- The Great Wall of Money: Power and Politics in China’s International Monetary Relations ed. by Eric Helleiner and Jonathan Kirshner
The Great Wall of Money is a timely and rigorous study on the role that power and politics play in forging China’s international monetary relations. The contributors agree that China’s power has been growing across several key dimensions of international monetary relations in recent years, including China’s creditor status and its provision of balance of payments finance, its significance to the international politics of macroeconomic adjustment, its influence in international financial institutions and the international use of its currency.
However, it is not as easy to define the nature of China’s growing monetary power. The editors have drawn important distinctions between “power-as-autonomy” and “power-as-influence” in the introduction (p. 3). Specifically, the former is the capacity to act without external influence or to deflect exogenous pressure, while the latter is the ability to change others’ behaviour. After reading the book, one could find that the contributors hold two different views on the nature of China’s international monetary power and that the fundamental reason for the competing assessments lies mainly in the different perspectives or levels of analysis adopted by the different contributors.
The first perspective emphasizes the domestic sources of China’s international monetary policy. The contributors are inclined to argue that China’s monetary power-as-autonomy is enhanced whereas its power-as-influence is still limited: China is more capable to preserve domestic financial stability from external shocks and pressures than it is to exercise its power to influence policy behaviours of other countries. More specifically, David Steinberg (Chapter 3) adopts a domestic political explanation of China’s foreign reserve accumulation, which highlights the priority of the party-state elites to maintain control and stability and the greater strength of political factions that favour large holdings of foreign reserves. Hongying Wang (Chapter 4) analyses three sets of political obstacles - the ideology of statist nationalism, the institutions of state capitalism, and the vested interests of the conservatives - that impede a fundamental change of China’s development strategy and constrain China’s international monetary power. Andrew Walter (Chapter 5) argues that China’s considerable power-as-autonomy in the [End Page 174] global system is reflected in its engagement with the international macroeconomic policy surveillance regime. It prevents China from achieving effective exchange rate reforms and internal rebalancing objectives, which is determined by the basic parameters of Chinese domestic politics.
By contrast, the second perspective stresses the external sources of China’s international monetary policy. The contributors tend to see China as a rising power that is no longer a rule-taker (accepting the status quo of the current international monetary order), but some combination of a ruler-maker (promoting global reforms) and a ruler-breaker (in that it is creating its own arrangements). Gregory Chin (Chapter 7) and Jonathan Kirshner (Chapter 8) both examine the delegitimation of the international monetary system and the American management with the dollar after the global financial crisis. Gregory Chin elucidates China’s intention to diminish its dependence on the dollar and to reform the international monetary system by promoting the international use of the RMB and diversification of the international monetary system. Jonathan Kirshner further argues that the RMB’s growing international role is a virtual certainty and that it will provide China with new international monetary power, particularly in the East Asian region.
In a nutshell, Andrew Walter (p. 153) provides an insightful concluding diagnosis of the power asymmetries in China’s domestic and international politics that could explain the two kinds of China’s monetary power: China is simultaneously weak and strong—weak because of the political obstacles to domestic financial reforms, but increasingly strong vis-à-vis most external actors and the broad mass of domestic society that calls for external and internal rebalancing.
The editors claim that the domestic and international levels...