The Political Economy of the Sino-American Imbalance

This thesis explores the development of the Sino-American imbalance between the mid-1990s and 2007. Addressing this issue, most mainstream economists have mainly concerned themselves with whether it is a natural reflection of cross-country differences in underlying ‘market fundamentals’ or an outcome of ‘misguided’ state policies which require corrective policy actions. On the other hand, international political economists have focused on its implications for inter-state power relations: whether it is a reflection of the US’ lasting hegemonic power based on the unique status of the dollar or a symptom of the rise of China as a new centre of the global political economy. In distinction to these existing views, this thesis focuses on the fundamental social foundation of the Sino-American global imbalance with the help of an Open Marxist account of capitalist social relations, and interprets the phenomenon as a form of the contradictory process of capital accumulation mediated by states’ economic policies.

By analysing the social context of the contradictory rise of China as a surplus-running ‘factory of the world’ together with the contradictory rise of the US as a debt-ridden ‘consumption market of the world’ from the mid-1990s, this thesis lays out three arguments on the nature of the Sino-American imbalance. First, it is argued that what is called ‘misguided’ policies were employed by each state as a governing strategy securing reproduction of social relations in the face of an accumulation crisis, and thus the root cause of the imbalance was not the policies themselves but the crisis-tendency inherent in the capitalist mode of production. Second, this thesis argues that the imbalance was managed through de-facto international cooperation between the global centre of production (China) and the global centre of circulation (the US) which are mutually dependent in sustaining accumulation within their respective territories. Third, this thesis maintains that the cooperative relations conducive to sustaining growth in the form of a growing bilateral imbalance were fundamentally contradictory relations, helping productive forces in China maximize themselves without regard for the limited markets, and at the same time allowing credit in the US to expand regardless of the debtors’ ability to service the accumulated debts, thus amplifying the possibility of a crisis on the world market. Consequently, the Sino-American imbalance was a perverted form of international cooperation between China and the US for sustaining accumulation and securing reproduction of capitalist social relations.