the 14thmetu conference on international relations area studies and international relations:...
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The 14thMETU CONFERENCE ON INTERNATIONAL RELATIONS
AREA STUDIES AND INTERNATIONAL RELATIONS: INTERSECTING
DIMENSIONS17-19 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
USA: Trade Balance/GDP, 1950-2013
-6.0-5.5-5.0-4.5-4.0-3.5-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.0
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Major Interventionin Viet Nambegins
US war inViet Namends in defeat
Invasion ofAfghanistan
Invasionof Iraq
Globalcrisis
Rise of New Economic
Global Powers1 Military defeats of the US government
2 Capitalist transition in China
3 Unification of Germany
& introduction of the euro
Three Major Exporting Countriesbillions, 1990-2013
0
400
800
1200
1600
2000
2400
2800
3200
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013
USA
Germany
China
China+HK
Trade Balances, USA, Germany & China-Hong Kong,billions, 1990-2013
-800-700-600-500-400-300-200-100
0100200300400
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013
USA
Germany
China
China+HK
Foreign Investment Outflows, USA, Germany & China/Hong Kong, billions, 1990-2013
0
50
100
150
200
250
300
350
400
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013
USA
Germany
China
China+HK
Net Value of Mergers & Acquisitions of Corporate Assets, billions, 1990-2013
-250-225-200-175-150-125-100-75-50-25
0255075
199019911992199319941995199619971998199920002001
200220032004200520062007200820092010201120122013
USA (-618 bn)
Germany (-120 bn)
China (+53 bn)
China+HK (+122 bn)
Foreign Reserves including Gold, billions,1990-2013
0
500
1000
1500
2000
2500
3000
3500
4000
4500
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013
China
China+HK
USAGermany
Five Largest Receivers of Chinese non-financial 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]