Turning point: International money and finance in Chinese IPE

ABSTRACT

Unlike the depth of international political economy (IPE) research on finance and money in North America and Britain/Europe, or the amount of work that has been done inside China on the IPE of international trade, the IPE of global finance and money is still at a nascent stage inside China. The paper examines the evolution of Chinese IPE research on global finance and money and suggests that research in these issue areas appears to be reaching a turning point. The main empirical finding is that this shift in knowledge production has been induced principally by China's emergence as a financial force and the national developmental concerns this entails, as well as by the onset of the 2008–09 global financial crisis and the rise of the emerging economies’ grouping. The growing Chinese scholarship on the IPE of finance and money is adding analytical depth and broadening Chinese IPE, particularly on the impact of financial globalization on developing and emerging economies. While such research will likely contribute to Chinese policymaking in the future, the scholarly test for Chinese IPE is whether and how it will contribute to filling the global knowledge gaps on the determinants of financial and monetary policy, and whether it will give rise to new understandings on global finance and money, especially the causes of international financial crises. Heretofore, much of the literature has been heavily policy-oriented and normative.

KEYWORDS:

• Chinese IPE
• global finance
• China
• money
• financial diplomacy
• monetary power

ACKNOWLEDGEMENTS

We thank Mark Blyth, Paul Bowles, Ding Yifan, Eric Helleiner, Li Wei, Margaret Pearson and Wang Yong for their suggestions on this paper, and Qi Fan, Yuan Ting, Karl Yan, Cui Ying and Cheng Yong for their research assistance. We thank the Social Sciences and Humanities Council of Canada for supporting the research. We thank the journal's three anonymous reviewers and the RIPE editors for their helpful comments and criticism. The authors take full responsibility for any errors of interpretation.

Notes

¹Wang Xin (2007); G. Chin and E. Helleiner (2008).

²For discussion of this oversight, see Cohen (2009) and Helleiner (2011).

³The initial review of the ‘key’ and ‘broader’ literatures was conducted by Wang Xin and assisted by Qi Fan, Cui Ying, Cheng Yong and Yuan Ting. The overall survey focuses on materials going back 15 years.

⁴This list of the leading Chinese IPE-related journals is the result of consultations with leading Chinese IPE scholars, including Su Changhe and Wang Yong, and foreign specialists on the IPE of China.

⁵For example, from 1997 to 2002, the Canadian International Development Agency (CIDA) was directed by China's Ministry of Foreign Trade and Economic Cooperation (today's Ministry of Commerce) to establish eight policy options and public sector reform projects with Chinese government and research institutions on trade policy and administrative capacity building, including a $6.75 million project on WTO Implementation Capacity Building, During the same period, CIDA was directed to only two projects on financial reform with China's Ministry of Finance and no stand-alone projects with the People's Bank of China. Gregory Chin was responsible for CIDA's main policy engagement projects with the People's Republic of China (PRC) from 2001 to 2006.

⁶We acknowledge that it is possible that the editors of the journals may have influenced the trends in terms of the sector focus of the articles that were published, either due to their own editorial priorities, or those of higher authorities. This would be a key issue for future research. Access to some of the journal editors proved, at times, to be a challenge, and the authors have chosen not to offer a ‘definitive’ statement on the editorial process for the leading Chinese IPE-related journals at this stage.

⁷Ding Yifan is the deputy director of the Institute of World Development at the Development Research Centre of the State Council. Interestingly, Ding Yifan did his doctoral degree in France, at Universite de Bordeaux, a rarity among Chinese IPE scholars who have been trained abroad, as most go to the US or Britain. Ding is also known as one of the more eclectic and historically and comparatively grounded IPE scholars in China.

⁸Wang Yong is the director of the Center for International Political Economy at Peking University.

⁹Yu Keping was also the editor of a Globalization Translation Series, under which the Central Compilation and Translation Bureau of the Chinese Communist Party published more than 30 books on the theme of globalization.

¹⁰Su Changhe put the School of International and Diplomatic Affairs at Shanghai International Studies University on a solid IPE footing as dean during 2006–11. He returned to Fudan University in 2011 as professor in the School of International and Public Affairs (SIPA). Fudan University is one of the key institutional centres for IPE, which also includes IPE scholars Fan Yongming, Zhang Jianxin and Song Guoyou and the former dean of SIPA, Chen Zhimin, among its faculty.

¹¹Wang Zhengyi of Peking University's School of International Studies and formerly of Nankai University in Tianjin has long researched and published using a historical world-systems mode of analysis.

¹²IPE courses were introduced for students majoring in international relations and international politics first at Renmin University in the mid-1990s and then at Peking University and Fudan University in the late 1990s. The Center for International Political Economy at Peking University was established in 2001. In late 2002, IPE became a major in the undergraduate IR programme at Peking University.

¹³Zhou understands the Triffin Dilemma as the contradiction between the role of the US dollar as a sovereign currency and the main medium of international exchange and investment, and the need for a more robust supplemental multilateral reserve asset option (See Chin and Wang, 2010).

¹⁴Zhang Ming (2007) was also one of the few economists inside China who wrote before the global financial crisis that the worsening global imbalances were unsustainable and would, sooner or later, lead to destructive adjustments in the international financial markets. However, unlike many IPE scholars, Zhang urged all concerned parties on both sides of the imbalances (that is, the US and China/Germany) to take proactive measures to adjust their domestic policies and implement coordinated burden-sharing adjustments.

¹⁵Ding Dou's doctoral training was in economics and he came to IPE when he became a professor at the School of International Studies at Peking University.

¹⁶Author's discussions with researchers of CASS IWEP's IPE Division, Beijing, Toronto, 2010, 2011.

¹⁷Author's interview with Chinese IPE scholar who shall remain anonymous, Beijing, June 2011.

¹⁸We thank Li Wei for this observation.

¹⁹In contrast to the innovators, Huang Yiping (2009), a researcher at the China Center for Economic Research at Peking University, consistently played the role of sceptic and focused on the obstacles to the SDR. He emphasized that a global central bank must accompany a super-national currency and was doubtful whether national authorities would ever delegate the powers to supra-national authorities to allow for the multilateral option to expand.

²⁰Zhang Yunling, a senior CASS scholar on China–ASEAN relations, has long argued for China to play a greater role in regional cooperation in East Asia and, amid the global financial crisis, Huang Ping, director-general for CASS’ America Studies Institute, and Chinese IPE scholars, including Wang Yong, explored the potential role for regional arrangements. Zhang Yuyan and Zhang Jingchun (2008b), similarly, criticized the ‘mechanical functionalist thinking’ of simply strengthening the existing global institutions and suggested that China should pursue Asian monetary cooperation, partly because China was not ‘fully ready’ to pursue ‘outright’ RMB internationalization, and partly because regional monetary cooperation serves the ‘common interest of Asia’ and thus provides ‘meaning’ for collective action, and for practical purposes.

²¹Huang Ming (2009), for instance, has written that talk of a ‘currency war’ is a ‘conspiracy theory’, ‘totally rubbish’, but warned that China must not integrate prematurely, must control the risks and must ensure ‘orderly financial opening’.

²²Authors’ interview with Li Wei, Beijing, July 2011.

²³Authors’ interview with Wang Yong, Beijing, July 2011.