Balance of payments and power: Assessing China`s global and regional interdependence relationship

Abstract

Global economic imbalance leads to change in the global distribution of economic resources. While some foresee the inevitable decline of US power, others consider China`s forthcoming global primacy to be an exaggeration. This paper seeks to contribute to the debate by linking balance of payments (BOP) to power analysis. Dimensions of BOP are connected to Keohane and Nye`s two ideal-types of interdependence relationship: realist and complex interdependence. The former relates to the global distribution of aggregate economic resources; the latter emphasizes a detailed investigation of distinct interdependence situations between countries. China`s BOP from 1997 to 2012 is assessed through the lens of both ideal-type scenarios. The findings show that China`s growing power manifests principally in its rising status as a major global buyer in primary goods and its growing military strength in the region. However, China is confronted with possible slowdown in wealth accumulation and its lagging technological development. At present, the speculation of China`s upcoming global primacy may be exaggerated, but its dominant position in the region is indeed on the rise. © The Author [2014]. Published by Oxford University Press in association with the Japan Association of International Relations; all rights reserved.