1NC vs Currency

1
Economic engagement fuels structural contradictions of
capitalism in China- drive for accumulation fuels US-China
conflict
Hung, PhD, 15
(Ho-fung, associate professor of sociology at Johns Hopkins University Issue 19, Fall,
https://www.jacobinmag.com/2015/12/china-new-global-order-imperialism-
communist-party-globalization/)
Trump isnt the only one smitten with China. Hailed by the business press and
industry consultants, veteran hedge fund trader Ann Lees bestselling book What the
U.S. Can Learn From China: An Open-Minded Guide To Treating Our Greatest Competitor As Our Greatest
Teacher portrays China as a place where political elites care about the long-term
national interest, cherish meritocracy, and value education and a strong work ethic
unlike the partisan rancor and negligence of long-term economic development in
the US. The Chinese economic boom has also captured the imagination of
many on the Left , who view the country as capable of ending Western hegemony and
global neoliberalism. One such thinker is Martin Jacques former editor of Marxism Today (the official
periodical of the Communist Party of Great Britain) who wrote the bestselling book When China Rules the World:
Jacques claims that Chinas
The End of the Western World and the Birth of a New Global Order. In it,
economic miracle is eroding the long-term dominance of Western capitalist
countries and creating a new, more egalitarian global order. Jacquess book was
published in the aftermath of the 2008 financial crisis , when many investment bankers
were desperate to retain their equities-averse customers . Selling them exotic funds
tied to the China growth story became a profitable gamble , so it is not surprising that the
book received widespread acclaim in major financial newspapers and magazines. Indeed, during the Great
Recession there were plenty of commentaries celebrating Chinas heavy state
intervention as a superior alternative to the neoliberalism the US had pushed on the
developing world. But with the recent stock market crash, Chinas hyper-growth
machine has lost some of its luster , and the post-recession euphoria over a
distinct Chinese capitalism has started to seem positively quaint . The countrys
economic woes demonstrate that it is very much a part of the global
capitalist system that capital accumulation in China follows the same logic and
suffers from the same contradictions of capitalist development in other parts
of the world. To understand the recent booms and busts of Chinese capitalism, in
other words, we first have to understand capitals international trends and
cycles . The Workshop of the World Chinas economic boom of the past two decades is the
culmination of a political-economic solution that the US and other core
countries pursued in response to the economic crisis of the 1970s. Beginning in the
late 1960s, manufacturing profits in core countries declined significantly due to
competition from a rebuilt Europe and Japan and the demands of an increasingly militant labor force. In an
attempt to revive profitability, manufacturers in the core began offshoring and
outsourcing production to low-wage economies in East Asia first South Korea, Taiwan,
Hong Kong, and Singapore, followed by other Southeast Asian countries like Malaysia and Thailand. This
hemorrhaging of manufacturing jobs accelerated after the Reagan administration began to
aggressively promote global free trade. But the supply of rural, low-wage labor in these economies
was shallow. When Asian Tigers became middle-income or even high-income countries, they also became far less
Fortunately for Western capital, China was just starting
attractive as manufacturing platforms.
to implement a series of rural-oriented and domestic-consumption-driven market
reforms to revive its entrepreneurial peasantry and rural industries. The measures were a
response to the stalling of the Mao-era primitive accumulation, which relied on coercive collective farms to transfer
rural surpluses to the urban-industrial sector in order to facilitate rapid growth in heavy industries. Enacted when
Deng Xiaoping came to power in 1978, the reforms were successful in that they brought prosperity to the
countryside and reduced rural-urban inequality. But they also led to hyperinflation and a balance-of-payments crisis
at the national level in the late 1980s and early 1990s, which contributed to social upheaval and political crisis
between 1989 and 1992. This multi-dimensional crisis pushed the struggling Chinese Communist Party (CCP) to
make a drastic shift toward an export-oriented model of development through a massive one-off devaluation of
the yuan in 1994 and a series of reforms that precipitated rural economic decline and triggered a flood of rural
migrant labor into coastal export-processing zones. The most significant upshot of the CCPs policy change was that
China became firmly plugged into the global free trade order. It became the workshop of
the world, sucking in manufacturing jobs from abroad. Still, most export-oriented factories in China
have remained tightly controlled and exploited by transnational corporations (TNCs)
headquartered in the Global North. The value composition of an iPhone shown in the
accompanying table perfectly illustrates the subordinate relationship between Chinas
workshops and TNCs in core countries. Benefiting tremendously from moving
manufacturing to China, US capital persistently lobbied Washington to make sure

political differences between China and the US would not stand in the way
of further profit-making. Their efforts usually paid off: the Clinton administration
decided in 1994 not to make renewal of Chinas Most Favored Nations status
conditional on addressing human rights concerns , made that status permanent in 2000, and
welcomed China into the World Trade Organization in 2001. The wave of manufacturing outsourcing
to China, as well as the race to the bottom among developing economies desperate to attract manufacturing
capital from the Global North, helped TNCs rake in super profits which over the past two decades were funneled
into core countries swelling financial markets, fueling further demand for consumer goods from China. This led
to rapidly expanding manufacturing capacity in China and financial
bubbles and debt-driven consumption in the US and other core countries.
By the 2000s, with overproduction in China and debt-driven consumption in the US reinforcing each other, there
was talk of Chimerica or G-2 the foundation of a new global economic order. A Dead Cat Bounce Everyone
the bubble popped. The US economy gave out in 2008, and
knows how this story ended:
Chinas soon followed. Beijing engineered a strong rebound, however, opening the floodgates of state bank
lending to restore growth relatively quickly. The US, meanwhile, was stuck in the economic doldrums. This
juxtaposition robust recovery in China, persistent downturn in the US caused some to argue that China had
displaced the US as the sole engine of global capitalism. Some also concluded that the Chinese economy was not so
export-dependent after all despite the Global Norths sluggish export market, China resumed double-digit growth
in 20092010, mostly by relying on domestic investment. This contention is shortsighted. During the boom years,
Chinas exports, together with the influx of export-oriented manufacturing capital, accounted for a large part of the
growth of Chinas foreign exchange reserves (mostly in the form of US dollar assets). Without its expanding
reserves, Beijing would not have been able to increase money supply growth in the form of lax state bank lending.
As such, the robust export sector and the rising reserves it brought made a debt-financed investment spree possible
in China between roughly 2000 and 2008 without falling into the economic malaise that plagued many Southeast
Asian economies on the eve of the 199798 Asian financial crisis, when years of debt-fueled investment unmatched
by adequate growth in foreign exchange reserves crippled their currencies and unleashed capital flight. But the
Chinas weakening export engine and reckless investment
situation changed after 2008.
expansion during the 20092010 recovery created a gigantic debt bubble that was
no longer matched by a commensurate increase in foreign exchange reserves .
Between 2008 and early 2015, outstanding debt in China skyrocketed from 148 percent of GDP to 282 percent,
exceeding the level most other developing countries and the US. By 2014, Chinas foreign exchange had actually
started to shrink. The redundant construction and infrastructure projects apartments,
coalmines, steel mills, etc. resulting from the debt-fuelled economic rebound are
unprofitable and not likely to turn around anytime soon. Chinas ability to repay and service
the debt is also doubtful, putting the country in a difficult situation its export sector is still struggling, but it has
run out of room for growth through fixed asset investment, leading to a falling profit rate and serious excess
To make matters worse for the CCP, the escalation of peasant resistance and
capacity.
labor unrest since the 1990s has forced the party state to improve rural economic
conditions (hence curtailing flows of rural migrant labor to coastal export sectors) and labor conditions in
manufacturing. These concessions have increased wage levels, putting further pressure

on capitals profitability. All of this has led China to a typical overaccumulation

crisis, epitomized by the ghost towns and shuttered factories across the country .
The gravity of the slowdown can be seen in the movement of the manufacturing purchasing manager index (PMI)
a PMI higher than fifty signals industrial expansion, whereas a value lower than fifty shows contraction. After the
20092010 recovery, the index kept falling. It is currently fluctuating around the stagnation line of fifty a
This overaccumulation
significant departure from Chinas vigorous and continuous growth before 2008.
problem is the source of the recent stock market meltdown and the capital flight
that caused the sharp devaluation of the Chinese currency and accelerated the
evaporation of Chinas foreign exchange reserves . The Highest Stage of Capitalism
Overaccumulation crises are as old as capitalism itself. As Russian revolutionary
Vladimir Lenin explained long ago in his Imperialism, the Highest Stage of Capitalism, severe
overaccumulation within a national economy pushes capitalists to look overseas for
more profitable places to invest. Lenins theory of imperialism has been critiqued and qualified by many
later writers, but history has corroborated his assertions about the catalyzing role of overaccumulation crises.
Indeed, it was the reason why manufacturing capital from the core relocated to Asia and China in the first place.
Now China finds itself beset by overaccumulation and feels the urge to export
capital to more auspicious locations. This isnt a sudden development Chinas capital exports have
risen spectacularly since the early 2000s. Stock of Chinas outward foreign direct investment jumped from $28
billion in 2000 to $298 billion in 2012 (though it is still meager compared to smaller advanced capitalist economies
such as Singapore). State-owned corporations, mostly energy firms and infrastructure construction firms backed up
by mammoth foreign exchange reserves originating in the export sector, have been at the forefront of Chinese
investment in the Global South most notably in Africa and Southeast Asia. Chinese manufacturing has recently
started relocating to lower wage countries like Tanzania and Vietnam, as well. The drive to export surplus capital
also undergirds Chinas recent ambition to create a One Belt, One Road network of ports, railroads, and highways
But as Lenin warned, the drive to
linking China to Europe across Central Asia and the Indian Ocean.

export capital overseas, and the need to protect that capital, pushes states to project
their political, and sometimes military, power abroad , leading to
imperialist expansion and inter-imperial rivalry with other capital-
exporting countries. Beginning in the 1970s, the CCP adopted a docile
geopolitical position relative to the United States in exchange for space for
economic development and trade expansion . The CCP helped the US curb the rise of Vietnam as a
Soviet proxy in Asia by supporting Cambodias Khmer Rouge in the 1970s and going to war with Vietnam in 1979.
But as Chinas
China also refrained from escalating any territorial disputes it had with the USs Asian allies.

investment in, and trade with, Southeast Asia has risen, its affinity for the
geopolitical status quo has weakened . China has become increasingly
assertive over territories contested with its Asian neighbors. Meanwhile, the ruling
elite of many Asian countries, while profiting from closer economic ties with China,
have become wary of the countrys growing geopolitical leverage and are now
tightening their links to the US as an insurance policy. Take Myanmar. The countrys
military junta, which Beijing has supported ever since Western countries imposed sanctions following a 1988
political crackdown, has felt increasingly insecure about its reliance on Chinese investment. This insecurity, coupled
with popular discontent over Chinese mining projects, motivated the regime to seek normalization of relations with
the United States by promising political reform. Although the Myanmar government remains cozy with China as
demonstrated by the 2013 opening of a gas pipeline constructed by the China National Petroleum Corporation that
connects the Bay of Bengal to Chinas southwestern Yunnan province its relations with the United States have
warmed considerably. It was even invited to be an observer in a USThailand military drill in early 2013.
Myanmar is not alone. Singapore, Taiwan, South Korea, the Philippines, Vietnam,
and others have all strengthened their economic and political-military ties
with the US even as they benefit from economic integration with China. Asian
countries desire to maintain American influence in the region to counterbalance
China has created the conditions for the Obama administrations Pivot to Asia policy
aimed at containing Chinas geopolitical ambition . It also aided the administrations
push for a Trans-Pacific Partnership that increases the USs economic links with, and subordination of,
its former Cold War allies in Asia. Beijing has responded by more confidently flexing its
political and military muscle in the region. Chinas attempted push for its own free-
trade agreement with its Asian neighbors, its increasingly bold military incursions
into ocean territories claimed by other and monitored by US navies, a nd its open
competition with India to influence Sri Lankan politics are all part of this shifting geopolitical context. Just as

Chinas capital exports are not restricted to Asia, Chinas new ambition to
project its geopolitical power is not confined to Asia either . The
connection between the global expansion of Chinese capital and Chinas
desire to expand its military power overseas was laid out in the states
2013 National Defense White Paper , which for the first time explicitly stated
that protecting Chinas global interests was now a core mission of the Peoples
Liberation Army. With the gradual integration of Chinas economy into the world
economic system , overseas interests have become an integral component
of Chinas national interests. Security issues are increasingly prominent, involving overseas energy
and resources, strategic sea lines of communication, and Chinese nationals and legal persons overseas. Chinese
nationals have become the number one kidnapping target for terrorist and rebel groups in Africa, and Chinese
facilities are valuable targets of sabotage. But China is not yet ready for a US marinesstyle overseas troop
Beijing has turned to some of the most brutal international
deployment. Instead,
mercenaries to defend its interests in Africa. Among them is Frontier Services Group, a Hong Kong
based firm with close ties to Chinas biggest state-owned conglomerate and whose chairman is Erik Prince, the
founder and former CEO of the US security firm Blackwater. Heading to War? With a deepening
economic crisis, Chinas need to export capital, and hence to project its
political and military power globally, will continue to grow . Such ambitions
have and will put China on a crash course with the US , which has maintained a
unique global military umbrella since the end of the Cold War. The nascent
rivalry is reminiscent of past inter-imperial acrimony . When Germany was a
growing capitalist power a century ago, it justified its aggression toward the British-
dominated international status quo by citing old injustices . Whether the China-US
dispute will escalate into conflict approaching the scale of the World Wars ,
especially given the emergent China-Russia alliance, remains to be seen. But just as
the turn-of-the-century rivalry sparked fierce discussions within the international
communist movement, so too will the intensifying geopolitical competition between
US and China (and Russia ) foment debate about China in progressive circles
around the world. Overcoming the different variants of orientalist China
fantasies coming from both the Right and Left while addressing the
China question critically and holistically is a daunting task. But given the
stakes, its one the Left must be ready for.

