The 14thMETU CONFERENCE ON INTERNATIONAL RELATIONS AREA STUDIES AND INTERNATIONAL RELATIONS: INTERSECTING DIMENSIONS June 2015 The New Bi-polar Global Economy, China and the United States John Weeks Professor Emeritus SOAS, University of London

Economic analysis in this presentation is explained in non-technical language in my new book, Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy Anthem Press 2014

Economic Basis for Global Power 1 Size of national economy 2 Trade/Current account surplus, basis for - foreign investment - international reserve currency 3 Foreign exchange reserves, basis for - currency stability - influence on/control of currency markets

Institutional basis for global power Control/dominance of international organizations that manage – 1 International short term and long term lending; (e.g., International Monetary Fund) 2 International finance regulators (Bank for International Settlements, Basel Committee on Banking Supervision, rating agencies) 3 International trade (World Trade Organization)

Review of Major Global Economic Institutions 1 International Monetary Fund - Keynes/White proposals & outcome - IMF & the Cold War - IMF in the age of financialization 2 World Trade Organization - the GATT - purpose of the WTO

Shrinking Economic Basis of US Global Power

USA: Trade Balance/GDP,

Rise of New Economic Global Powers 1 Military defeats of the US government 2 Capitalist transition in China 3 Unification of Germany & introduction of the euro

Three Major Exporting Countries billions,

Trade Balances, USA, Germany & China-Hong Kong, billions,

Foreign Investment Outflows, USA, Germany & China/Hong Kong, billions,

Net Value of Mergers & Acquisitions of Corporate Assets, billions,

Foreign Reserves including Gold, billions,

Five Largest Receivers of Chinese non- financial foreign investment, $140 bn – Hong Kong 2 $27 bn – Cayman Islands 3 $14 bn – British Virgin Islands 4 $7 bn – Australia 5 $6 bn – South Africa [First three are conduits and/or tax heavens.]

Change in Institutions of Global Economic Governance & Control 1 Transformation the Euro Zone into a German sphere of influence 2 Marginalization of the World Bank & ambiguous role of the IMF 3 Collapse of the WTO & sphere 0f influence trade blocs 4 Counter measures by the Chinese regime [Beijing-based AIIB, BRICS “Contingent Reserve Allocation” institution, 40% funded by Chinese government]

Conclusions 1 The German government has established itself as the regional power in Europe [“history never repeats itself but often it rhymes.” – attributed to Samuel Clements] 2 The US & Chinese regimes are competing for global economic & military dominance