Analysing China’s economic interdependence and political relations with its neighbours

Abstract

This study examines the effects that economic interdependence has on political relations between China and its neighbours. Three economic liberal hypotheses are tested using data from the International Cooperation and Regional Conflicts dataset to measure dyadic political interaction along with economic data from the IMF and China Statistical Yearbooks and control variable data from Polity IV, COW CINC, among other sources. Though a significant amount of literature addresses the effects trade has on conflict at the systemic level, few studies address it at the dyadic level and even fewer test the pacification of trade on non-Western states. Examining economic, political, institutional, geographical, and political relations data from 1987 to 2001, this research tests the economic liberal hypothesis which posits that interdependence is associated with cooperative political relations between states. The findings show that trade interdependence is generally associated with political cooperation. However, the realist contention that relative power increases are associated with political conflict is also supported and analysed further.