Abstract
ABSTRACT This article analyses China's use of Bilateral Swap Lines (BSLs) as a form of ‘financial statecraft’ and its influence on the prevailing U.S.-led global financial order. The analysis covers the period from the 2008 global financial crisis to the 2020 COVID-19 pandemic crisis, focusing on specific instances of BSLs arrangements by Asian countries, such as South Korea, India, and ASEAN member states. The article suggests that China's monetary strategy, behind the extended institutionalisation of BSLs, is to elevate its ‘relational power’ within the USD-dominated ‘Bretton Woods II system,’ falling short of directly challenging it. Firstly, China is not yet ready to act as an international lender of last resort, as evidenced by its selectiveness in excluding certain countries with diplomatic issues from its extensive BSL agreements. Secondly, the practical utilisation of Chinese BSLs, demonstrated during the recent Covid-19 crisis, was not significant, rendering the Chinese renminbi BSLs more akin to a mere ‘placebo’ lender of last resort, providing nations with token insurance for hedging purposes.
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