Nonhegemonic or Hegemonic Cooperation? Institutional Evolution of East Asian Financial Regionalism

Abstract

This article undertakes to identify the key features of institutional cooperation in East Asia to promote financial regionalism. The process employed by this study involves tracking the institutional evolution of East Asian financial cooperation, and empirically comparing and contrasting two cases to achieve this article’s purpose: the emergence and development of the Chiang Mai Initiative (CMI) and China’s recent initiative for the Asian Infrastructure Investment Bank (AIIB). The results demonstrate that CMI, which is widely regarded as one of the most robust institutional arrangements in East Asia, is institutionalized in the form of “nonhegemonic cooperation” by the ASEAN plus Three countries. “Nonhegemonic cooperation” refers to intestate institutional cooperation with the absence of a single actor (or state) that has veto power and is predominant in setting its agendas. This institutional development is contrary to the theoretical expectations of the mainstream IR literature, such as neorealism and neoliberal institutionalism. In contrast, however, the aim of China’s AIIB initiative appears to be the promotion of Chinacentered regional financial cooperation that diverges from CMI-style nonhegemonic cooperation. Will East Asian cooperation be institutionally headed toward a hegemonic form? Or, will CMI-style nonhegemonic cooperation survive China’s rise? The article concludes by examining the extant theories of institutional cooperation. Particular attention is paid to the question of whether the rational institutional design approach can account for hegemonic and nonhegemonic cooperation. Future research is also suggested.