Capitalism is a protection racketits the root cause of every

impact. Left unaddressed, itll cause extinctiononly a
revolution can solve
Robinson, PhD Sociology, 16
(William I, professor of sociology, global studies and Latin American studies at the University of California at Santa
Barbara http://www.truth-out.org/opinion/item/35596-sadistic-capitalism-six-urgent-matters-for-humanity-in-global-
crisis)

In these mean streets of globalized capitalism in crisis, it has become profitable to turn
poverty and inequality into a tourist attraction . The South African Emoya Luxury Hotel and Spa
company has made a glamorized spectacle of it. The resort recently advertised an opportunity for tourists to stay
"in our unique Shanty Town ... and experience traditional township living within a safe private game reserve
environment." A cluster of simulated shanties outside of Bloemfontein that the company has constructed "is ideal
for team building, braais, bachelors [parties], theme parties and an experience of a lifetime," read the ad. The
luxury accommodations, made to appear from the outside as shacks, featured paraffin lamps, candles, a battery-
operated radio, an outside toilet, a drum and fireplace for cooking, as well as under-floor heating, air conditioning
and wireless internet access. A well-dressed, young white couple is pictured embracing in a field with the
corrugated tin shanties in the background. The only thing missing in this fantasy world of sanitized space and
glamorized poverty was the people themselves living in poverty. Escalating inequalities fuel capitalism's chronic
The "luxury shanty town" in South Africa is a fitting metaphor
problem of over-accumulation.

for global capitalism as a whole. Faced with a stagnant global economy, elites
have managed to turn war, structural violence and inequality into
opportunities for capital, pleasure and entertainment . It is hard not to
conclude that unchecked capitalism has become what I term "sadistic capitalism,"
in which the suffering and deprivation generated by capitalism become a source of
aesthetic pleasure, leisure and entertainment for others. I recently had the opportunity to
travel through several countries in Latin America, the Middle East, North Africa, East Asia and
throughout North America. I was on sabbatical to research what the global crisis looks like on the ground around the
world. Everywhere I went, social polarization and political tensions have reached
explosive dimensions. Where is the crisis headed, what are the possible outcomes and what does it
tell us about global capitalism and resistance? This crisis is not like earlier structural crises of world
capitalism, such as in the 1930s or 1970s. This one is fast becoming systemic. The crisis of humanity
shares aspects of earlier structural crises of world capitalism, but there are six novel, interrelated
dimensions to the current moment that I highlight here, in broad strokes, as the "big picture" context in which
 The level of
countries and peoples around the world are experiencing a descent into chaos and uncertainty. 1)
global social polarization and inequality is unprecedented in the face of out-of-control, over-
accumulated capital. In January 2016, the development agency Oxfam published a follow-up to its report on global
62 billionaires --
inequality that had been released the previous year. According to the new report, now just
down from 80 identified by the agency in its January 2015 report -- control as much wealth as one half
of the world's population, and the top 1% owns more wealth than the other 99%
combined. Beyond the transnational capitalist class and the upper echelons of the global power bloc, the richest
20 percent of humanity owns some 95 percent of the world's wealth, while the bottom 80 percent has to make do
This 20-80 divide of global society into haves and the have-nots is the
with just 5 percent.
new global social apartheid. It is evident not just between rich and poor countries, but within each
country, North and South, with the rise of new affluent high-consumption sectors alongside the downward mobility,
Escalating inequalities fuel capitalism's
"precariatization," destabilization and expulsion of majorities.
chronic problem of over-accumulation: The transnational capitalist class cannot find productive
outlets to unload the enormous amounts of surplus it has accumulated , leading to stagnation in the
world economy. The signs of an impending depression are everywhere. The front page of
the February 20 issue of The Economist read, "The World Economy: Out of Ammo?" Extreme levels of social
polarization present a challenge to dominant groups . They strive to purchase the
loyalty of that 20 percent, while at the same time dividing the 80 percent, co-opting
some into a hegemonic bloc and repressing the rest. Alongside the spread of
frightening new systems of social control and repression is heightened
dissemination through the culture industries and corporate marketing
strategies that depoliticize through consumerist fantasies and the
manipulation of desire . As "Trumpism" in the United States so well illustrates, another
strategy of co-optation is the manipulation of fear and insecurity among the downwardly
mobile so that social anxiety is channeled toward scapegoated communities. This
psychosocial mechanism of displacing mass anxieties is not new, but it appears to
be increasing around the world in the face of the structural
destabilization of capitalist globalization. Scapegoated communities are under siege, such
as the Rohingya in Myanmar, the Muslim minority in India, the Kurds in Turkey, southern African immigrants in South
21st
Africa, and Syrian and Iraqi refugees and other immigrants in Europe. As with its 20th century predecessor,
century fascism hinges on such manipulation of social anxiety at a time of acute
capitalist crisis. Extreme inequality requires extreme violence and repression
that lend to projects of 21st century fascism. 2) The system is fast reaching the
ecological limits to its reproduction. We have reached several tipping points in what
environmental scientists refer to as nine crucial "planetary boundaries. " We have already
exceeded these boundaries in three areas -- climate change, the nitrogen cycle and diversity loss. There have been
for the first time
five previous mass extinctions in earth's history. While all these were due to natural causes,
ever, human conduct is intersecting with and fundamentally altering the earth
system. We have entered what Paul Crutzen, the Dutch environmental scientist and Nobel Prize winner, termed
the Anthropocene -- a new age in which humans have transformed up to half of the world's surface. We are
altering the composition of the atmosphere and acidifying the oceans at a rate that
undermines the conditions for life. The ecological dimensions of global crisis cannot
be understated. "We are deciding, without quite meaning to, which evolutionary pathways will remain open
and which will forever be closed," observes Elizabeth Kolbert in her best seller, The Sixth Extinction. "No other
creature has ever managed this ... The Sixth Extinction will continue to determine the course of life long after
everything people have written and painted and built has been ground into dust." Capitalism cannot be held solely
responsible. The human-nature contradiction has deep roots in civilization itself. The ancient Sumerian empires, for
example, collapsed after the population over-salinated their crop soil. The Mayan city-state network collapsed about
AD 900 due to deforestation. And the former Soviet Union wrecked havoc on the environment. However, given
capital's implacable impulse to accumulate profit and its accelerated
commodification of nature, it is difficult to imagine that the
environmental catastrophe can be resolved within the capitalist system .
"Green capitalism" appears as an oxymoron, as sadistic capitalism's attempt to turn

the ecological crisis into a profit-making opportunity , along with the conversion
of poverty into a tourist attraction. 3) The sheer magnitude of the means of
violence is unprecedented , as is the concentrated control over the means of
global communications and the production and circulation of knowledge, symbols
and images. We have seen the spread of frightening new systems of social control
and repression that have brought us into the panoptical surveillance society and the
age of thought control. This real-life Orwellian world is in a sense more perturbing than that described by
George Orwell in his iconic novel 1984. In that fictional world, people were compelled to give their obedience to the
state ("Big Brother") in exchange for a quiet existence with guarantees of employment, housing and other social
necessities. Now, however, the corporate and political powers that be force obedience even as the means of
survival are denied to the vast majority. Global apartheid involves the creation of "green zones" that are cordoned
off in each locale around the world where elites are insulated through new systems of spatial reorganization, social
control and policing. "Green zone" refers to the nearly impenetrable area in central Baghdad that US occupation
forces established in the wake of the 2003 invasion of Iraq. The command center of the occupation and select Iraqi
elite inside that green zone were protected from the violence and chaos that engulfed the country. Urban areas
around the world are now green zoned through gentrification, gated communities, surveillance systems, and state
and private violence. Inside the world's green zones, privileged strata avail themselves of privatized social services,
consumption and entertainment. They can work and communicate through internet and satellite sealed off under
the protection of armies of soldiers, police and private security forces. Green zoning takes on distinct forms in each
locality. In Palestine, I witnessed such zoning in the form of Israeli military checkpoints, Jewish settler-only roads and
the apartheid wall. In Mexico City, the most exclusive residential areas in the upscale Santa Fe District are
accessible only by helicopter and private gated roads. In Johannesburg, a surreal drive through the exclusive
Sandton City area reveals rows of mansions that appear as military compounds, with private armed towers and
electrical and barbed-wire fences. In Cairo, I toured satellite cities ringing the impoverished center and inner
suburbs where the country's elite could live out their aspirations and fantasies. They sport gated residential
complexes with spotless green lawns, private leisure and shopping centers and English-language international
schools under the protection of military checkpoints and private security police. In other cities, green zoning is
subtler but no less effective. In Los Angeles, where I live, the freeway system now has an express lane reserved for
those that can pay an exorbitant toll. On this lane, the privileged speed by, while the rest remain one lane over,
stuck in the city's notorious bumper-to-bumper traffic -- or even worse, in notoriously underfunded and
underdeveloped public transportation, where it may take half a day to get to and from work. There is no barrier
separating this express lane from the others. However, a near-invisible closed surveillance system monitors every
movement. If a vehicle without authorization shifts into the exclusive lane, it is instantly recorded by this
surveillance system and a heavy fine is imposed on the driver, under threat of impoundment, while freeway police
warfare and police containment have
patrols are ubiquitous. Outside of the global green zones,
become normalized and sanitized for those not directly at the receiving end of
armed aggression. "Militainment" -- portraying and even glamorizing war and
violence as entertaining spectacles through Hollywood films and television police shows, computer
games and corporate "news" channels -- may be the epitome of sadistic capitalism. It
desensitizes, bringing about complacency and indifference. In between the green
zones and outright warfare are prison industrial complexes, immigrant and refugee
repression and control systems, the criminalization of outcast communities and
capitalist schooling. The omnipresent media and cultural apparatuses of the
corporate economy, in particular, aim to colonize the mind -- to undermine the
ability to think critically and outside the dominant worldview . A neofascist
culture emerges through militarism, extreme masculinization, racism and racist
mobilizations against scapegoats. 4) We are reaching limits to the extensive
expansion of capitalism. Capitalism is like riding a bicycle: When you stop pedaling
the bicycle, you fall over. If the capitalist system stops expanding outward, it
enters crisis and faces collapse. In each earlier structural crisis, the system
went through a new round of extensive expansion -- from waves of colonial conquest in earlier
centuries, to the integration in the late 20th and early 21st centuries of the former socialist countries, China, India
and other areas that had been marginally outside the system. There are no longer any new
territories to integrate into world capitalism. Meanwhile, the privatization of education,
health care, utilities, basic services and public land are turning those spaces in global society that were outside of
capital's control into "spaces of capital." Even poverty has been turned into a commodity. What is there left to
commodify? Where can the system now expand? With the limits to expansion comes a turn
toward militarized accumulation -- making wars of endless destruction
and reconstruction and expanding the militarization of social and political
institutions so as to continue to generate new opportunities for
accumulation in the face of stagnation. 5) There is the rise of a vast surplus
population inhabiting a "planet of slums," alienated from the productive economy,
thrown into the margins and subject to these sophisticated systems of social
control and destruction . Global capitalism has no direct use for surplus humanity. But indirectly, it
holds wages down everywhere and makes new systems of 21st century slavery
possible. These systems include prison labor, the forced recruitment of miners at gunpoint by warlords
contracted by global corporations to dig up valuable minerals in the Congo, sweatshops and exploited immigrant
communities (including the rising tide of immigrant female caregivers for affluent populations). Furthermore, the
global working class is experiencing accelerated "precariatization." The "new precariat" refers to the proletariat that
faces capital under today's unstable and precarious labor relations -- informalization, casualization, part-time, temp,
immigrant and contract labor. As communities are uprooted everywhere, there is a rising reserve army of immigrant
labor. The global working class is becoming divided into citizen and immigrant workers. The latter are particularly
attractive to transnational capital, as the lack of citizenship rights makes them particularly vulnerable, and
therefore, exploitable. The challenge for dominant groups is how to contain the real and potential rebellion of
surplus humanity, the immigrant workforce and the precariat. How can they contain the explosive contradictions of
this system? The 21st century megacities become the battlegrounds between mass
resistance movements and the new systems of mass repression. Some populations
in these cities (and also in abandoned countryside ) are at risk of genocide , such as those in Gaza,
zones in Somalia and Congo, and swaths of Iraq and Syria. 6) There is a disjuncture between a
globalizing economy and a nation-state-based system of political authority .
Transnational state apparatuses are incipient and do not wield enough power and
authority to organize and stabilize the system, much less to impose regulations on
runaway transnational capital. In the wake of the 2008 financial collapse, for instance, the governments
of the G-8 and G-20 were unable to impose transnational regulation on the global financial system, despite a series
Elites historically have attempted to resolve
of emergency summits to discuss such regulation.
the problems of over-accumulation by state policies that can regulate the anarchy of
the market. However, in recent decades, transnational capital has broken free from
the constraints imposed by the nation-state. The more "enlightened" elite representatives of the
transnational capitalist class are now clamoring for transnational mechanisms of regulation that would allow the
global ruling class to reign in the anarchy of the system in the interests of saving global capitalism from itself and
from radical challenges from below. At the same time, the division of the world into some 200 competing nation-
states is not the most propitious of circumstances for the global working class. Victories in popular struggles from
below in any one country or region can (and often do) become diverted and even undone by the structural power of
transnational capital and the direct political and military domination that this structural power affords the dominant
groups. In Greece, for instance, the leftist Syriza party came to power in 2015 on the heels of militant worker
struggles and a mass uprising. But the party abandoned its radical program as a result of the enormous pressure
exerted on it from the European Central Bank and private international creditors. The Systemic Critique of Global
Capitalism A growing number of transnational elites themselves now
recognize that any resolution to the global crisis must involve
redistribution downward of income. However, in the viewpoint of those from
below, a neo-Keynesian redistribution within the prevailing corporate power
structure is not enough. What is required is a redistribution of power downward and
transformation toward a system in which social need trumps private profit . A
global rebellion against the transnational capitalist class has spread
since the financial collapse of 2008 . Wherever one looks, there is popular,
grassroots and leftist struggle, and the rise of new cultures of resistance : the Arab
Spring ; the resurgence of leftist politics in Greece, Spain and elsewhere in Europe;
the tenacious resistance of Mexican social movements following the
Ayotzinapa massacre of 2014; the favela uprising in Brazil against the
government's World Cup and Olympic expulsion policies; the student strikes in Chile; the remarkable
surge in the Chinese workers' movement; the shack dwellers and other poor people's campaigns in South Africa;
Occupy Wall Street, the immigrant rights movement, Black Lives Matter,
fast food workers' struggle and the mobilization around the Bernie Sanders presidential campaign in the United
States. This global revolt is spread unevenly and faces many challenges. A number of these
struggles, moreover, have suffered setbacks, such as the Greek working-class movement and, tragically, the Arab
Spring. What type of a transformation is viable, and how do we achieve it ? How we interpret the
global crisis is itself a matter of vital importance as politics polarize
worldwide between a neofascist and a popular response. The systemic critique of
global capitalism must strive to influence, from this vantage point, the discourse
and practice of movements for a more just distribution of wealth and
power. Our survival may depend on it.

The 1AC frames engagement as cooperation between nations-

this depoliticizes the class interests that design and benefit
from engagement. Instead we should engage Chinese workers
against capitalism
Hart-Landsberg, PhD, 10
(Martin, Professor Emeritus of Economics at Lewis and Clark College, The U.S.
Economy and China: Capitalism, Class, and Crisis, Volume 61, Issue 09 (February)
http://monthlyreview.org/2010/02/01/the-u-s-economy-and-china-capitalism-class-
and-crisis/)
 Those who argue that U.S. problems owe much to Chinas
The Nation-State Argument
growth strategy tend to reason as follows: Chinese state policies have transformed
China into an export powerhouse, with the U.S. market its main target . Initially, Chinese
exports were predominately labor intensive, low-technology products, such as textiles and shoes. However,
beginning in the mid-1990s, China also became a major exporter of higher valued added, high-technology products,
such as computers, cell phones, and other consumer electronics. As BusinessWeek points out, this is far from a
normal development: America has survived import waves before, from Japan, South Korea, and Mexico. And it has
lived with China for two decades. But something very different is happening. The assumption has long been that the
US and other industrialized nations will keep leading in knowledge-intensive industries while developing nations
focus on lower-skill sectors. Thats now open to debate. What is stunning about China is that for the first time we
have a huge, poor country that can compete both with very low wages and in high tech, says Harvard University
economist Richard B. Freeman. Combine the two, and America has a problem.1 This one-two punch is said to
have devastated the U.S. manufacturing sector, driving firms out of business and undermining both manufacturing
employment and wages. Families were forced into greater and greater debt to sustain consumption. And, as a
growing share of consumer spending went to the purchase of goods produced in China (and other countries),
government efforts to boost employment and production became increasingly ineffective. Financing the resulting
trade deficit also required ever greater foreign borrowing, especially from China, which helped accelerate the
financialization of the economy and put additional limits on U.S. fiscal and monetary policy. Taken together, these
trends contributed to a weaker, more unbalanced and unstable growth process, laying the groundwork for the
Logically, then, reversal of these trends is key to the revitalization of the
current crisis.

