Good-Bye Hegemony! by Lebow Richard Ned Reich Simon

Author:Lebow, Richard Ned, Reich, Simon
Language: eng
Format: epub
Publisher: Princeton University Press
Published: 2014-05-25T16:00:00+00:00

CHINA’S CUSTODIAL ROLE

In the summer of 2011, as the prospect of a historically unprecedented US government debt default loomed, Chinese foreign ministry spokesman Hong Lei called upon the US government to “adopt responsible measures and policies” toward foreign investors. His comments came a day after Moody’s Investor Services advised that it might cut its ratings for US government debt, and Federal Reserve Chairman Ben Bernanke’s warning that a default would amount to “a huge financial calamity.”57 Both Standard & Poor’s and China’s Dagong Global Credit Rating had already downgraded the US credit rating, primarily because of the economy’s slow growth and the government’s rising debt.58 The symbolic importance of China berating the United States was unmistakable. The globe’s self-appointed economic leader was behaving in a way that undermined its claims of economic centrality and prudence. China, America’s chief foreign creditor and formerly a nation committed to autarchy, was expressing concern about irresponsible American behavior that again threatened global instability. The previous instance was the subprime mortgage crisis four years earlier.

Yet there has been plethora of American academic, governmental, and popular articles and reports that accuse China of expanding its economic power at a cost of other states through trade, foreign direct investment (FDI), overseas development aid, and a total disregard of macroeconomic imbalances. Chinese FDI is often characterized as a predatory means of enhancing outward trade and the inward procurement of much-needed raw materials.59 The purchase of US Treasury bills and European government bonds are depicted as investments intended to exert political leverage in a variety of domains, including the formal recognition of China as a ‘full market economy’ within the World Trade Organization (WTO), a status it craves.60

Chinese behavior is undeniably interest-based. China is the primary beneficiary of the existing international economic order. Taylor Fravel argues, in contrast to realist expectations, that “China has pursued foreign policies consistent with status quo and not revisionist intentions.”61 In keeping with this orientation, we maintain that it is assuming a more expansive—if still underdeveloped—custodial role through the combined use of markets and diplomacy in a way that expands its influence while avoiding conflict. A recent example is Beijing’s purchase of European government bonds to help avert a Greek default on its debt.62 This is merely one instance of efforts by China to buttress the global economic system in ways that are currently unmatched by any other state. In the remainder of this chapter we will examine these efforts in the context of the need to address global imbalances, stabilize currencies, reinforce liberal rules in trade and finance, and to act as the lender of last resort through both developmental aid and the financing of public debt. These are the functions of global economic management identified as critical by liberal theorists.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.