Economic interdependence and conflict: The case of China and its neighbors

This study tests the proposition that increased economic interdependence between states reduces conflict and promotes peace between them. The study examines dyadic relations between China and its neighbors. This research finds that one of the benefits of interstate trade and investment is improved interstate relations. In both quantitative and qualitative assessments in this study, dyadic trade flows improved interstate relations. Financial flows were also found to improve interstate relations in the qualitative assessment alone and did not reach statistical significance in the quantitative study. However, economic interdependence can foster peace between the actors as long as relative power capabilities remain stable.