U.S. economy, an outcome best achieved through a restructuring of the U.S.-

China economic relationship. More specifically, China must be pressed to revalue its
currency, open its markets wider to U.S. goods, and play by the accepted
rules of market-based capitalist competition . These steps can be expected to boost
U.S. exports to China, reduce U.S. imports from China, and, as a consequence, renew U.S. manufacturing, boost
This
family-wage job creation, reduce domestic and foreign debt, and restore national policy effectiveness.

argument promotes the view, intentionally or not, that our task is to strengthen
capitalist market forces in China . As we see next, this view rests on a poor
understanding of the forces at work in China (not to mention capitalist
dynamics ) and the consequences of those forces for U.S . (and Chinese) workers. Chinas
Adoption of an Export-Driven Growth Strategy China has indeed become an export powerhouse. Between 1990 and
2008, Chinas share of total world exports rose from 1.8 percent to 9.1 percent.2 China is on pace to become the
worlds biggest exporter in 2009, overtaking Germany. This export orientation represents a major change from past
Chinese growth dynamics. China under Mao Zedong (1949-1976) had a highly centralized planned economy, in
which production was organized by state-owned firms and directed at meeting domestic needs. Exports were few
and undertaken primarily to pay for necessary imports. During this period, China achieved both rapid growth and
industrialization. As Maurice Meisner explains, Starting with an industrial base smaller than that of Belgiums in the
early 1950sChina emerged at the end of the Mao period as one of the six largest industrial producers in the
world.3 Moreover, because it was isolated from international trade and investment for most of the Mao era, China
was forced to (and did) develop its own technological capabilities. Looking at the computer sector, for example,
Andrew Ross notes that: In the 1950s, the new communist state established a science and technology R&D
network, modeled after the Soviet system, and its electronics arm went on to produce several generations of
computers, in many cases with little or no gap behind the capitalist powers. Chinas first computer was developed
in 1958, only one year after Japans and its first integrated circuit was produced in 1964, only five years behind the
first US patent. A microcomputer was developed by 1977 (even before IBM unveiled its PC), a microprocessor by
1980, and a supercomputer, along with an IBM-compatible PC, by 1983.4 Shortly after Mao died, the Communist
Party (led by Deng Xiaoping) decided to radically increase the economys reliance on market forces. It claimed that
such a step was necessary to overcome the countrys growing economic problems, which were alleged to have
been caused by Maos overly centralized system of state planning and production. However, although political and
economic changes were definitely desired by the majority of Chinese, Deng and his followers greatly overstated the
severity of existing problems and, more importantly, ignored popular calls for an exploration of other, non-market
reform responses.5 Regardless of intentions, the Partys post-1978 reform program ended up
dramatically transforming the Chinese economy into a capitalist one (although with
Chinese characteristics). In contrast to the pre-reform period, almost all economic activity is now
market determined. And, while the state continues to dominate in many strategic sectors, such as finance,
energy, and transportation, the great majority of value added in the all-important manufacturing sector is now
produced by profit-seeking, private firms.6 Most importantly, foreign capital now plays a leading role in the Chinese
economy, especially in manufacturing.7 Its activity has transformed China into an export-driven economy: the ratio
of exports to GDP climbed from 16 percent in 1990 to over 40 percent in 2006, with the share of foreign produced
exports growing from 2 percent in 1985 to 58 percent in 2005 (and 88 percent for high-tech exports).8 Equally
noteworthy, the share of total exports being produced by 100 percent foreign-owned firms has also soared.9
This restructuring cannot be understood simply through a nation-state
lens . Rather, as Chinas reforms proceeded over the 1990s, Chinese accumulation dynamics
became increasingly dependent on transnational corporate investment and export
activity. As a consequence, the Chinese economy became more and more enmeshed in a
broader process of East Asian restructuringone that was driven by the
establishment and intensification of transnational, corporate controlled, cross-
border production networks, which linked and collectively reshaped all the
economies involved. In other words, the Chinese experience , and in particular, its export drive,
can only be understood in the context of broader capitalist dynamics . China
and the Dynamics of Transnational Restructuring The expansion of cross-border networks was largely driven by the
desire of transnational corporations to cheapen the production cost of goods classified as machinery and
transportation equipment, most importantly information and communication technology (ICT) products (such as
computers and office machines, and telecom, audio, and video equipment) and electrical goods.10 These two
product lines together accounted for nearly three fourths of total exports from the [East Asian] region in 2006-
2007.11 In accord with the logic of these networks, a growing percentage of the regions ever greater trade
activity became limited to the intraregional exporting/importing of the parts and components used to produce these
products. As the Asian Development Bank points out, Disaggregating manufacturing trade into final products on
the one hand and parts and components on the other shows[that] intraregional trade in Asia is mainly
concentrated in parts and components. The intraregional share of developing Asias parts and component trade
rose by almost 20 percentage points over the past decade, reaching 62% in 2005-2006, as compared to an 8
percentage point increase in total trade in manufacturing over the same period.12 China was not only pulled into
this process of regional restructuring, it has become central to its functioning. In the words of the Asian
Development Bank, the increasing importance of intra-regional trade is attributed mainly to the parts and
components trade, with the PRC [Peoples Republic of China] functioning as an assembly hub for final products in
Asian production networks.13 The share of parts and components in Chinas imports of manufactures from East
Asia rose from 18 percent in 1994-1995 to over 44 percent in 2006-2007. The import share of parts and
components in the machinery and transportation equipment category soared over that same period from 46.1
percent to 73.3 percent.14 Chinas unique position as the regions production platform for final goods is highlighted
by the fact that it is the only country that runs a deficit in regional parts and components trade, and whose exports
are overwhelmingly final products. It is this unique position that has enabled China to increase its share of world
exports of ICT products from 3 percent in 1992 to 24 percent 2006, and its share of electrical goods from 4 percent
to 21 percent over the same period.15 The U.S.-China Bilateral Trade Relationship The transnational production
dynamics highlighted above led East Asian countries (other than China) to shift their overall export activity away
from the United States and the European Union and towards East Asia, in particular, China. At the same time, they
led China to expand and redirect its export activity away from East Asia and toward the United States and the
European Union. Between 1992-1993 and 2004-2005, the East Asian share of Chinas exports of final goods fell
from 49.5 percent to 26.5 percent, while the OECD share (excluding Japan and South Korea) increased from 29.3
percent to 50.1 percent.16 Not surprisingly, then, the value of U.S. imports from China has soared, from $16 billion
In 2003, China became the second largest exporter to the
in 1990 to $340 billion in 2007.
United States, trailing only Canada. The position of these two countries has fluctuated since, with China
becoming the largest exporter in 2007 and then again in 2009. U .S. exports to China have also grown,
but far more slowly: from $5 billion in 1990 to $65 billion in 2007. As a consequence, the U.S. trade deficit
with China has grown dramatically: from $11 billion in 1990 to $274 billion in 2007. This is the largest deficit that
the United States holds with any country.17 While the overwhelming majority of U.S. imports from China have long
been manufactures (approximately 96 percent), their composition (as previously noted) has changed over time. The
share of miscellaneous manufactures, such as toys, clothes, and footwear, fell from 58.5 percent in 1995-1996 to
37.7 percent in 2005-2006.18 Over the same period, the import share of machinery and transportation equipment
products rose from 26.3 percent to 44.1 percent. Within this broad category, ICT products dominate. In 2005-2006,
ICT products made up 37.6 percent of all U.S. manufactured imports from China.19 Not only are Chinese imports to
the United States becoming increasingly sophisticated, China is also increasingly the main foreign supplier of such
products. For example, in 1995-1996, China accounted for only 6.5 percent of total U.S. ICT imports. In 2005-6,
China accounted for 33 percent of the total.20 These trends highlight the reason that Chinese
exports have received so much attention in the U nited States. They also reveal, in concert
with the previous analysis of East Asias transnational accumulation dynamics, that these sophisticated
Chinese exports are really Chinese only in the sense that they were assembled in
China. This point is reinforced by the fact that Chinas increased share of the U.S.
deficit was matched by a decline in the share accounted for by the rest of East Asia.
From 1999 to 2007, Chinas share of the total U.S. trade deficit rose from 20.4 percent to 32.1 percent. Over the
same period, Japans share fell from 21.1 percent to 10.2 percent. And the combined share of the rest of East Asia
also fell, from 16 percent to 7.9 percent.21 In short, the threat to U.S.-based manufacturing
activity comes not from China, but from the profit maximizing strategy of
transnational capital. While East Asian corporations have played the leading role in shaping and
expanding the regions transnational production networks, U.S. companies have also benefited from, and helped to
Some of the biggest beneficiaries are those U.S. firms that import
expand, their operation.
and then market the products exported from China ; Wal-Mart and Dell are among the biggest in
terms of the dollar value of imports. U.S.-based manufacturing firms that produce machinery and transport
equipment also participate in these networks. For example, the share of parts and components in U.S. machinery
and transportation equipment exports to China grew from 36.1 percent in 1995-1996 to 50.8 percent in 2005-2006.
Over the same period, the share of parts and components in machinery and transportation equipment imports from
China actually fell slightly, from 25 percent to 24.2 percent. The same trend exists for ICT products. Parts and
components, as a share of U.S. exports of ICT products to China, rose from 51.2 percent to 72.8 percent. Parts and
components, as a share of imports in this category, fell slightly, from 23.5 percent to 20.7 percent.22 Thus, rather
than producing final goods in the United States, U.S.-based manufacturers are increasingly dedicated to supplying
the parts and components that China-based producers need to produce those final goods. Prema-chandra
Athukorala and Nobuaki Yamashita describe the nuances of this strategy as follows: [T]he share of parts and
components in U.S. [ICT] exports to other East Asian economies, in particular, ASEAN countries, is much higher
compared with that of exports to China. This pattern is consistent with case study-based findings that U.S. firms
located in East Asian countries and regions undertake further processing and assembly of parts and components
originally designed and produced in the USA as part of their engagement in China-centered regional production
networks.23 A Critical Assessment of the Chinese Economic Experience Most analysts assert that
Chinese working people have gained from their countrys pivotal role as the regions
export platform; they tend to equate Chinas export accomplishments with progress toward national
development. However, a more direct examination of how Chinese economic policies and
restructuring have affected the lives of Chinese workers and the countrys technological capacities points to a
different answer. Social Conditions Perhaps most noteworthy is that the countrys rapid export-led
growth has failed to generate adequate employment opportunities. According to the
International Labor Organization (ILO), total urban (regular) manufacturing employment actually declined over the
Chinese manufacturing workers, like
period 1990-2002, from 53.9 million to 37.3 million.24 Thus,
their U.S. counterparts, have suffered from declining employment opportunities.
Although there was a small increase in total urban employment over this period, almost all the growth was in
irregular employment, meaning casual-wage or self-employmenttypically in construction, cleaning and
maintenance of premises, retail trade, street vending, repair services, or domestic services. More specifically, while
total urban employment over this thirteen-year period grew by 81.7 million, 80 million of that growth was in
irregular employment. As a result, irregular workers in China now comprise the largest single urban employment
category.25 While the reform process has taken an especially heavy toll on state workers, private-sector
most of the new jobs are
employmentespecially at firms producing for exporthas grown. Unfortunately,
low paid with poor working conditions . Even after doubling between 2002-2005, the average
manufacturing wage in China was only 60 U.S. cents an hour, compared with $2.46 an hour in Mexico.26 A report
on labor practices in China by Verite Inc., a U.S. company that advises transnational corporations on responsible
business practices, found that systemic problems in payment practices in Chinese export factories consistently rob
workers of at least 15 percent of their pay.27 Workplace safety is an even greater problem .28
Above all, Chinese labor policies have been designed to attract foreign investment and boost the export
competitiveness of firms operating in China. Their success is illustrated by wage and consumption trends. Chinese
wages as a share of GDP have fallen from approximately 53 percent of GDP in 1992 to less than 40 percent in 2006.
Private consumption as a percent of GDP has also declined, falling from approximately 47 percent to 36 percent
over the same period. By comparison, private consumption, as a share of GDP, is over 50 percent in Britain,
Australia, Italy, Germany, India, Japan, France, and South Korea; it is over 70 percent in the United States.29 As The
although the share of income going to working people has
Economist magazine explains,
fallen in many countries over the past decades, nowhere has the drop been as
huge as in China.30 One of the keys to this success has been Chinese state
policies towards internal migrants, who comprise approximately 70 percent of the manufacturing
workforce and 80 percent of the construction workforce. Over the last twenty-five years, some 150-200 million
Chinese have moved from the countryside to urban areas in search of employment. Although the great majority
moved legally, they suffer enormous discrimination. For example, because they remain classified as rural residents
under the Chinese registration system, they must not only pay steep fees to register as temporary urban residents,
but they also have no rights to the public services available to urban-born residents (including free or subsidized
education, health care, housing, and pensions). The same is true for their children, even if they are born in an urban
legal distinctions make it easy for companies to exploit their
area.31 These and other
workers. Conditions at Foxconn, a large Taiwanese-owned subcontractor for firms such as Apple and Dell, are
representative. Foxconns assembly line workers in Shenzhen (a major manufacturing center in south China) earn
approximately $32 for a 60-hour workweek (along with company-provided dormitory housing and meals). Apple-
hired investigators of a Foxconn plant that builds iPods found that mangers routinely used corporal punishment to
discipline workers, and that workers labored more than six consecutive days 25 percent of the time, despite the
fact that Chinese law requires at least one day off each week.32 Angered by steadily deteriorating living and
working conditions (including the market reform-driven dismantling of national health, housing, and retirement
protections), growing numbers of people (in both urban and rural areas) have demonstrated a willingness to
confront their employers and governing officials in defense of their rights. The number of large-scale public order
disturbances has increased from 58,000 in 2003 to 74,000 in 2004, 94,000 in 2006, 120,000 in 2008, and to
58,000 in the first quarter of 2009 (on pace for a record of 230,000 by the end of 2009).33 Particularly worrisome to
the Communist Party leadership is the changing nature of labor actions: workers are increasingly taking direct
action, engaging in regional and industry-wide protests, and broadening their demands.34 With repression alone
unable to stem the rising tide of protest, the Communist Party has tried introducing a number of reform policies
designed to ameliorate the worst excesses generated by Chinas growth strategy, without radically changing its
orientation. Among the most important was the implementation of a new Labor Contract Law in January 2008.35
The law requires, among other things, that businesses provide their workers with a written contract (something a
majority of workers do not have or have never seen) and premium pay for overtime and weekend work. While the
law has generated a sharp increase in arbitration cases, its impact on employment conditions has been limited.36
Regardless, the Partys determination to sustain the countrys export-oriented growth strategy means that it can do
little to respond positively to popular discontent. The state began rescinding many of the laws worker protections
even before the end of 2008. It did so to protect corporate profits hard hit by the downturn in exports caused by the
growing world economic crisis. It also ordered local governments to freeze locally established minimum wages.37
National Technological Capacities The social conditions noted above are unlikely to prove short-term sacrifices. One
Chinas national technological capacities are also being eroded by the
reason is that
countrys transnational corporate-shaped restructuring . As noted above, China had a strong
national research and development infrastructure in place before the start of the reform period. However, given the
countrys system of highly centralized planning, most of the gains supported prioritized military and heavy/chemical
industry sectors. Few, if any, applications were shared with or designed to benefit consumer industries, and
enterprises within these industries had no incentive (or resources) to develop their own innovations. This was one of
the limitations of Chinas economic system that needed to be addressed in the wake of Maos death. Early
decentralizing reforms did encourage new technological dynamism and improve the standard of living of working
people. However, the gains were not sustained. As the reform program progressed, the resulting foreign domination
of industrial activity began steadily eroding the countrys development capacities.38 This outcome is illustrated by
the post-reform evolution of Chinas high-tech industries, especially its computer industry. In the early 1980s, the
Chinese government started reducing the direct funding of its various state research institutes with the goal of
forcing them to become self-financing. In response, and with government encouragement, these institutes created
new, profit-making enterprises. To enhance their chances of success, these new enterprises were granted
managerial independence and, more importantly, free access to the personal and (pre-reform) research findings of
their parent institutions. Four computer companies were among the most successful of these new enterprises:
Legend (now Lenovo), Founder, Great Wall Computer, and Stone. Lenovo, for example, was started by the Chinese
Academy of Sciences.39 These firms were able to expand rapidly and dominate the domestic computer market for
two interrelated reasons. They were able to combine innovations related to Chinese language word processing
developed by their parent institutions with foreign-purchased hardware and technology, to produce affordable
computers, capable of processing Chinese characters.40 And they were able to obtain the needed hardware and
technology from foreign firms on relatively favorable terms, thanks to state policies that restricted the direct access
of these firms to the Chinese market.41 By the middle of the 1990s, conditions had changed. The Chinese economy
had become dependent on foreign capital and enmeshed in its regional networks. Unwilling to change its growth
strategy, the Chinese state had little choice but to abandon its restrictions on foreign access to the domestic
market. The resulting competition has taken its toll on leading Chinese firms, including those in the computer
industry. Lenovo (which acquired IBMs PC unit in 2005) remains the largest PC seller in China, but is facing a profit
squeeze and losing ground to HP and Dell (both of which are rapidly expanding their own distribution networks).
Lenovos market share fell from 36 percent in 2006 to 29 percent in 2007.42 Chinas other computer makers
(labeled also-ran computer makers by BusinessWeek) are in real trouble, including Founder, which used to hold
second place in the Chinese market.43 While leading Chinese firms continue to battle for survival in the domestic
market, they are largely missing in action as far as high-technology exports are concerned. For example, China is
now the worlds leading computer exporter, assembling approximately 80 percent of the worlds notebook and
desktop computers. However, Chinas main contribution to this activity is limited to providing cheap labor and land.
Chinas export dominance is due to the fact that Taiwanese original design manufacturers (ODMs)who dominate
worldwide computer manufacturinghave shifted their production to the mainland. In 2001, Taiwanese computer
makers manufactured only 4 percent of their computers in China. Five years later, it was 100 percent. Reflecting
this shift, eight of Chinas top ten exporters are now Taiwanese ODMs that supply branded PC sellers such as Dell
with unbranded computers and components.There are no Chinese ODMs and there are no significant Chinese
suppliers to the Taiwanese ODMs, or to their suppliers.44 Lenovos operations underscore this situation. By
purchasing IBMs PC unit, Lenovo instantly became a major player in the global PC industry. Yet this purchase has
done little to advance Chinese technological capacities. Lenovo continues to use the same (mainland-based)
Taiwanese ODMs previously used by IBM, and has even moved its headquarters to the United States, where it
employs U.S. engineers for product development.45 Surveying Chinas situation five years after the countrys 2001
accession to the WTO, the Chinese economist Han Deqiang recalls that he had argued the greatest damage [of
membership] would be to Chinas capacity to control its industrial and technological development autonomously. I
think its safe to say these last five years have more than proven that true. In China, any industry that wants to
develop its own technology or markets has encountered increasingly great barriers.46 BusinessWeek proves
supportive evidence for this point, noting: delve beneath the muscular statistics and hype about advances in
strategic industries, and China doesnt seem so prepared to catapult into a role of global economic leadership.
Experts familiar with highly touted Chinese achievements such as commercial jets and high-speed trains say the
technologies that underpin them were largely developed elsewhere. China exported $416 billion worth of high-tech
goods in 2008, but subtract the mainland operations of Taiwanese contract manufacturers and the likes of Nokia,
Samsung, and Hewlett-Packard, and China is an electronics lightweight.Most mainland companies mine existing
technologies and compete on high volume and low cost in commodity goods.47 Some Chinese firms, like Lenovo,
have (thanks to mergers and acquisitions) already established themselves as major international competitors. No
doubt there will be others. But such accomplishments are not an adequate indicator of whether a country is
successfully strengthening its own national development capacities. And, on this measure ,
China does not
appear to be succeeding. Rather, in line with its ever deepening integration
into transnational capitals regional production networks, the Chinese
economy is slowly but steadily increasing its dependence on foreign
technology, production, and marketsa trajectory that bodes ill for
Chinese working people . The Reality of Class in China There is no disputing the fact that Chinese
production has also generated massive new wealth. Unfortunately, as in the United States, much of this wealth
has flowed to a relative few, causing an explosion of inequality and the formation (or
solidification) of new class relations in China . An Asian Development Bank study of twenty-two
East Asian developing countries concluded that China had become the regions second most
unequal country, trailing only Nepal. This is not surprising, considering that, over roughly a ten-year period
(from the early 1990s to the early 2000s), China recorded the regions second highest increase in inequality, again
While the results of the Asian Development Bank study are striking, they do
trailing only Nepal.48
not adequately convey the real concentration of wealth that has accompanied and
motivated Chinas evolving reform strategy. According to the Boston Consulting Group, China had
250,000 U.S. dollar millionaire households (excluding the value of primary residence) in 2005.
Although this group made up only 0.4 percent of Chinas total households, it held 70
percent of the countrys wealth.49 According to Rupert Hoogewart, the publisher of an annual list of
Chinas one thousand richest people, the number of U.S. dollar billionaires has grown from zero in 2003 to 260 in
2009 (more than in any other country except the United States).50 And, embracing the realities of the new China,
the countrys nouveau riche have not been shy about spending their money. LVMH Mot Hennessy Louis Vuitton,
the worlds largest luxury goods maker, plans to open two to three stores a year in China, where sales are rising 50
percent annually. Financir Richemont, the worlds second-biggest, expects to quadruple sales in China within five
An obvious reason that those in the
years by selling more Cartier jewelry and Piaget watches.51
leadership of the Communist Party have steadfastly pushed and defended Chinas
growth strategydespite its accompanying inequalities and structural distortions is that they have
been among its biggest beneficiaries . They have been able to take advantage
of the reform process (and the countrys resulting international embeddedness) to use state assets
for personal gain, place family and friends in lucrative positions of authority in both the state and private
sectors, and ensure that the rapidly growing capitalist class remains dependent on the
Partys good will. This, in turn, has led to a fusion of party-state-capitalist elites
around a shared commitment to continue the advance of Chinas capitalist
restructuring. Many of the children of leading Party officials (known as the princelings) were appointed to key
positions in Chinas most strategic and profitable industries: banking, transportation, power generation, natural
resources, media, and weapons. Once in management positions, they get loans from government-controlled banks,
acquire foreign partners, and list their companies on Hong Kong or New York stock exchanges to raise more capital.
Each step of the way the princelings enrich themselvesnot only as major shareholders of the companies, but also
from the kickbacks they get by awarding contracts to foreign firms. Thus, more than 90 percent of Chinas richest
twenty thousand people are reported to be related to senior government or Communist Party officials.52 The
Party leadership has been willing to share the fruits of the countrys production with international capitalalthough
struggles over distributional issues are growing sharper, as international capital strengthens its position within
Chinabecause international capitals participation is critical to the operation of Chinas new political economy.
However, Chinas elite appear determined to ensure that they will be the primary national claimant. Thus, at the
same time that the Chinese Communist Party has opened up an unprecedented number of sectors for foreign-
equity participationthe authorities havetightened control over other aspects of the economy. This has resulted
in the truncation, if not atrophy, of thousands of [small and medium sized] private firms.53 The world recession
has done little to induce Chinese leaders to reorient their countrys growth strategy. Although China has suffered a
significant decline in exports, it has done much better than most other countries. In fact, as already indicated, it has
likely passed Germany to have become the worlds biggest exporter in 2009. However, Chinas gains during this
period of collapsing world trade have come largely because it is winning a larger piece of a shrinking pie. In other
words, although it is selling less than the year before, China has raised its import share in both the United States
and Europe by taking market share from other countries. The reason, as the New York Times points out, is that
because of the recession consumers are demanding lower-priced goods and Beijing, determined to keep its export
machine humming, is finding a way to deliver. Delivering, in this context, means that the Chinese government is
doing whatever is necessary to ensure the ability of Chinese [based] manufacturers to quickly slash prices by
reducing wages and other costs in production zones that often rely on migrant workers.54 Among other things, this
includes rolling back recently approved labor protections and freezing minimum wages, as noted above. The U.S.
the United States and Chinese economies have
Economic Situation Revisited As we have seen,
become intertwined in complex ways. Conventional wisdom is that this outcome was largely shaped
by an aggressive Chinese export policy that has benefited China but left the United States with a weakened and
this outcome was forged by global capitalist
unbalanced economy. In reality, as argued above,

