INTRODUCTION
Western hostility towards China encourages the paranoia and strengthens the domestic political position of the paranoiac… We should be skeptical of Chinese intentions, without falling into hostility. We should maintain a dialogue with China, even if the tone is not always cordial. We should regard China as a complex and contradictory nation, one likely to be alternatingly partner and adversary. China is not a villain… but rather an ambitious nation that is becoming the behemoth in the neighborhood. One of the oldest problems in international relations… has been how the international community can accommodate the ambitions of newly powerful states. It is rarely a question of right or wrong, but rather of the instability that is inevitable as the previous military, economic and political balance must be recalibrated. If China is able to sustain its economic miracle, then this readjustment of the scales will be one of the most important – and perhaps dangerous – tasks in international relations in the coming decades.
Nikolas Kristof, 1993
Over the past 40 years, China has transformed from an isolated nation into the world’s largest economy. In colloquial Chinese, this kind of change is referred to as, 麻雀变凤凰; “from sparrow to phoenix.” The World Bank described China’s economic trajectory as “the fastest sustained expansion by a major economy in history.” This economic transition has raised China’s prominence and influence in global relations. China’s dominance in the international sphere is not unique to the twentieth century. On the contrary, for most of recorded history, China has been far more developed, technologically sophisticated, prosperous, and civilized than the west. Only in the last half-millennia has Europe managed to pull ahead and dominate global economic and cultural spheres. For decades, the western perspective has been one that sees China’s backwardness as inevitable, its government and ideologies incongruous with market dominance. However, surges in economic growth and increased political and social influence indicate that China is regaining the global dominance it lost during the years of western industrialization. Throughout the 1990s, some academics warned that the international community was not granting adequate consideration to the implications of the rise of a powerful China. While the business community may have taken notice, it seemed as though political leaders were either preoccupied with other concerns, or skeptical of China’s ability to rise to the top. Furthermore, Western governments operated under the notion that China would seamlessly join and uphold the international world order dictated by the United States.
China’s accession to the World Trade Organization in 2001 was taken as preliminary evidence that China would open its economy and democratize its politics. However, much to the dismay of hegemonic powers, the Chinese government and economy have increased in dominance without full market liberalization. Xi Jinping’s administration, beginning in 2012, has made it clear to the world that the Chinese state will not decouple from its economy, rather continue to move forward with attention towards the nation’s legacy of socialism. Moreover, Xi’s rise to power has indicated China is charting its own path, one that seeks to reshape, alter, and redefine elements of the existing world order to better fit the nation’s values and interests. China does not want to play by the rules, it wants to make them. The world has caught on, and nations across the globe have turned their attention east. China now dominates global news. News stories across the globe warn China is emerging as a dangerous hegemon, one capable of challenging or overthrowing the United States’ postwar regime.
Fears of China’s rise are grounded in the contemporary realities of living in an interdependent world. While the world may seem polarized ideologically, it is increasingly connected structurally. Global networks of trade, telecommunications, and finance link international actors in unprecedented ways, and it is through those networks that certain nations may gain advantages, whether structural or relational, in the global economy. For most of recent history, globalization has offered the United States and Europe significant leverage over shaping the contours of the international political economy. The literature surrounding structural power, beginning with Susan Strange in the 1980s, attempts to explain how certain nations and actors gain influence in the international political economy due to their command of global institutions, networks, and systems. Political theories of interdependence emerging in the second half of the 20th century shed light on how relationships between nations, businesses, and institutions affect international relations, and how asymmetrical power relationships can be used both as a collaborative force and a tool of destruction. These two bodies of work shed light on the political, social, and economic forces that shape modern state power. Both literatures settle on the idea that the United States and other powerful countries have maintained their status as global hegemons due to their unique control over international finance, information networks, core technology, and the centrality these systems and technologies have in the current economy.
China knows well that centrality in the international political economy is more than market size or production capacity. The networks (both information and financial), core technologies, and major international institutions a nation exerts influence over are also determinative of a nation’s power, and some countries’ share of this power is greater than others. With this in mind, China is surging forward with new industrial plans to advance its position in the global hierarchy. Grand plans like Made in China 2025, which aims to turn the nation into a high-tech industrial superpower, and the Belt and Road Initiative, which expands Chinese physical and digital infrastructure throughout the east are tangible examples of Beijing’s ambitions. However, published state plans are not the only route towards success. China is also investing in technologies with high levels of interdependence.
My research focuses on two new areas of technological development, both with deep implications for China’s structural power and global interdependency networks: digital currency and satellites. China’s digital yuan, projected to launch as soon as this year, has the potential to undermine U.S. structural power in international finance by offering countries an alternative to U.S. and EU-dominated financial networks like the Society for Worldwide Interbank Financial Telecommunications. If accepted by the international community, the digital yuan could rise in status as the next international reserve currency, and grant raises China’s centrality in the international financial system. China’s BeiDou satellite system, which was declared fully operational this past summer, marks a significant achievement in China’s space program. The BeiDou system also serves important functions for both China’s military and throughout the Belt and Road Initiative. These case studies were chosen due to both technologies’ high levels of interdependence and cutting-edge nature, making them representative of China’s overall geostrategic aims.
The structure of this paper is as follows: I begin with a discussion of China’s economic trajectory, an outline of some of the most pressing challenges to Chinese growth, and China’s new industrial strategy. The conversation in Chapter 2 is then grounded in a lengthy literature review of interdependence and structural power. In addition to clarifying both fields, I also compare the two disciplines and determine areas of overlap. Chapter 3 is split into two case studies: the digital yuan and BeiDou satellite system and what they can reveal about China’s status in the global economy.