Introduction to the Handbook on the International Political Economy of China

Abstract

Since China embarked on a course of economic reform and trade liberalization about 40 years ago, the country has transformed from a largely agrarian society to a major economic powerhouse in the world. Sustained and rapid economic growth averaging over nine percent a year through 2016 has made China the second largest economy in the world as well as a major world center of manufacturing activities, trading power, overseas investor, and holder of foreign exchange reserves. The expansion of China’s economic linkages with the rest of the world has not only brought about significant reconfigurations of the East Asian regional economy, but is also exerting a significant impact on the domestic political economies of both developing and developed economies as well as the underlying structure and norms of the global economic system. More importantly, China’s phenomenal economic ascent is taking place at a time of profound changes in the international economic system. The trade war between the United States and China that is still unfolding at the time of writing further highlights the intense competition between the two for global leadership and the potential for conflict arising from China’s unprecedented rise to the center of global economic activities. These profound changes in both US–China economic relations and in the global economic structure make it particularly timely and relevant for us to reflect on China’s position and role in the global economic system since the beginning of the reform era. How did Beijing manage to open the Chinese market to foreign trade and investment and integrate China into the global economy? What are the scope, reach, and impact of China’s growing commercial activities in areas such as trade, foreign direct investment (FDI), and finance? What kind of role has China been playing in global economic governance? Is China’s leadership in the global economy likely to complement or challenge the existing order? Is Beijing a norm breaker, norm taker, norm shaker, or norm maker in key global economic governance regimes? To what extent do domestic politics and international relations influence China’s foreign economic relations and shape Beijing’s approach to global economic governance? This volume speaks to these questions, which in turn have important implications for understanding the country’s future trajectory in the global economy. Through an examination of Beijing’s international economic engagement in areas such as trade, investment, finance, sustainable development, and global economic governance, it explores in depth the evolution and consequences of China’s changing role in the global economy. In particular, the volume highlights the following dimensions of Chinese behavior: (1) the processes underlying China’s rising global economic influence; (2) China’s behavior and role in global economic governance; (3) the interests and motivations underlying China’s international economic initiatives; and (4) the influence of politics, including both domestic politics and foreign relations, on China’s global economic footprint. Contributing