dynamics and, as such, it reflects core class realities : transnational capital and
those allied with it (in both countries) have gained, while workers (from both countries) have
been forced to compete against each other, to their collective detriment .
Reflecting this reality, the current world crisis has had, at best, minor effects on current U.S. and Chinese economic
strategies and, by extension, bilateral trade relations. Governments in both countries have implemented stimulus
programs that were designed to sustain growth without transforming existing patterns of economic activity. In fact,
both have engaged in major efforts to reinforce those patterns. The Chinese government has actively intervened
(restructuring labor markets) to strengthen the competitiveness of its exporters, and the U.S. government has
How, then, should
actively intervened (with massive subsidies) to support leading financial enterprises.
U.S. economic problems be addressed? As previously noted, those who argue that China
is the main cause of current problems promote the following policy answers: force
China to revalue its currency, open its markets to U.S. exports, and play by the
rules of competitive capitalism . Unfortunately, these are
counterproductive policies . For example, revaluing Chinas currency will not bring production back
to the United States. Rather, it will either encourage the Chinese government to intensify its repression of workers
in an attempt to offset the currency change, or it will lead transnational capital to shift parts of its production
process to other countries within its networks.Demanding that China open its markets to U.S.
exports will also likely have minimal economic effect. Most large U.S. firms are
structurally tied to transnational networks, and unlikely to restructure their
production. In addition, Chinese workers remain too poor to purchase enough U.S.-
produced goods to reduce the bilateral trade deficit significantly . Total Chinese personal
consumption is only 16 percent of total U.S. personal consumption. Finally, there is little to be

gained by demanding that China play by the accepted rules of capitalist

competition . The Chinese government has already transformed the countrys economy along capitalist lines.
Industrial production is primarily undertaken by private firms (most of it organized by
transnational corporations) and motivated by the pursuit of profit . Labor markets are already highly
flexible. Workers are largely unorganized (or unrepresented, even when an official union exists) and have minimal
Given the nature of capitalist competition in the United
protection, either on the job or off.
States, this demand can only mean that U.S. capital seeks more advantages from
producing in China. These types of policies encourage U.S. workers to believe that
the root cause of existing problems lies not in the functioning of the U.S. economic
system, or capitalism more generally, but rather in the behavior of a foreign
government . Unfortunately, too many workers in the United States are already too quick
to blame other workersChinese and/or Latin Americanfor their declining living and working conditions.
An appropriate response to the current crisis will, by necessity, have to challenge
capitalism and its imperatives. One target has to be capital mobility. We have seen the
destructive consequences of capitals freedom of movement . We therefore have to
find ways to strengthen those movements that seek to dismantle free
trade agreements and the broader global institutions , such as the WTO and IMF,
which underpin them . Another target has to be production for profit. Capitals
pursuit of profit has created an economy that is not responsive to our
needs , whether as individual workers or as members of broader communities. In terms of the former, we
have to intensify our efforts to achieve a radical transformation of labor
laws, thereby helping to ensure living wages and the right to unionize. In terms of the
latter, we have to build support for the demand that all who want to work should be
employed in the production of needed goods and services (as determined democratically by
communities). This will require, among other things, not only transforming and strengthening the public
sector so that it is capable of regulating private (production, investment, and trade) decisions, but also planning,
organizing, and directly engaging in production itself . This, in turn, means that we must fight to
reverse the long-term decline in tax payments by the wealthy and corporations, and work to strengthen the ability
these general
of public sector unions to represent and defend the broader public interest. Significantly,
demands are ones that increasingly motivate the activism of growing numbers of
Chinese workers. This should not be a surprise since, as I have tried to demonstrate, they are oppressed by
the very same system that oppresses U.S. workers. If we can successfully incorporate that
understanding into our own organizing, we are likely to find ourselves with valuable
allies.
 2
Theres a distinction between conditionality and engagement
Smith 5 Karen E. Smith, Professor of International Relations and Director of the
European Foreign Policy Unit at the London School of Economics, 2005
(Engagement and conditionality: incompatible or mutually reinforcing?, Global
Europe: New Terms of Engagement, May, Available Online at
http://fpc.org.uk/fsblob/484.pdf, Accessed 07-25-2013, p. 23)
Engagement is a foreign policy strategy of building close ties with
First, a few definitions.
the government and/or civil society and/or business community of another state . The
intention of this strategy is to undermine illiberal political and economic practices, and socialise government and
Most cases of engagement entail primarily
other domestic actors into more liberal ways.

building economic links , and encouraging trade and investment in particular .

Some observers have variously labelled this strategy one of interdependence, or of oxygen: economic activity
Conditionality, in contrast , is the linking, by a state
leads to positive political consequences.19
or international organisation, of perceived benefits to another state (such as aid or trade concessions)

to the fulfillment of economic and/or political conditions . Positive

conditionality entails promising benefits to a state if it fulfils the conditions;
negative conditionality involves reducing, suspending, or terminating those
benefits if the state violates the conditions (in other words, applying sanctions, or a strategy of
asphyxiation).20To put it simply, engagement implies ties, but with no strings

attached ; conditionality attaches the strings . In another way of looking at it,

engagement is more of a bottom-up strategy to induce change in another
country, conditionality more of a top-down strategy .

