing costs. He stopped short of predicting imminent collapse; his concern is that simultaneous pressures make the eventual outcome hard to anticipate.
For investors and policymakers watching South Africa, the immediate risks sit increasingly in advanced economies and major technology companies rather than emerging markets alone. Labia argues this gives Pretoria room to pursue a “more non-aligned way” and say, in his words, “we’re going to treat both the US and China with due caution.” But he warns against underestimating China’s manufacturing strength and export capacity, urging policymakers to watch the trade deficit with China and back domestic manufacturing, citing the textile industry as an example of trade damage and pointing to pockets of manufacturing excellence worth protecting. With elections approaching, he wants a more assertive defence of local industry.
His broader argument ties the financial crisis, populism, geopolitical conflict, weakened international law and the rise of technology companies into a single theme: a failure to hold powerful institutions and individuals to account. The question he leaves open is whether the global system can rebuild confidence before the accumulated consequences become harder to manage. Further coverage of the interview appears at https://www.ewn.co.za/2026/10/19/south-africa-must-be-wary-of-both-the-us-and-china-economist-warns.