Search on Ifri.org

About Ifri

Frequent searches

Suggestions

Power and Financial Interdependence

Papers
|
Date de publication
|
Image de couverture de la publication
couv_setser_us_page_1.png
Accroche

The link between financial self-reliance and geopolitical power has long been debated. The unbalanced Sino-American trade relationship has created asymmetric financial ties which generate potential sources of leverage for both parties and will not quickly disappear. Absent a clarifying major crisis, it will be difficult to definitively determine which party has greater leverage.

Image principale
© Pla2na/Shutterstock.com
© Pla2na/Shutterstock.com
Corps analyses

Many in the United States (US) are concerned about indebtedness to its primary strategic rival, and the risks posed by a sudden Chinese withdrawal from US financial markets. US policymakers actively sought to encourage China’s top leadership not to withdraw financing from the market for US Agency securities in the run-up to the global financial crisis.

Yet China also sees risks in this unbalanced financial relationship. Chinese policymakers have expressed concern about the domestic political consequences of losses on either their Treasury or Agency holdings and actively have sought to diversify China’s reserves – including by substituting the risk of lending to developing economies for the visibility associated with large holdings of Treasuries in US custodians. China increasingly worries that its dollar holdings and the dollar’s global role increase its vulnerability to potential financial sanctions.

Both parties thus worry about the possibility that financial interdependence can be weaponized yet find it hard to extricate themselves from the inevitability of financial interdependence absent a clean break from an entrenched pattern of trade imbalances.

 

This paper is also available in French: "Puissance et interdépendance financière"
 

Decoration

Available in:

Regions and themes

Thématiques analyses

ISBN / ISSN

979-10-373-0862-7

Share

Download the full analysis

This page contains only a summary of our work. If you would like to have access to all the information from our research on the subject, you can download the full version in PDF format.

Power and Financial Interdependence

Decoration
Author(s)
Image principale
digital globe
Geoeconomics and Geofinance Initiative
Accroche centre

Economic questions are approached from a political economy perspective: the evolution of the global economic system, governance and institutions, dynamics and trends of various economic zones (United States, Russia, China, emerging markets...). European issues are at the core of our research. 

Image principale

Multi-alignment and De-risking: The Global South Response to World Fragmentation

Date de publication
31 October 2024
Accroche

Turbulences and conflicts threaten the stability of the global order. What is the Global South’s response to these risks?

Image principale

Why Chinese Fintechs Have Failed to Reshuffle International Finance

Date de publication
04 March 2024
Accroche

New Chinese financial technologies, including unparalleled electronic payment systems, have so far failed to threaten U.S. financial dominance.

Image principale

Climate, Finance, and Geopolitics: Human Self-delusions and the Challenges for Europe

Date de publication
11 December 2023
Accroche

The combination of geopolitical tensions, climate disruption, and the growing role of finance in the economy is taking us into uncharted territory. Until recently, each of these subjects was handled separately, but they are now inextricably linked by two shared characteristics: the gravity of the threat, and the fact that they all lay bare the scale of human self-delusions.

Image principale

Impossible Decoupling, Improbable Cooperation: Economic Interdependencies in the Face of Power Rivalries

Date de publication
02 November 2023
Accroche

Export restrictions, economic and financial sanctions, politicization of monetary and financial choices, screening of inward and outward foreign direct investments, exceptional customs duties, and state interventions in sectors deemed strategic: the political vise is tightening around international economic and financial relations.

Page image credits
© Pla2na/Shutterstock.com

How can this study be cited?

Image de couverture de la publication
couv_setser_us_page_1.png
Power and Financial Interdependence, from Ifri by
Copy
Image de couverture de la publication
couv_setser_us_page_1.png

Power and Financial Interdependence