The affs conditioning is a reason to vote neg it explodes the

topic to an endless amount of distinct conditions and makes
neg prep impossible because the plans can have planks
unrelated to the topic and also takes out core ground like
conditions CPs, diplomatic credibility DA, elections, say no affs,
and trilateral relations
 3

The plans policy of restraint encourages aggression and collapses

US credibility including coalitions to stop ISIS and Russian
aggression
Kazianis, Senior Fellow Defense Policy @ Center for the National
Interest, 2016
(Harry, To Avoid a War With China, Should America Abandon Asia?, 1-4,
http://www.nationalinterest.org/feature/avoid-war-china-should-america-abandon-
asia-14792?page=4)

Rule number one if you are trying to win a debate: never admit your own thesis is a fantasy. And yet, this is the grim
position that John Glaser finds himself in, stating that there is something fantastical about my policy preferences. Fictional foreign

policy fantasys like Glasers, alluding to an America that can hide behind vast oceans to its east and west and a superior
nuclear deterrent that is supposedly remarkably insulated from external threats creates a false narrative. Such ideas should be exposed

for what they are: at their worst a shameful mischaracterization of what many are
dubbing a policy of restraint and at worst a foreshadowing of a dangerous neo-
isolationism that should be thrown onto the ash heap of history once and
for all. But lets not get ahead of ourselves just yet. Before we continue on with our debate on American foreign policy towards Asia (you can find
Mr. Glasers original essay here, my response here, his rebuttal here as well as a supportive post to Glasers position by CATO Vice President Christopher
Preble here), let us recap a polished up version of Glasers argument: In order to avoid a clash with a rising China the United States should abandon its
strategy of primacy in the Asia Pacific. Containment of China is a costly and risky strategy, I claimed, and one that is not necessary to secure Americas
vital national interests. Crucially though, the core of my argument came down to this: the prospect for such apparently belligerent policies to successfully
dampen Chinas regional ambitions is very dim. That Beijing will grow more assertive in response seems more likely. So now that we have his arguments
reestablished, I would like to focus my final effort in this debate by unpacking Mr. Glasers thesis points, arguing not only why they are wrong, but also why
they run completely counter to furthering Americas national security interest, something Glaser argues he is advancing in his half-baked foreign policy
fantasy. I along with many others in these pages have argued Washington is following a classic hedging strategy when it comes to Beijing. On the one
hand, America wants to continue a nearly $600 billion bilateral trade relationship that has clear benefits for both sides. At the same time, Washington has
undertaken a carefuland what I would argue far too careful when one analyzes Beijings actionsreassessment of China policy. This has resulted in the

pivot or rebalance to Asia.Doing the bare minimum in order to not invite Chinas wrath,
America, along with its allies, is attempting to restrain Beijings aggressive and
coercive actions, actions that at this point, can only be seen as Chinas attempt to dominate a space at least out to the first island chain
and cast aside the status quo. Americas reaction was simply the least risky course of action, and

merely a reaction to Chinese actions from 2008 to the present, actions that are
growing more aggressive and coercive with each passing day. But we shouldnt just
consider Americas reaction when it comes to China . Such events are now forcing
Americas allies throughout the region to reconsider their own security when it
comes to China, creating some interesting reactions across the board. Consider just a short list:
1) Vietnam, a former Cold War enemy, is seeking a much stronger partnership with America all thanks
to Chinese actions in the South China Sea. Hanoi is also working to modernize its military, such as purchasing from Russia advanced conventionally-
powered attack submarines armed with state of the art anti-ship weapons. 2) India, once a proud member of the non-aligned club, is working with the
United States closely on many strategic and economic issues of mutual concern. Such a relationship is a direct result of a shared concern over Chinese

actions.Washington has sold billions of dollars of defense equipment to New Delhi with
talk of additional purchases already in the works . Both nations, fearing Chinas aggressive actions, are being
pushed closer by the day. 3) Prime Minister Shinzo Abe is working toward a stronger Japanese military, with

record defense budgets and the crafting of plans to develop an anti-access/area-

denial strategy in the East China Sea. In fact, Japan might end up selling Australia some its most advanced attack submarines, an idea
unthinkable just a few years ago, but now very possible thanks to actions taken by China. 4) Speaking of Australia, there is now an
active debate whether Canberra should acquire nuclear weapons . While most
experts dont believe Australia will acquire nukes anytime soon, when one factors in the fierce debate over ideas such as a Larger Australia then such
chatter suggests a change in Asias security environment, one that China can only be credited in creating. 5) The Philippines has taken China to court over
its claims in the South China Sea. While Beijing has been steadfast in its position that it will not accept any type of court decision over its claims of
indisputable sovereignty, losing such a case would weaken Chinas hand in the global court of public opinionsomething it surely does not take lightly.
Considering Manila cant hope to counter Chinas military might, lawfare was its only option after Beijing seized Scarborough Shoal. 6) Taiwan, after
Washington has dropped the ball time and time again after agreeing to help Taipei acquire new conventional submarines, will now work to engineer their
own domestically. This was an obvious response to Chinas massive military buildup and fears that America might not be able to make it to the island
democracy in time to stop a possible future Chinese military action such as an invasionan option Beijing has not renounced despite good relations and a

it is not just America that is working to

recent meeting between Mr. Xi and Mr. Ma late last year. As we can see,

constrain Chinas aggressive actions, but a region-wide effortand Beijing only has
itself to blame. Idea #1: In order to avoid a clash with a rising China, the United States should abandon its strategy of primacy in the Asia-
Pacific This is really the crux of Glasers argument and really what makes his ideas truly uniquebut also uniquely dangerous. Let us suppose next year,

when a new U.S. president takes office, that he or she decides America should
abandon primacy in Asiaan argument no presidential candidate dares make, by the way. What next? At the very least, Washington
would have to dissolve treaties and other obligations to allies in the region such as Japan, South Korea, Taiwan, the Philippines and Australiaas well as
dissolve budding strategic partnerships with nations such as Vietnam and India. The above scenario should set off a number of frightening questions. For
starters, has any nation throughout history decided to simply just dissolve so many different alliances and partnerships at once over a short amount of

How would our allies in Europe or in the Middle East respond? Would they trust
time?

our leadership to confront the Islamic State? What about the challenge of
Putins aggressive moves in Ukraine or Syria? Our allies would correctly
assume America might just walk away from these relationships as well somedayas
according to Glasers worldview, better to withdraw than confront a challenge to the

status quo that might create conflict . Sketch this out a little further and one would not be remiss in making the
assumption that Glaser is not only advocating dropping so-called primacy in Asia, but by default, walking away from many other alliances around the
world. If this is the case, Glaser owes it to the reader to explain what happens when America walks away from an international system not just in Asia but

What replaces it? Would nations like Russia, China and Iran that have very
around the world.

different interests than the United States quickly rush in and fill the void? Any
college freshman taking International Relations 101 or even the most
cursory reading of history would tell you that this is the likely outcome. Idea
#2: Containment of China is a costly and risky strategy. . . and one that is not necessary to secure Americas vital national interests Is the

Obama Administration today really trying to contain China? If this is what

containment looks likewhen we cant even get the messaging right when the U.S.
Navy conducts freedom of navigation operations (FONOPS), as we are so worried we are going to
offend China as it builds and militarizes new islands in the South China Seathen
we have a much bigger problem on our hands. For the purposes of this essay, let us put aside the debate if Obama
is trying to contain China. Idea #3: The prospect for such apparently belligerent policies to successfully dampen Chinas regional ambitions is very dim

Washington and its allies must confront Chinese

Despite Mr. Glasers assertion above, I would argue that

actions head on and that we can change Beijings strategy of altering the status
quo. No one is calling for conflict, but Beijing must be made to understand that its challenge of the
international system will be met with significant costs . Simply walking away from
Asia, out of fear that war will be the result of a more active policy, is not a solution
based on reality or history, but rather is a failure to understand the tools
America and its allies have to change Beijings calculus. In the past, I have offered a specific
five-point plan to tackle Chinas challenge of the status quo when it comes to the South China Sea. While for purposes of time and length a complete
review is beyond the scope of this essay, I would offer two points from this previous work that could also be applied when it comes to Chinese actions
throughout Asia. First, If Beijing wants to raise the stakes in the South China Sea [and for that matter, Asia], it should know its actions will have
repercussions across the region - even in the areas it holds most dear. . . . If China is hell-bent on changing the international order in Asia to
accommodate its own wants and aspirations, why should America respects its core interests anymore? For example, if Taiwan wishes to enhance its own
military with progress toward new conventional submarines, or by purchasing updated F-16 or even F-35 aircraft, Washington should help. America could
even float the possibility of large arms sales agreements with Vietnam and the Philippines as a way to level the playing field. Washington could also speak
out to a much greater extent on human rights abuses in China - specifically in Tibet and Xinjiang. Regular invitations to the White House for the Dali Lama
and Chinese human rights activists would certainly get Beijing's attention. And Second: China's growing power has always been rooted in its economic
rise. Bearing in mind Beijing's actions over the last several years, it is long past time for Washington to consider whether its deep trade and economic
relationship with China now runs counter to its own national interests. Should America's economic success be so intertwined with a rising China that
routinely challenges the international order? The mere threat to reverse decades of U.S. economic policy would be enough to give Beijing pause. U.S.-
Chinese bilateral trade is worth more than $550 billion. Even the slightest hint of a change would have powerful ramifications - and would likely be
opposed by many in the American business community who have made their fortunes in China. Yet, with $1.2 trillion-worth of U.S. seaborne trade passing
through the South China Sea, and with a global commons that has stood the test of time now under threat, Washington has a powerful reason to hint at
reconsidering its economic relationship with Beijing (and an even more important reason to ensure the Trans-Pacific Partnership becomes reality).

Would China get even more aggressive as a reaction to the above, as Glaser seems to suggest? Beijing, I
would argue, would have very few options to respond in kind unless it wants to up the ante dramatically and at

the same time the costs of its actions. An even more aggressive China would only align the Asia-

Pacific and wider Indo-Pacific against its ambitionsand by default contain itself. While
I doubt China will completely back down, Beijing would be creating tremendous risk by pushing even

harder, as the costs would simply be too high for what they would get in return. While I
tip my hat to Mr. Glaser for a spirited debate and I respect his position, and to a certain extent his idealism, an America that would

simply withdraw from Asiaand by default, as the predominant power globally considering the damage to its reputationis a
nothing short of a recipe for disaster . How would Washington be perceived in
global capitals as abandoning its allies to China at a time when Beijing continues to
alter the status quo throughout the region? Would anyone ever trust Americas
word again? At the end of the day, I admire Mr. Glasers fantasy, but it should remain where it
belongs, for debate in a classroom or in an International Relations theory textbook.

Russia lash-out causes extinction

Farmer, Telegraph Defence correspondent, 2015
(Ben, Russian tensions could escalate into all-out war, says Nato general, 2-20,
http://www.telegraph.co.uk/news/uknews/defence/11425393/Russian-tensions-
could-escalate-into-all-out-war-says-Gen-Adrian-Bradshaw.html)

Tensions with Russia could blow up into all-out conflict, posing an existential
threat to our whole being, Britains top general in Nato has warned. Gen Sir Adrian Bradshaw, deputy

Putin could try to use his armies to

commander of Nato forces in Europe, said there was a danger Vladimir

invade and seize Nato territory, after calculating the alliance would be too
afraid of escalating violence to respond. His comments follow a clash between London and Moscow
after the Defence Secretary, Michael Fallon, said there was a "real and present danger" Mr Putin could
try to destabilise the Baltic states with a campaign of subversion and irregular
warfare. The Kremlin called those comments absolutely unacceptable". Sir Adrian told the Royal United Services Institute
there was a danger such a campaign of undercover attacks could paralyse Nato decision making, as members disagreed over how
much Russia was responsible, and how to respond. Nato commanders fear a campaign of skilfully disguised, irregular military action
He said the "resulting
by Russia, which is carefully designed not to trigger the alliance's mutual defence pact.
ambiguity" would make "collective decisions relating to the appropriate responses
more difficult". But Sir Adrian, one of the most senior generals in the British Army and a former director of special forces,
went further and said there was also danger that Russia could use conventional forces and Soviet-era brinkmanship to seize Nato
He said Russia had shown last year it could generate large conventional forces
territory.
at short notice for snap exercises along its borders . There was a danger these could
be used not only for intimidation and coercion but potentially to seize Nato
territory, after which the threat of escalation might be used to prevent re-
establishment of territorial integrity. This use of so called escalation dominance was of course a classic Soviet
technique. He went on to say that the threat from Russia, together with the
risk it brings of a miscalculation resulting in a strategic conflict, however
unlikely we see it as being right now, represents an existential threat to
our whole being.

ISIS causes great power war

Kagan, director of the Critical Threats Project @ AEI, 16
(Frederick, Kimberly Kagan, the founder and president of the Institute for the Study
of War, Jennifer Cafarella, the Evans Hanson Fellow and Syria Analyst at the Institute
for the Study of War, Harleen Gambhir, a Counterterrorism Analyst at the Institute
for the Study of War and the author of ISISs Global Strategy: A Wargame, and
Katherine Zimmerman, a research fellow at the American Enterprise Institute (AEI)
and the lead analyst on al Qaeda for AEIs Critical Threats Project, "AL QAEDA AND
ISIS: EXISTENTIAL THREATS TO THE U.S. AND EUROPE", Institute for the Study of
War, January 2016, www.understandingwar.org/report/al-qaeda-and-isis-existential-
threats-us-and-europe?ct=t(Today_s_Headlines_and_Commentary11_3_2015)
Physical annihilation or total subjugation are not the only existential threats to America. Al Qaeda and ISIS do not now have the
capabilities to obliterate or conquer the West, yet they are already driving processes by which America and Europe are beginning to
ISIS also pose a threat to the continued
abandon the central values and ideas that define them. Al Qaeda and

existence of the world order we have known for decades through their constant and periodically
successful efforts to destroy states on which regional order depends. Those efforts
unintentionally cohere with Putins drive to reverse the outcome of the Cold War by

truncating the territory and sovereignty of Soviet successor states, separating Europe from the
U.S., and breaking both NATO and the European Union. They coincide with Chinese undertakings through the finely-
calibrated use and threat of force to gain territory, separate the U.S. from its Asian allies, and acquire hegemony in the western
They interact with Iranian efforts to expel the U nited States, Britain, and the West from the
Pacific.

