Research On Sino-u.s. Economic Interdependence And Its Asymmetry

As the most systemically important countries in the global economic system, China and the United States would play an exemplary role for the international community with the mode of the interdependent relationship between them, especially for the economic relations between ―the country who gives priority to foreign trade‖ and ―the country who gives priority to finance‖. From 2008 to 2009, after what is called ―the global financial crisis which is changing the future of the world‖, rebalancing of the global economy, reforming of the international monetary system and integration of regional economy have become the three hot topics of the international community. China as the world’s largest developing country(also the fastest emerging power) and the United States as the world’s largest developed country(also the most economically developed country) have become the center of these three topics. Therefore, after the global financial crisis, the economic interdependence between China and the United States has become the focus of international community‘s attention.Based on the view that "since the international economy is closely related to international politics, there must be an objective law between the economic linkage mode and the power structure distribution‖, the second chapter builds a linkage model of the two countries, which is based on open macroeconomic theory. In the framework of DSGE model, economic interdependence is mainly manifested in that with the increasing trade and financial linkage, the national economic structure and the change of the economic policy of the other party will weaken the traditional macroeconomic policy influence on domestic economic variables and the impact to domestic economy, so that changes of one country’s economic policy would be an non-ignorable disturbance in another country. As China’s "marginal effect of foreign income to net export" is larger, resulting in China’s export trade highly depends on the final goods consumption market in the United States; As "marginal impact of interest rates on the foreign bond holdings" is small, leading to that the fiscal policy and the regulation effect of monetary policy of China will be significantly affected by currency market environment changes of the other country. The bilateral economic relations is under the background of interdependence with macroeconomic structure as the main feature, the trade and capital circulation pattern between the two countries determines the sensitivity and vulnerability of China were significantly higher than that of the United States, which was also the outstanding performance of the asymmetry of the interdependent relationship between China and the United States. The bilateral relation has already become the relationship between dominant power and the emerging power, and the differences of development stage are the main reasons for the asymmetry of the economic interdependence between the two countries.The third chapter investigates the sensitivity and vulnerability of Sino-U.S. economic interdependence from dimensions of trade and finance. In the field of trade, the main performance of the greater interdependence is that the two countries are viewing each other as the most important export target and source of imports. With the global value chain, the imbalance of the bilateral trade is manifested in the different positions of two countries in the global value chain, and being the terminal of processing industry chain of China in the east Asian production network. As a result of Sino-U.S. interdependence relying on the global value chain, the different roles and positions in the global value chain of China and the United States are being the key factors to the development of bilateral trade relations. The dependence of United States on Intermediate products market of China is under the influence of China’s processing trade patterns; while the dependence of China on the United States eventually commodity market is affected by its import consumption ability. In the financial sector, the financial interdependence of China and the United States is mainly around the dependence of RMB on dollar. The specific form of the interdependence exists in the bilateral capital circulation. The investment from China to the United States comes mainly from official foreign exchange reserves, while the investment of United States to China mainly comes from the multinational companies. The differences in the structure of investment are closely related with the different patterns of economic growth and the rules of market operation. As for the dependency in the field of securities investment being significantly higher than that in the field of direct investment, the following reasons are: First, the foreign exchange reserves of China invested in U.S. bonds market constitute the premise of American direct investment in China; Second, the characteristics of the bilateral capital circulation comes from the gap between the level of financial development in China and the United States, which is saying that underdeveloped financial system in China is difficult to promote effective domestic capital accumulation; while through the U.S. financial market China is able to complete its own capital accumulation process by the intermediary function of international finance. The degree of the close China-U.S. economic interdependence relation determines that American recession is transmitted through direct contact on China’s external impact, namely the clear trade channels and the financial adjustment channels. In the field of trade, from the perspective of direct channel, the level of personal income and consumption have significant influence on the import and export trade between China and the United States, showing that the spillover effects of external shocks on China focus on the income effect, and the deterioration of the macroeconomic conditions of the U.S. is the most significant threat for China. From the perspective of indirect channel, the spillover effects of external shocks on China from its impact on Asian production network. Exports from China to the U.S. trade make a quick response to macroeconomic downturn in the United States, with almost all types of trade goods hitting; But from the point of view of trade recovery, exports from China has recovered very well, and even higher than the domestic macroeconomic recovery level. In the financial sector, the financial channels of economic impact mainly from two aspects: first, the Federal Reserve quantitative easing monetary policy; Second, the redistribution of overseas money from financial institutions and multinational companies in the United States. More importantly, there is inner links between financial and trade interdependence. Lagging of the development of the domestic financial market in China and excessively dependence on the role of net exports to economy have made China overly sensitive to external shock from the outside world.The fourth chapter focuses on using the combination of economics and international political economics analysis to discuss the source and basis of the formation of the asymmetry of economic interdependence, and then to analysis the effect of the asymmetry on bilateral power structure. Behind the Sino-U.S. economic interdependence, "financial balance of terror" and the "debtor logic", is used to analysis the concept of economic vulnerability