East Asia’s power shift in the U.S. dollar system: nature and prospects

LI Xiao1 LI Junjiu1

(1.School of Economics, Jilin University)

【Abstract】Multi-dimensional considerations are needed when we analyze the status quo, nature, and prospects of the power shift in East Asia. This paper argues that although China’s rise has changed previous East Asian power structure to some extent, yet it has not caused a substantive power shift in the region. The current power shift is obviously chaotic: individual East Asian economies perhaps gain some relative advantages in some aspects during the rise, but none of them can attain decisive power advantages in all power structures, not to mention fundamentally overturning America’s power advantages in the region. Power shift in East Asia is in essence the enhancement of individual economies’ statuses in the U.S. dollar system. The formation and development of the U.S. dollar system, a too-big-to-fail “threat system” is crucial for maintaining America’s hegemony. For this reason, maintaining the U.S. dollar’s hegemony constitutes a core national interest for the United States. In practice, the U.S. has started its long-term power games with Japan and China when faced with the rapid rise of these two largest East Asian economies within the U.S. dollar system. There are two possible scenarios for the power shift in East Asia. One is power diffusion in the U.S. dollar system and the other is a fundamentally changed international power system resulting from the power shift from the U.S. to China. To achieve the second scenario, China needs to deal with two key problems, namely the country’s fragile status in the new “triangle trade” and the institutional constraints on its financial development. Moreover, another two important issues must be considered seriously by the country. The first is how to gradually escape from the constraints imposed by the U.S. dollar system and the resultant risks. The second is how to determine its own future between reemerging as a great power and becoming a new type of great power with global significance.

【Keywords】 U.S. dollar system; East Asia; power shift; power game; power diffusion;

【Funds】 China’s National Social Sciences Foundation’s Major Project Inviting Tenders (10&ZD054) Youth Foundation Project of the Ministry of Education of China for Humanities and Social Sciences Research (12YJCGJW005) Project of Jilin University for the Construction of Innovation Teams on Philosophy and Social Sciences (2012FRTD02) Funded by Jilin University Philosophy of the Social Sciences University-level major research base "Sino-Japanese Joint Center of Economic Research"

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ISSN:1006-9550

CN: 11-1343/F

Vol , No. 11, Pages 18-51+156

November 2014

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Article Outline

Abstract

  • 1 Introduction
  • 2 Status quo of East Asia’s power shift
  • 3 Nature of East Asia’s power shift: enhanced status and power game in the U.S. dollar system
  • 4 Prospects of power shift in East Asia