Middle East and establish Persian hegemony from Afghanistan to the Mediterranean. These phenomena,
taken together as they must be, are reshaping the world in ways that will fundamentally alter the daily lives of Americans over time.
Al Qaeda and ISIS will bring increasing levels of violence to our streets and homes, driving domestic security responses that will
The destruction of
curtail Americans civil liberties and fuel ethno-religious tensions that will increasingly rend our society.
a peaceful global order prizing the free movement of people, goods, and ideas will profoundly affect the
American economy by reshaping our access to raw materials , finished products, trading partners, and the
free flow of international investment. The time when Americans could live in safety and relative prosperity while the flames and fear

of war engulf tens of millions is rapidly passing. The drift toward major regional wars will inevitably
involve America in those conflicts, moreover, however determined we might be to avoid such involvement. Americans have
ended up fighting in every major European war since the start of the Republic except for one despite strenuous efforts to remain
neutral in all of them.99 The notion that the world can descend into flames and America can remain somehow insulated from the fire
is unsustainable. We have already been drawn into the wars in Syria, Iraq (again, following our withdrawal in 2011), and
Afghanistan. The question before us now is how to design a prudent strategy to guide our future involvement in those conflicts and,
more importantly, to begin shaping the world through military and non-military means toward a new stable order conducive to our
safety, security, values, and way of life. The current project focuses on addressing the threat of al Qaeda and ISIS globally but
particularly in Iraq and Syria because that is the most urgent challenge facing America today. Its urgency springs from the fact that

the war in Mesopotamia and the Levant is driving expanding regional conflict, global sectarian
strife , and the mobilization of growing numbers of Muslims around the world behind banners of extremism and confessional
hatred. It is causing unprecedented resources to flow into the coffers and training camps of ISIS and al Qaeda

affiliates which will direct some of those resources into increasing attack s within the U.S. and Europe. It has
drawn Iranian military forces and proxies into combat in several countries, inextricably linking these wars with American hopes of
preventing Iran from acquiring nuclear weapons and, ultimately, moderating Irans willingness to use terrorism and armed force in
Russian military intervention in the conflict has now conjoined this
pursuit of its regional ambitions.
crisis with Putins attacks on NATO, Europe, and his neighbors as well. The wars in Iraq and Syria have become
the nexus of almost all of the threats to American and European security and the world order and must thus have priority in any
strategy.
 4
Lines of credit undercuts the USD as the reserve currency
which kills dollar heg multiple warrants
Daniel C.K. Chow, 2-25-2016, (the Frank E. and Virginia H. Bazler Chair in
Business Law at The Ohio State University Moritz College of Law. He teaches and
writes in the areas of international trade law, international business transactions,
international intellectual property, and the law of China, Why China Established the
Asia Infrastructure Investment Bank Ohio State University Moritz College of Law;
Public Law and Legal Theory Working Paper Series No. 333; Pg 28-31//)HBJ
The AIIBs current obligations are to make loans in dollars but the AIIB might in the
future make loans in Renminbi (RMB or the peoples currency). China has been seeking to
promote the RMB as an international currency for some time and these efforts recently were rewarded
when on November 30, 2015, the IMF declared the RMB as one of its official currencies.252 Promoting the RMB will
add considerable prestige to the currency . For example, the Wall Street Journal states: It confers a
measure of international legitimacy to Chinas currency as the government starts to
liberalize its rigidly controlled exchange rate and financial system. For the Chinese, it is a matter
of prestige, a plank in Beijings strategy to elevate the countrys economic role in
the global economy as it challenges U.S. political and economic dominance around
the world.253 Much more than prestige is involved, though. The point missed by this observation is that China will also
gain significant political power as well if the RMB becomes an established
international currency frequently used in international transactions . Today, most
international transactions are conducted in U.S. dollars.254 Transactions in U.S.
dollars create great power for the United States over the international
financial system. Trade in U.S. dollars, even if initiated overseas, requires the
clearance through banks in the United States. 255 The United States can effectively freeze any transaction by
blocking the transfer of dollars by U.S. banks. For example, the United States can impose sanctions on a country such as Iran by
prohibiting the transfer of U.S. dollars through U.S. banks to Iran.256 Since oil is paid for in U.S. dollars, the United States can
effectively restrict the sales of oil by Iran through controlling U.S. banks. In the case of Iran, China was able to circumvent many of
the Wests restrictions in buying Iranian oil (using means that are undisclosed) but was careful not to violate U.S. restrictions on
It is apparent that if China is able
banking because China must deal with U.S. banks on a regular basis.257
establish the RMB as a currency that can be regularly used in international
transactions, China can circumvent future U.S. sanctions since China will not
need to use U.S. dollars or U.S. banks . China can deal directly with countries subject to U.S. sanctions. In
addition, China would now have the same power to control international financial
transactions in RMB through its control of Chinese Banks. China can suspend or use
the threat of suspending RMB transactions through Chinese Banks to add weight to
its dealings in international transactions. Using the AIIB to promote the RMB as a
currency regularly used in international trade not only creates prestige for China,
but could also add immense power over the international financial system. V. Conclusion
The establishment of the AIIB as a multilateral institution represents a diplomatic triumph as China was able to attract dozens of the
United States closest allies in defiance of U.S. opposition. Beyond this diplomatic coup, however, there are larger potential
AIIB might
consequences for the future of the international global system. Despite Chinas own assertions to the contrary, the
emerge as a direct rival to the World Bank and the International Monetary system.
This rivalry will consist not only in the amounts of loans made, but also in the rules of international lending and the rule of
international trade in general. Will China use the AIIB to counter the Washington Consensus, laden with its western values, with its
own approach that pursues Chinas own policy goals under what might become known as the Beijing Consensus? Aside from the
the Beijing Consensus might include policies intended to promote
doctrine of non-interference,
SOEs and the use of the RMB as a regularly used currency for international
transactions. In addition to these policies, the Party may well have other goals in mind. The governance structure of the AIIB,
the role of the Party, and Chinas own global ambitions suggest that China is posed to use the AIIB as a policy
tool just as the United States and its closest allies have used the World Bank and the IMF as a policy tool. This potential conflict
represents for the future a clash between rival multilateral financial institutions led by the United States and by China. The
clash could elevate the longstanding conflict between the United States and China over the
rules governing international trade to the multilateral policy level for the first time. This
portends a larger struggle over who will write the rules for international trade in the future.

That takes away the one advantage the USD has over the
Renminbi currently and sinks overall global legitimacy turns
all of the case
Doug Stokes, 5-09-2013 (Department of Politics, University of Exeter, Exeter,
UK, Achilles deal: Dollar decline and US grand strategy after the crisis Routledge,
Review of International Political Economy, pg 15-23//)HBJ
DOLLAR LIQUIDITY Another major factor that helps explain post-crisis dollar hegemony is
the deep liquidity of the US financial regimes. As we saw above, in the face of the financial crisis,
surplus money flocked to safe havens, with US debt seen as the safest . This is
partly due to the dollars political backing, rooted as it is within a stable liberal democracy. This is also due to the
deep liquidity of the US dollar regimes, internal to which are a range of mutual
self-reinforcement mechanisms. For example, higher volumes in the US FX markets helps
to contribute to lower risk spreads and transaction costs for those using dollars.
These higher volumes, in turn, also contribute to dollar liquidity: who wants to hold a unit of value that
nobody wants and from which it is hard to withdraw? As the director-general at the China Banking Regulatory Commission explained,
[e]xcept for US Treasuries, what can you hold? He continued that once you start issuing $1 trillion$2 trillion [$1,000$2,000
billion] . . . we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do (Financial Times,
2009). These cyclical reinforcement logics are inherent to US heg emony and,
when added up, create very strong incentives to remain within the US -centric global
economic order. There is thus a path dependency to US hegemony, with both
states and private actors interests mutually bound into the relative health
of the US dollar and the American economy. Moreover, the leverage that this
synergy affords the US need not be used openly for it to be effective: it is what Susan
Strange called the structural power of the US dollar that sets the broad parameters
within which others must work (Strange, 1989). INCUMBENCY AND INERTIA Aside from this export
dependence and liquidity, dollar incumbency and broader institutional inertia also serve to transform the
calculation of national interests within states themselves . As Kirshner argues, states and powerful
private actors within those states develop a vested interest in the value and stability of the
dollar. Once in widespread use, the fate of the dollar becomes more than just
Americas problem it becomes the problem off all dollar holders. He continues that even
those that simply peg to the dollar as part of a broader international economic strategy also have an interest in [the] future of the
dollar even without signing on as stakeholders the way large holders of dollars have, advertently or not, as they accumulate dollar
denominated assets (Kirshner, 2008: 425). Eichengreen has argued against the view that this dollar incumbency necessarily means
dollar overtook the pound as the
that the dollar will remain the key reserve currency. He notes that the
principal international currency in the mid-1920s, one decade after the formation of the US Federal Reserve in
1913. As such, currency switches can be very sudden (Eichengreen, 2011). However, this switch took place
against the backdrop of not only a significantly weaker British military power, but after a major world war, and even then the dollar
did not emerge as the global reserve currency until after World War II. In others words, there is often a significant time lag between a
these transitions are often preceded
waning of capabilities and a subsequent polarity transition. Importantly,
by significant global upheaval, usually interstate war amongst great powers. Today, with
the possession of nuclear weapons coupled with the historically qualitatively unique form of economic interdependence based on
FDI that we examined above, interstate war amongst great powers is a more distant possibility (Brooks, 2007). US STRATEGY IN
EAST ASIA So far, this paper has mainly examined a range of economic indicators and their relationship to US power. However, as
US strategic power also plays an important part in its broader global
argued above,
monetary leadership. Specifically, a feature of contemporary international relations is a
strategic unipolarity centred on the US within a steadily maturing multipolar global
economy based on the US, Europe and an increasingly dynamic East Asia. As declinists rightly identify, an important
pre-condition for US global primacy is economic capability. They also tend to posit a
unidirectional relationship: that of US economic decline undermining the US capacity to project strategic power globally. Conversely,
I would posit that this relationship is in fact far more synergistic, with US strategic capabilities also helping to incentivize states into
US strategic
the broader structures of the US-led order, including participation in US financial regimes. In short,
unipolarity helps it to partially manage a maturing economically multipolar global
economy that delivers sets of leveraging tools to help prolong US hegemony (Stokes and
Raphael, 2010). The security public goods that US hegemony provides thus also works in the US national interests (Norrloff, 2010).
This point has important policy ramifications for those calling for a retrenchment of
US power either globally or in the East Asian region more specifically , and declinists often
draw wider strategic implications from their respective analyses of US economic decline. As Layne has argued, Taiwan, the Senkaku
Islands [a series of islands contested by both Japan and China], and the disputed waters of the South China Sea may be important
for substantive and symbolic reasons to China and Japan, but they have no intrinsic strategic value to the United States.
Defending Taiwan or Japans claims in the East and South China Seas confers no added value to Americas own security and, in
the case of a broader global decline, the US should withdraw direct security guarantees and instead let its key allies defend
themselves (Layne, 2006: 138). In this context, the US has long deployed a hub-and-spokes security system in Asia, with the US
acting as the hub, and various states, including Japan, South Korea, Australia, Thailand and the Philippines, acting as regional proxy
spokes (Shambaugh, 2004/05). This alliance system has traditionally been created to contain China and, although to an extent this
the US continues to
hub-and-spokes model is being eclipsed by a more Asia-centric and diffuse set of interrelationships,
remain the principal external hegemon in the region . The 2011 strategic pivot from Europe to
the Asia-Pacific by the Obama administration reaffirmed the centrality of the region to US
national interests (Cronin and Kaplan, 2012). In the words of Robert Willard, Commander of the US Pacific Command
(USPACOM), whilst the region has remained relatively peaceful and stable for the past six decades, myriad challenges to its future
security will try US resolve, raise the magnitude of our relationships with five treaty allies and many strategic partners, and test
USPACOM as a principle guarantor of security in the region (US Senate Armed Services Committee, 2012). Importantly, the call for a
significant strategic retraction from East Asia misses out on the broader and mutually beneficial logics of US strategy in the region
and the leveraging capacity it affords.
In the context of dollar hegemony and maintaining US
global power, a key problem for the US to manage is the potentiality for Asian states
to move towards ever greater economic interdependency. This would weaken their reliance on the
US as an export market as well as create space for these states to work outside of US-centred global financial regimes a clear
threat to US dollar hegemony. The clearest signal of this maturing intra-Asian interdependence was the establishment of the $60
billion Chiang Mai Initiative (CMI) in 2000 by the Association of Southeast Asian Nations (ASEAN) plus China, Japan and South Korea.
The CMI established a network of bilateral swap arrangements between members and was conceived as a way to reduce
dependence on the dollar, ease pressures on member nations currency pegs to the dollar, and lessen Asian reliance on Western-
dominated multilateral institutions such as the IMF. In 2010, the amount available to members was doubled to $120 billion (Ciorciari,
2011). However, a centrifugal force in this deepening interdependence have been more traditional strategic fears and mutual
enmity between the leading regional states, most notably between Japan and China, as well as struggles over regional leadership.
East Asian states continue to tailor their respective monetary and exchange
Tellingly,
rate policies as their national interests dictate . As such, for all the talk of financial regionalism in East
Asia, little real progress is possible without a significant moderation of underlying rivalries and animosities (Cohen, 2011: 31). These
fears have not been helped by Chinas increasingly assertive stance towards the South China Sea, which potentially sits on more oil
than any other state in the world except Saudi Arabia. This sea is a crucial line of communication and forms the demographic hub of
the 21st century global economy, where 1.5 billion Chinese, nearly 600 million Southeast Asians and 1.3 billion inhabitants of the
Indian subcontinent move vital resources and exchange goods across the region and around the globe. Struggles over who controls
this sea, together with Chinas strategic maritime build-up, has meant that the South China Sea has become the epicenter of what
appears to be a long-term geopolitical struggle in which classical power politics and nationalism are intensifying alongside the rise of
China (Cronin and Kaplan, 2012: 9). This, coupled with other simmering strategic tensions, as, for example, the ChinaTaiwan
relationship, tensions over North Korea and Chinas monopoly of crucial rare-earth metals, gives the US considerable leverage, most
notably because of its status as an external hegemon and, thus, mediator of a broad range of strategic relationships. In essence,
powerful Asian states such as Japan and South Korea, who also happen to be some of the largest purchasers of US debt, are deeply
reliant on US strategic capabilities as one of their primary hedges against a rising China. The 2011 strategic pivot and the
concomitant guidance issued by the Obama administration affirmed this focus: Chinas emergence as a regional power will have the
The synergy between US strategic
potential to affect the U.S. economy and our security in a variety of ways.
and economic interests, as well as the leverage that the US mediation capacity
delivers, is made explicit: the maintenance of peace, stability, the free flow of
commerce, and of U.S. influence in this dynamic region will depend in part on an
underlying balance of military capability and presence (US Department of Defense, 2012a). Both the
US Secretary of Defense, Leon Panetta, and his Japanese counterpart, Satori Morimoto, further acknowledged this relationship. In
late 2012, in response to deepening Sino-Japanese tensions over territorial claims to the Senkaku Islands in the resource-rich East
China Sea, Panetta affirmed the US commitment to Japanese security (US Department of Defense, 2012b). The US turn to
Asia thus provides stability for the global economy and , as Hilary Clinton, US Secretary of State,
argued, makes the Asian and European economies the linchpins of the global economy and international relations in an
economically interdependent world dependent on American power projection capacity as the
strategic turn to the region fits logically into our overall global effort to secure and
sustain Americas global leadership (Clinton, 2011). In the context of USChina relations and regional security
in Asia, the interplay between containment and engagement is highly complex with multifaceted aspects of overlap (Acharya and
Goh, 2007). However, the US remains first among equals in the region and, whilst it may be a stretch to argue that the US would
seek to use its mediation between states to openly call for macroeconomic adjustments to suit US economic interests, as it did in
the 1985 Plaza Accords with Japan, its mediation undoubtedly grants it a great deal of leverage. Clinton continued that the US
treaty alliances with Japan, South Korea, Australia, the Philippines, and Thailand are the fulcrum for our strategic turn to the Asia-
Pacific . . . . They leverage our regional presence and enhance our regional leadership at a time of evolving security challenges
(Clinton, 2011). It is thus very hard to see how states within the US-led security system in East Asia would not be wary of upsetting
the external hegemon upon which their respective hedging strategies rest, particularly in the context of rising tensions over Chinas
maritime build-up, assertiveness in relation to territorial disputes and a US commitment to making the Asia-Pacific its principal post-
an important element for US capabilities (and,
Iraq priority. Whilst declinists thus rightly identify the fact that
therefore, the hub-and-spokes system in East Asia) is its dollar hegemony, of equal importance is how
US strategy in the region works in the interests of a number of the very states
funding it, not least Japan and South Korea, and how this, in turn, develops important dependencies that
help keep these states incentivized into these broader monetary structures of the
global economy. In the 1980s, Keohane argued that it is difficult for a hegemon to use military
power directly to attain its economic policy objectives with its military partners and
allies as these cannot be threatened with force without beginning to question the
alliance; nor are threats to cease defending them unless they conform to the hegemons economic rules very credible except in
extraordinary circumstances (Keohane, 1984: 40). Given the ever-deepening interdependence between the US and the Asian
the array of defence relationships in Asia has an extremely important
political economies,
intrinsic value for US interests, as a precondition for US mediation is recipient
states participation in broader US-centric monetary regimes . As such, military capability or
strategic mediation does not need to be used directly as in their latent potentiality, they offer the capacity of the most powerful
party to structure relationships with dependent allies and potential adversaries alike. Keohane continued that in the case of US
strategic capabilities, the incapacity of the US to directly cajole allies does not mean that military force has become useless. It has
certainly played an indirect role even in U.S. relations with its closest allies, since Germany and Japan could hardly ignore the fact
that American military power shielded them from Soviet pressure (Keohane, 1984: 40). In the post-Cold War era, an increasingly
regionally assertive and rising China continues to worry Japan and, as Morimotos statement above attests, Japan continues to be
In the case of China, in the very unlikely event
very mindful of its reliance on US security guarantees.
that it seeks to significantly undermine dollar hegemony through a sudden
diversification or cessation of purchases, this would help destroy the conflict-
pacifying forms of interdependence currently in play between it and the US and
would almost certainly introduce a far more zero-sum logic to regional interstate
relations (Mastanduno, 2007). With the US acting as the key external balancer in Asia, and a string of US-aligned militarily
powerful states, there is very little to indicate that this would favour China, with more assertive regional balancing severely
curtailing Chinas compelling capacity and choking its sea lanes of communication a prerequisite for the export and external
the complex balance between US strategic mediation
energy dependent Chinese economy. In sum,
in East Asia and the ebb and flow of forms of regional interdependence and security
competition act as a major incentivization for the largest purchasers of US debt to
work within a broader US-centred global system, including US monetary regimes.
What can we conclude from the above?

