China’s manufacturing dominance and the potential for weaponization of trade

The apparent success of China’s mercantilist economic policies is causing a crisis of confidence among market-orientated countries. China, it seems, has gamed the multilateral system to accrue national power and this influence is now leveraged to reorder global institutions in a fashion more suited to the country’s interests. As the world’s dependency on China in the economic sphere continues to grow, what is in store for the future of trade and globalization?

This paper by Research Fellow Stewart Paterson is the first in a series to examine the elements that drive the dynamics of trade dependency with the world’s second largest economy.

Organized into four parts, the essay begins with an examination of China’s economic rise in the past four decades and ascertains the degree of power the country has accrued through its economic success. Secondly, the paper briefly surveys this rise in a historic context, highlighting previous shifts in economic power that have impacted trade and its relationship with great power rivalry.

The third section looks at the reasons behind the existence of the current multilateral system and asks if those reasons remain valid. Finally, the conclusion poses: What are the chances of the current multilateral system surviving? How can the international community best prepare for its breakdown?

To read the full research from the Hinrich Foundation. please click here.