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The 14thMETU CONFERENCE ON
INTERNATIONAL RELATIONS
AREA STUDIES AND INTERNATIONAL
RELATIONS: INTERSECTING
DIMENSIONS
17-19 June 2015
The New Bi-polar Global Economy,
China and the United States
John Weeks
Professor Emeritus
SOAS, University of London
Economic analysis in this presentation is explained
in non-technical language in my new book,
Economics of the 1%:
How mainstream economics
serves the rich, obscures reality
and distorts policy
Anthem Press 2014
Economic Basis for Global Power
1 Size of national economy
2 Trade/Current account surplus, basis for
- foreign investment
- international reserve currency
3 Foreign exchange reserves, basis for
- currency stability
- influence on/control of currency markets
Institutional basis for global power
Control/dominance of international organizations
that manage –
1 International short term and long term lending;
(e.g., International Monetary Fund)
2 International finance regulators (Bank for
International Settlements, Basel Committee on
Banking Supervision, rating agencies)
3 International trade (World Trade Organization)
Review of Major Global Economic
Institutions
1 International Monetary Fund
- Keynes/White proposals & outcome
- IMF & the Cold War
- IMF in the age of financialization
2 World Trade Organization
- the GATT
- purpose of the WTO
Shrinking Economic Basis
of US Global Power
USA: Trade Balance/GDP, 1950-2013
2013
US war in
Viet Nam
ends in defeat
2010
Major
Intervention
in Viet Nam
begins
2007
Invasion of
Afghanistan
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
1959
1956
1953
1950
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
-4.5
-5.0
-5.5
-6.0
Invasion
of Iraq
Global
crisis
Rise of New Economic
Global Powers
1 Military defeats of the US government
2 Capitalist transition in China
3 Unification of Germany
& introduction of the euro
Three Major Exporting Countries
billions, 1990-2013
3200
2800
2400
2000
1600
USA
Germany
China
China+HK
1200
800
400
0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Trade Balances, USA, Germany & China-Hong Kong,
billions, 1990-2013
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
400
300
200
100
0
-100
-200
-300
-400
-500
-600
-700
-800
USA
Germany
China
China+HK
Foreign Investment Outflows, USA, Germany &
China/Hong Kong, billions, 1990-2013
400
350
300
USA
250
200
Germany
China
China+HK
150
100
50
0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Net Value of Mergers & Acquisitions
of Corporate Assets, billions, 1990-2013
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
75
50
25
0
-25
-50
-75
-100
-125
-150
-175
-200
-225
-250
USA (-618 bn)
Germany (-120 bn)
China (+53 bn)
China+HK (+122 bn)
Foreign Reserves including Gold, billions,
1990-2013
4500
4000
China+HK
3500
3000
China
2500
2000
1500
1000
Germany
USA
500
0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Five Largest Receivers of Chinese nonfinancial foreign investment, 2004-2010
1 $140 bn – Hong Kong
2 $27 bn – Cayman Islands
3 $14 bn – British Virgin Islands
4 $7 bn – Australia
5 $6 bn – South Africa
[First three are conduits and/or tax heavens.]
Change in Institutions
of Global Economic Governance & Control
1 Transformation the Euro Zone into a German
sphere of influence
2 Marginalization of the World Bank & ambiguous
role of the IMF
3 Collapse of the WTO & sphere 0f influence trade
blocs
4 Counter measures by the Chinese regime
[Beijing-based AIIB, BRICS “Contingent Reserve
Allocation” institution, 40% funded by Chinese
government]
Conclusions
1 The German government has established itself
as the regional power in Europe
[“history never repeats itself but often it
rhymes.” – attributed to Samuel Clements]
2 The US & Chinese regimes are competing for
global economic & military dominance