Economic leadership suppresses conflict and encourages

peaceful over violent solutions -- Empirics prove
Hubbard, Open Society Foundations program assistant, 2010
(Jesse, Hegemonic Stability Theory: An Empirical Analysis,
https://isrj.wordpress.com/2010/05/28/hegemonic-stability-theory/)

Regression analysis of this data shows that Pearsons r-value is -.836. In the
case of American hegemony, economic strength is a better predictor of
violent conflict than even overall national power, which had an r-value of
-.819. The data is also well within the realm of statistical significance, with a p-value
of .0014. While the data for British hegemony was not as striking, the same overall
pattern holds true in both cases. During both periods of hegemony, hegemonic
strength was negatively related with violent conflict, and yet use of force by the
hegemon was positively correlated with violent conflict in both cases. Finally, in
both cases, economic power was more closely associated with conflict levels than
military power. Statistical analysis created a more complicated picture of the
hegemons role in fostering stability than initially anticipated. VI. Conclusions and
Implications for Theory and Policy To elucidate some answers regarding the complexities my analysis unearthed,
I turned first to the existing theoretical literature on hegemonic stability theory. The existing literature provides some potential
frameworks for understanding these results. Since economic strength proved to be of such crucial importance, reexamining the
literature that focuses on hegemonic stability theorys economic implications was the logical first step. As explained above, the
literature on hegemonic stability theory can be broadly divided into two camps that which focuses on the international economic
system, and that which focuses on armed conflict and instability. This research falls squarely into the second camp, but insights from
the first camp are still of relevance. Even Kindlebergers early work on this question is of relevance. Kindleberger posited that the
economic instability between the First and Second World Wars could be
attributed to the lack of an economic hegemon (Kindleberger 1973). But economic instability
obviously has spillover effects into the international political arena. Keynes, writing after WWI, warned in his seminal tract The
Economic Consequences of the Peace that Germanys economic humiliation could have a radicalizing effect on the nations political
culture (Keynes 1919). Given later events, his warning seems prescient. In the years since the Second World War, however, the
European continent has not relapsed into armed conflict. What was different after the second global conflagration? Crucially, the
United States was in a far more powerful position than Britain was after WWI. As the tables above show, Britains economic strength
after the First World War was about 13% of the total in strength in the international system. In contrast, the United States possessed
about 53% of relative economic power in the international system in the years immediately following WWII. The U.S. helped
rebuild Europes economic strength with billions of dollars in investment through the Marshall
Plan, assistance that was never available to the defeated powers after the First
World War (Kindleberger 1973). The interwar years were also marked by a series of
debilitating trade wars that likely worsened the Great Depression (Ibid.). In contrast, when Britain was more powerful, it
was able to facilitate greater free trade, and after World War II, the United States played a
leading role in creating institutions like the GATT that had an essential
role in facilitating global trade (Organski 1958). The possibility that economic stability is an important factor
in the overall security environment should not be discounted, especially given the results of my statistical analysis. Another
theory that could provide insight into the patterns observed in this research is that
of preponderance of power. Gilpin theorized that when a state has the
preponderance of power in the international system, rivals are more likely
to resolve their disagreements without resorting to armed conflict (Gilpin
1983). The logic behind this claim is simple it makes more sense to challenge a
weaker hegemon than a stronger one. This simple yet powerful theory can help
explain the puzzlingly strong positive correlation between military conflicts engaged
in by the hegemon and conflict overall. It is not necessarily that military
involvement by the hegemon instigates further conflict in the international system.
Rather, this military involvement could be a function of the hegemons weaker
position, which is the true cause of the higher levels of conflict in the international
system. Additionally, it is important to note that military power is, in the long run,
dependent on economic strength . Thus, it is possible that as hegemons lose
relative economic power, other nations are tempted to challenge them
even if their short-term military capabilities are still strong . This would help
explain some of the variation found between the economic and military data. The
results of this analysis are of clear importance beyond the realm of theory. As the
debate rages over the role of the United States in the world, hegemonic stability
theory has some useful insights to bring to the table. What this research makes
clear is that a strong hegemon can exert a positive influence on stability in the
international system. However, this should not give policymakers a justification to
engage in conflict or escalate military budgets purely for the sake of international
stability. If anything, this research points to the central importance of
economic influence in fostering international stabilit y . To misconstrue these
findings to justify anything else would be a grave error indeed. Hegemons may play
a stabilizing role in the international system, but this role is complicated. It is
economic strength, not military dominance that is the true test of
hegemony. A weak state with a strong military is a paper tiger it may
appear fearsome, but it is vulnerable to even a short blast of wind.
 5
Text: United States federal government
not oppose Chinas organizational initiatives or try to
block other countries from participating in them
expand the voting power of China, without conditions, in
regional and global financial institutions, including the
International Monetary Fund and the World Bank
develop more sustainable investment standards in
existing international financing institutions, including the
International Monetary Fund, World Bank and the Asian
Development Bank
increase cofinancing projects between the World Bank and
Chinas financing institutions
create a currency swap line between the representatives
of the Western Central Banks

Solves the case allows China to have a vested interest in the

IMF establishing more liquidity, solving investor confidence
and the incentive for depreciation also solves all the warrants
for economic diplomacy
Rajiv Biswas, 2015, (Asia-Paci-c Chief Economist for IHS Global Insight. Former
Director for Southeast Asia for e Economist Group. Former Senior Economist for the
International Finance and Capital Markets Department of the Commonwealth
Secretariat, "Reshaping the Financial Architecture for Development Finance: the
new development banks. " LSE GLOBAL SOUTH UNIT WORKING PAPER SERIES,
http://eprints.lse.ac.uk/61120/1/LSE%20GSU%20Working%20Paper%202-
2015.pdf//)HBJ
With China and India having grown more rapidly than the US and Europe for
decades and projected to continue to do so over the next two decades, the disproportion of the BRICS share of IMF
voting rights compared to their share of world GDP can only widen unless substantial reforms are
made to the governance and voting rights structures of the Bretton Woods
institutions. Based on IHS long-term projections of world GDP, China will be the worlds largest economy by 2025, when it will
account for 19.9% of world GDP, while India is projected to account for 5.5%. e Asian BRICS alone will thus have over 25% of world
Unless there is far more rapid
GDP, compared to their combined IMF voting rights total of 6.15% at present.
progress in IMF voting right reforms than is currently evident, the Asian BRICS will
confront a major asymmetry between their weight in the global economy and their
role in the governance of the IMF. Equally provocative to the developing nations in regard to the governance of
the Bretton Woods institutions is the agreement between the US and Europe that the Managing Director of the IMF should be
European and the President of the World Bank should be American. is convention has been adhered to since the foundation of the
IMF and World Bank; no developing country national has ever led either multilateral institution in the last 70 years. President
Obama attempted to make amends for the unfairness of this state of aairs by
nominating a US citizen of Korean ethnicity to become the World Bank President in
2012. But this does not fundamentally redress the gross imbalance between the
BRICS weight in the global economy and their voting rights in the Bretton Woods
institutions. e concerns amongst developing countries about the delay to IMF quota and governance reforms were reected in
the G20 Finance Ministers and Central Bank Governors Meeting held in Istanbul on 9-10 February 2015. is was a key issue
highlighted in the G20 Communiqu released after the meeting: RESHAPING THE FINANCIAL ARCHITECTURE. eir eorts to reshape the
Bretton Woods governance structures having essentially come to naught, one initiatives that has been under discussion since 2012
amongst the BRIC countries was the establishment of their own development bank. A resolution to do just that was formally
approved by the BRICS at their summit in South Africa in 2013, and detailed planning was subsequently undertaken in the lead-up to
the 6th BRICS Summit in Fortaleza in July 2014. ere and then, the formal decision was taken to set up the New Development Bank
(NDB) which had initial authorised capital of US$ 100 billion and initial subscribed capital of US$ 50 billion, along with a Contingent
Reserve Arrangement (CRA) with capital of US$ 100 billion. An Inter-Governmental Agreement was signed on 15 July 2014 by Brazil,
Russia, India, China and South Africa to establish the NDB and CRA. e initial subscribed capital of the NDB will be provided in equal
shares by the -ve founding member countries. e remit of the NDB will be to -nance infrastructure and sustainable development
projects, while the CRA is to be an external account support facility to help developing countries manage balance of payments
crises. e NDB is set up to provide loans, equity participation, guarantees and other -nancial instruments. e BRICS members also
intend the NDB to have discretion to co-operate with international organisations, as well as public and private organisations,
particularly with international -nancial institutions and national development banks. countries have considerable experience in these
principles through their regulatory and supervisory responsibilities in their domestic banking systems. ere is enough capacity and
knowledge within the BRICS to craft best practice standards for the NDB and the other institutions now being created. Another major
challenge to the BRICS and other developing countries in attempting to reshape the international -nancial architecture stems from
signi-cant foreign exchange reserve constraints, which most developing countries still face. NDB, AIIB and Silk Road Fund bear
potential to rapidly transform global development -nance. On the other hand,
it is unlikely the developing
countries as a group can play a signi -cant role in international crisis prevention and
resolution for developing countries in the near to medium term, with even some of
the largest developing countries facing considerable challenges due to volatile
international capital ows. e constraints on the foreign exchange reserves of both Russia and India have been tested
by recent economic crises. Indias economic crisis in 2013 triggered a protracted depreciation of the rupee that forced the Reserve
Bank of India to intervene in currency markets over a period of months, and deplete its foreign exchange reserves, in order to
smooth the depreciation. e Russian economic crisis that commenced in 2014 is still unfolding: capital ight in 2014 was estimated by
the Central Bank of Russia at US$ 128 billion (e Moscow Times, November 10, 2014). e Central Bank is estimated to have used up
US$ 80 billion of its foreign exchange reserves to intervene to stabilise the sharp depreciation of the rouble in 2014 (Reuters News,
December 17, 2014). Total foreign exchange reserves are estimated to have declined from US$ 510 billion at the end of 2013 to US$
416 billion by mid-December 2014. On the other hand, Chinas capacity to intervene to stabilise global crises could increase
signi-cantly if China manages to introduce full currency convertibility and establish the yuan as a global reserve currency. But this is
e developing countries long-simmering discontent over the
still a long-term goal. CONCLUSION.
Bretton Woods -nancial architecture, notably the allocation of voting rights, has
resulted in a revolution in global development -nance that is being led by China.
Chinas rapid economic ascent over the last two decades has led to its having become the worlds second largest economy. In the
process it has acquired the capacity to act as the -nancial mainstay of a number of new initiatives for development -nancing which
can be led by developing countries.Thwarted
in playing the leading decision-making role in the
IMF and World Bank that it deserves, China has instead led the creation of new
multilateral development -nance institutions governed by the developing countries.
China is using its vast reserves to lend -nancial strength to these institutions,
although other developing countries are also providing capital. e NDB, AIIB and Silk Road Fund
combined bear potential to signi-cantly increase the total multilateral -nancing available for economic development in the medium-
term, and will give developing countries a greater voice in governing global development -nance in the next decade and beyond. For
the present, however, the capacity of the BRICS and other developing countries to intervene
in -nancial crisis prevention and resolution remains limited due to constraints on the
foreign exchange reserves of most large developing countries, with the possible
exception of China. it positions itself within the institutional membership as primus inter pares rather than the dominant
shareholder driving all decision-making. irdly, these new development institutions will be an
important counterbalance to the political weight of the West, giving China a greater
voice in global development -nance. is will become more important politically and
economically for China as it becomes the worlds largest economy, given that its
participation in the World Bank and IMF belie its stature in the global economy. THE
CHALLENGES AHEAD. e New Development Bank and the AIIB and Silk Road Fund will face considerable hurdles, not least of which
are the crafting of an ecient governance- and a world-class prudential regulatory structure that can avoid the pitfalls of overt
politicisation of the new institutions. However, with the correct design, the BRICS New Development Bank could become an
important new lender addressing the economic development and infrastructure -nancing needs of developing countries worldwide. e
establishment of the BRICS Bank at the same time as the AIIB and Silk Road Fund has the potential to signi-cantly reshape the
global -nancial architecture of development -nance. e governance of the new multilateral -nance institutions is very much under
scrutiny. To a large extent, this reects international perceptions about issues such as corruption in developing countries, with the
BRICS countries still poorly perceived by international standards. Transparency Internationals Corruption Perceptions Index, which
ranks 175 countries, in 2014 had South Africa the highest ranked amongst the BRICS, at 67th, with Brazil in 69th place, India 85th,
China 100th and Russia 136th. is is on an international ranking spectrum in which Denmark was 1st and North Korea and Somalia
were ranked equally last, at 174th. A key challenge for the founding countries of the NDB, AIIB and Silk Road Fund will be to
establish governance structures and decision-making systems having a high degree of transparency, integrity, and independence
Well-established international best practices for
from political inuence in making lending decisions.
governance of -nancial institutions exist already, and the BRICS central banks as
well as other central banks from developing Poors gave the World Bank an AAA
foreign currency credit rating in its April 2014 report, and Moodys gave it an Aaa
long-term issuer credit rating in January 2014. e World Banks strong credit ratings
from international rating agencies, combined with its extremely sound -nancial
management and liquidity position, give it excellent access to international capital
markets for its programs. In comparison, the NDB will probably have a less favourable
-nancial pro-le in the view of international capital markets, due to the smaller
number of government shareholders and their lower sovereign credit ratings in
comparison to the major shareholders of the World Bank. In addition, the -nancial governance and loan portfolio of the NDB will not
have an established track record to begin with, which will also lend it a less favourable credit rating in international -nancial markets,
and make the cost of borrowing higher. On the other hand, the NDB is likely to bene-t from its access to funding from the state-
owned banks of the BRICS countries, notably Chinese state-owned banks, which could provide a very large potential source of
-nancing for the NDB. Stephany Grith-Jones, the eminent professor of development economics at Columbia University, has recently
estimated that, given initial capital of US$ 100 billion, the NDB could be lending up to US$ 34 billion annually in 20 years time
(UNCTAD Discussion Paper No. 215, April 2014); which is roughly equivalent to the current annual lending of the World Bank. e exact
annual lending levels of the NDB will be determined by a complex mix of factors, but the key point is that the governance structure
of the NDB does allow for the future growth of the Chinese and Indian economies to be readily matched by increased capital
subscriptions to the NDB. If the total size of the Chinese and Indian economies does indeed reach 25% of world GDP by 2025, as IHS
long-term projections indicate, this would result in very sizeable increases in the NDBs total capitalisation and in its annual lending
to developing countries. CHINAS PARALLEL INITIATIVES. China has launched other initiatives to expand infrastructure -nancing for
developing countries in Asia. In October 2014, 21 Asian countries agreed to establish a new Asian Infrastructure Investment Bank
(AIIB) for which China will provide up to 50% of the initial capital. In November 2014 at the APEC Summit, President Xi also
announced the creation of the new Silk Road Fund to improve connectivity in Asia, for which China will provide US$ 40 billion of
capital. China is uniquely positioned amongst large emerging markets to be capable of funding signi-cant development -nance
initiatives like the NDB, with foreign exchange reserves estimated at US$ 3.8 trillion as at December 2014. Recognising that such
initiatives will strengthen its political and economic ties with other developing nations, China has now begun to exercise more
signi-cant leadership in global development -nance. In addition to the NDB in July 2014, China has led an initiative to create an Asian
Infrastructure Investment Bank (AIIB), of which the Memorandum of Understanding was signed by 21 Asian countries on October
24th 2014. e AIIB had initial authorised capital of US$ 100 billion, with subscribed capital likely to be around US$ 50 billion. China
has stated its willingness to provide up to 50% of the initial capital for the AIIB. e headquarters of the AIIB will be located in Beijing. -
e AIIB has raised concerns in some quarters about a potential rivalry with the World Bank or the Asian Development Bank, with some
major Asia-Paci-c countries having remained on the sidelines. For many Asian developing countries, however, the AIIB is a much-
needed additional source of infrastructure -nance, and the Chinese initiative has been warmly welcomed by many of them. Like the
NDB, the AIIB creates a mechanism for China and other developing countries to reshape the global -nancial architecture in
development -nance. China is redoubling its eorts to expand its role in international development -nance by committing US$ 40
billion to a new Silk Road Fund that is to -nance infrastructure connectivity in emerging Asia. China made the announcement at the
November 2014 APEC Leaders Summit in Beijing. From the Chinese perspective, the NDB, AIIB and Silk Road Fund achieve a
number of strategic objectives. Firstly, they provide developing countries a source of development -nancing that is not under the
dominion and tutelage of the Bretton Woods institutions with their lending conditionality and their one-sided governing mechanisms.
Secondly, China will be the key source of capital for these new institutions, which from a geopolitical perspective extends Chinas
inuence amongst developing countries, even while e Fortaleza Declaration claimed that the NDB will strengthen co-operation among
the BRICS, and also supplement the work of multilateral and regional -nancial institutions in global development. e Declaration
the BRICS members were disappointed and seriously concerned that
pointedly added that
the 2010 IMF reforms had still not been implemented, and that the IMF governing
structures needed to be modernised to reect the reality of emerging markets and
developing countries.
Currency swaps between Central Bank representatives solves all of the case and
preserves dollar hegemony which solves all of the case promotes stability inside of
international markets --
Xu Mingqi, 3-16-2016 (Ph.D. and professor of international economics and the
deputy Director of the Institute of World Economy and Director of European Studies
Centre at Shanghai Academy of Social Sciences, Co-Director of the Center for World
Economy Studies at Shanghai Institutes for International Studies. He also acts as the
Executive Council Member and the Deputy Secretary-General of China Society for
World Economy Studies and the Secretary-General of Shanghai Society for World
Economy Studies. He is Vice-Chairman of Shanghai Institute for European Studies
and the Executive Director of Shanghai Research Center for International Finance.
Professor Xu has published more than 100 papers and articles in the fields of
international finance, trade, and international and European Economic Issues,
Currency Swap of Central Bank: Influence on International Currency System Social
development and Research foundation, Pg 10-22//)HBJ
Analysis of view of Federal Reserve and
III. Frequently financial crisis break and Western USD currency swap protracted 1.

