History Matters: China and Global Governance

Abstract

This paper focuses on the two-way relationship between China and the international economic system. China's embrace of the global institutions and their rules and norms helped guide its spectacular economic growth and integration into the world economy. China's impact on the global economic order is still an open question, however. Its sheer size and dynamism makes it a force to be reckoned with. So far its influence has been largely constructive but recent signs of assertiveness in the Asian region and at home coincident with the 2012 leadership transition raise questions about the future. History matters to the answer. Memories of historical pre-eminence and humiliation drive nationalism and assertiveness at the same time that China identifies with developing countries as a counterbalance rather than as a leader or enforcer of the global norms and rules. The paper evaluates China's role in the regional and global economic institutions by applying a basic criterion of economic cooperation: is China willing to modify national policies in recognition of international economic interdependence? In the global institutions China does the minimum whereas in the region it has cooperated in safeguarding regional economic stability. Participation in the IMF demonstrates the complexities of China's re-emergence. China pursues its own interests in managing the exchange rate regime and accumulating foreign reserves, seemingly with little regard for the external consequences, at the same time that it advocates reforms in the international monetary system.