of China. The "financial balance of terror" reveals that Chinese investment behavior on the financial markets in the United States is meant to ensure the dollar assets and the export strategy in fact, and it also caused the Chinese monetary authorities on the policy choices into dilemma. Differences in the levels of financial development of China and the United States have affected the locations in the structure of economic division, and the evolution trend of economic interdependence of the two countries under the background of "financial balance of terror". As long as China being the "periphery" or " nation who give priority to trade" in the international monetary system, it is difficult to bypass the "Dollar Trap" and "Capital Doubtful Recycling ". As to dominate the current international financial rules of logic "debtor", it reveals that China under the dollar standard, the deeper into dollar system, the more will be affected by the "path dependence" effect. For China, the dollar system as a system level low substitutability "international commodity", in China’s economic growth mode is of vital importance "inputs". The lack of the "key element" will lead to great damages to the economy as a whole. China does not have the ability to obtain alternative, is China’s vulnerability in the Sino-U.S. economic interdependence of the nature of the embodiment. In Sino-U.S. economic interdependence, the vulnerability of China is the not to get rid of the dependence on the U.S. market at the expense of the smaller and monetary dependence, namely by the depend on the framework of China is hard to bear the change must pay cost. This vulnerability of formation and the economic interdependence relation behind the "financial balance of terror" and the "debtor logic" and other issues are closely related. In a sense, the Chinese rely too much on the standard of us dollar is the root cause of this vulnerability.The fifth chapter of this dissertation reveals the asymmetrical economic interdependence between China and the United State, which is a typical interdependence between "financial state" and "trading nation". Overall, dependence of China on American goods and financial dependence are far more than the United States commodity dependence and financial dependency of China. Monetary and financial hegemony supported by the dollar standard system is the core of the fabric of American hegemony. In the framework of the dollar standard, the rise of China and other emerging powers, in essence are American hegemony the dominant status in the "system". Therefore, recognize and support the dollar in the dominant position in the international monetary system, is the inevitable choice of China’s integration into the global free trade system. Established by the United States dollar system make it partially and peripheral countries to share the power with the development of the economic growth, especially in trade, the so-called "spread of power". The asymmetrical economic interdependence between the two countries, affect us on the diffusion of the power of the Chinese model, thus affecting the status of power division between the two countries. China’s integration into the global free trade system, with its abundance of labor resources occupied one end of the global production networks, to participate in the Asia-pacific regional affairs also gradually obtained the more influence; And the United States spread to China at the part to allow power at the same time, checked in a specific field of the rights of the other reasonable for China. If the "power" is the process and results of event control, then the United States only allow others to participate in the process of international affairs, and always keep itself to the height of the implementation results of all kinds of transaction control. In terms of the common interests of China and the United States in the commodity market and financial market of the interdependent relationship, there are significant between the two countries the interests of the intersection: macroeconomic climate in China and the United States still is given priority to with positive correlation; But in the interests of the intersection, on the basis of the United States with the dollar hegemony and the resulting asymmetric economic interdependence, the interests of a larger share. In asymmetric under the pattern of economic interdependence, the United States will be able to continue to seek the interests of the unequal division. Compared to curb the development of China’s economy, however, the United States more from the Angle of the influence of maintain this asymmetry. In the new focus of competition and wrangling between the two countries, the network security problem and rebalancing in the Asia-pacific region has become increasingly prominent. Increasingly close economic interdependent relationship between China and the United States, of course, to a certain extent, political form against the United States, fully demonstrated the United States as asymmetric dependent on smaller side, can’t completely through the use of economic means to transform economic clout into political influence, and to rely on the larger side form power(China).The last chapter of this article from the perspective of international political economics analysis and demonstrates how the two countries should strengthen bilateral economic and financial cooperation, thus to improve the economic interdependence, especially from "negative dependence" to "positive dependence". Construction of new power relations to ensure the long-term development of the relations between the two countries is of great importance. Construction for the new power relations between China and the United States successfully or not, firstly, to a large extent depends on the correct positioning of the each other between China and the United States. Between the two countries, the economic interests of existing conflict, and there is an obvious complementarity and symbiosis. Both for new type of power relations between China and the United States has certain strategic competition, and can realize the relatively stable cooperation in a certain range. In the process of the competition and cooperation, the china-us strategic and economic dialogue mechanism, the substantial progress of Sino-U.S. bilateral investment treaty negotiations, will play a key role. The construction of new power relations will not happen overnight, it is necessary to the two countries in the process of system and policy coordination to make long-term and continuous efforts.The innovation of this study is mainly reflected in: first, compared with the existing literature research, this study highlights the use of DSGE model study of Sino-U.S. economic interdependence, the method of the Chinese in vulnerability and vulnerability of Sino-U.S. economic interdependence has carried on the thorough research; And further from the perspective of asymmetry of the power structure of China and the United States carried on the thorough analysis. Second, this study according to the American economist Stephen Roachhave put forward "two economies of China and the United States must make the transition from negative dependence to rely on positive" this view, the Roach’s "negative" and "positive dependent on" the interpretation of the meaning of these two concepts; And on this basis, the dissertation realizes a deep research and exploration for the transition of dynamic mechanism.