Western Central Banks swap protracted Before, only short term method of central bank
currency swap against crisis, under financial crisis frequently broken and constant
turmoil of market, it changed into permanent system, but without limits, specific limitations and rules. Market
and academia both aroused wide concern. But whether it can suggest that financial turmoil and crisis already became normal? Or issuer of credit currency-
central bank which faced economic globalization needed cross border currency issue cooperated system to fit with? Or it tried to establish an international

Federal Reserve is the positive pioneer and propellant of currency

currency credit control system?

swap. It is no doubt that they found persuasive evidence by theirs action . Scholar (Fleming
and Klagge, 2010) of Federal Reserve though that after global financial crisis intrigued by financial crisis of USA, USD capital shrinks suddenly occurred in

Federal Reserve, through exchange channel, provided timely USD

global financial market.

liquidity to countries which signed currency swap agreement with USA, thus
financial shrink and attack of these countries were alleviated . According to the research of Federal
Reserve scholar, when market was in shrinkage, USD capital provided by currency swap

channel should low cost of raised USD in market, in which currency swap channel
was provided by Federal Reserve. Therefore they thought that Western central bank 11 swap
which took Federal Reserve as a center provided extra liquidity for out foreign
reserve liquidity. And it contributed to these countries to cope with financial crisis
impact and to alleviate crisis (Goldberg et al., 2011). Of course, why financial crisis of USA would lead liquidity shrinkage of other
countries financial market; why it was impacted by crisis but needed USD to intervene market; they would not talk about these. They implicitly thought
this is a natural and immutable condition. Mainstream economists and scholars of USA have a popular and positive encouraged attitude toward central

if crisis
bank currency swap. Senior research fellow of Peterson Institute for International Economics, Truman (Truman, 2013) points out that

frequently broken and cannot be avoided in future, global central bank

currency swap network should be established and plays the final lender
role as required. He also suggests this network can be divided into three levels and according to different levels to start currency swap as
required. The first level is started by IMF and based on its standard and judgment, when

it is needed, central banks of members are suggested to use swap channel to

provide liquidity for other commercial banks of other countries . The second level is present central
bank group (as six countries central banks) which based on their own standard and judgment to start swap to provide liquidity for market. The third level
is based on bilateral requirement of each central bank to start currency swap. Although he does not discuss how the global currency swap system is
established in detail, what is the essential distinction among the swap start of the three levels and how to avoid ethical risk; international financial
academia gives concentrated attention to his idea. Destais of French Centre D'Etudes Prospectives et D'Informations Internationales (CEPII) thinks that
though central currency swap network may not the best, compared with the last mender with international system, for example, compared with IMF, it
remained a sub-optimal choice which can provide required liquidity (Destais, 2014a) for market when market suffers bad crisis. He also thinks that if
participating swap central bank insists on transparency, positive function of global currency swap network is far more than its negative function.
Therefore, he suggests G20 to regulate some specifications for central bank currency swap to ensure transparency and to avoid ethical risk (Destais
2014b). Of course, he does not explain why IMF is the best option to final lender but cannot realize. Singapore scholar Rana2012 points out that the

reason why currency swap of 12 Western central bank can become liquidity supply system out of
preserved multi-lateral system is that these countries can get needed liquidity as
required in preserved multi-lateral, whether the requirement of getting liquidity is legal ,and the main participator still is issuer
of international currency. Therefore, out of operated varied systems, like IMF, they need a supply channel to get

liquidity, and it is necessary for central bank to do currency swap. From the point of stabilizing
international financial market, Michael Obsfeld et al thinks that when sequence and capital concentration flight are showed up in a country, reserve

level of a country is an important indicator to predicate how much the domestic

currency exchange rate will depreciated, and it is far enough to only base on
adverse balance scale of balance of payments account . Therefore, they also think
that currency swap limits provided by Federal Reserve is a reserve line of a country
which has the same function of stabilizing interest rate as foreign exchange reserve
(Obstfeld et al, 2009).
 Yuan Adv
Chinas economy is stable current reforms solve
Xinhua 8/12/16(The Xinhua News Agency is the official press agency of the People's Republic of
China. Xinhua is the biggest and most influential media organization in China. China's economy
stable, restructuring underway, http://news.xinhuanet.com/english/2016-08/12/c_135590999.htm)

BEIJING, Aug. 12 (Xinhua) -- A string of economic data for China in July came in slightly lower than expectations, as widespread
flooding disrupted business activity and continued economic restructuring and reform experienced growing pains. The pace of fixed-
asset investment slipped to 8.1 percent in the January-July period, the lowest growth in over a decade, from a 9-percent increase in
Growth of industrial
the first half of the year, according to data released by the National Bureau of Statistics (NBS) Friday.
production and consumption also softened. Value-added industrial output expanded 6
percent year on year in July, slower than the 6.2 percent increase for June. Retail sales growth eased to 10.2 percent
after a rise of 10.6 percent the previous month. Commenting on the data, NBS spokesperson Sheng Laiyun said the shape of
China's economy has some ups and downs, but the underlying trend remains positive. The economy was
running within a reasonable range despite headwinds at home and abroad, he said. China has been trying to wean
the economy off its over-reliance on exports and investment, toward a growth model that
drains strength from consumer spending, innovation and services sector . According to
Sheng, economic restructuring is at a "crucial stage," and some of the reform policies were starting to work, weighing on economic
growth in the short term. Economic growth held steady at 6.7 percent in the second quarter, the lowest
level since the 2009 global financial crisis but still within the government's target range of 6.5-7 percent for 2016. Amid downward
Instead, it chose
economic pressure, China has resisted the temptation of temporary fixes like aggressive monetary easing.
structural reform as the tool to put the economy on a more sustainable path . To push supply-
side structural reform, the country prioritized the tackling of industrial overcapacity,
reduction of housing inventories, deleveraging to defuse financial risks and lowering
companies' financing costs. The slowing fixed-asset investment growth for the first seven months
was dragged by a 22.9 percent fall in the mining sector, indicating the government's efforts
to cut coal and steel overcapacity are working. Property development investment growth slowed to 5.3
percent in the January-July period, from 6.1 percent in the first half. Private sector investment climbed 2.1
percent in the first seven months, slowing further from an already weak 2.8-percent rise in the first half. Sheng
attributed the continued weakness in private sector investment, which accounts for 61.4 percent of total fixed-asset investment, to
the slowdown in export manufacturing, entrance barriers for private companies in some sectors, limited access to loans and
widespread flooding in some areas. Investment growth by state-owned enterprises also slowed to
21.8 percent in the first seven months, from 23.5 percent in the first half. Infrastructure investment jumped 19.6 percent
during the period, decelerating from 20.9 percent in the first half. Breakdown of Friday's data shone a light on the economy as new
development dynamics gained steam, with new industries, new technologies, new services and new business models prospering.
Output of the high-tech industry climbed 12.2 percent in July, accelerating from June's 10.6-
percent increase. New energy car production grew 52.5 percent in July. Revenues of
strategic emerging services gained 15.6 percent year-on-year in the first half, according to NBS
data. Chinas blue-chip CSI300 index climbed for a sixth straight session on Tuesday, with July consumer inflation data
keeping alive hopes of further monetary policy easing, while improving producer prices attracted bets on resources shares.

China economic downturn will be peaceful

Miller, 2014, PhD Poli Sci (Charles, Will China regress to the mean?,
http://www.aspistrategist.org.au/will-china-regress-to-the-mean/)
Now what does this have to do with China? Well, former US Treasury Secretary Larry Summers and fellow Harvard
economist Lant Pritchett have just written a paperdescribed by Marginal Revolutions Tyler Cowen as one of the
best and most important economics papers Ive seen all yearsuggesting that regression to the mean is exactly
Analysing decades of statistical evidence on
whats most likely to happen to the Chinese economy.
economic growth, they note that the best predictor of how much a country will grow
in future isnt its current growth rate, rather the global average growth rate.
Expansions as rapid and as sustained as Chinas are historically rare . Most countries which
are highly developed today got there by posting solid and moderate but sustained economic growth over a long
time frame (the US, Britain, Denmark). Many lower income countries by contrast have hosted spectacular booms
over a couple of decades, followed by busts which undo many of the gains (Brazil being one example).
Economic predictions, dont have a great track record (though I argue theyre getting
better and Summers himself is better than most). Moreover, even the best predictions are
probabilistic rather than deterministic. Maybe theres something about China that our growth models
arent capturing which will allow it to keep on expanding at a rapid clip. Summers and Pritchett limit themselves to
concluding that the burden of proof should lie with those who believe itll continue to post the current spectacular
the main China-
growth rates and not those who forecast a more modest trajectory. But as far as Im aware,
specific factors are also pointing in a bearish direction . The ageing population is one
well known factor, as is the possibility of radical political change (more of which below).
What could be even more important though is the lack of strong property rights (a point also made by MITs
economists Daron Acemoglu and James Robinson). Property rights are increasingly being seen as
the key to long-term economic growth in the developing world because they give
entrepreneurs the assurance that their hard work, innovation and risk taking will be
appropriately rewarded. Unfortunately, China currently falls down rather badly on that score. Summers and
Pritchetts argument is convincing . If Chinas growth does revert to the mean, what

might the consequences be for Asia-Pacific security? Pessimists such as my

The CCP
dissertation chair Peter Feaver argue that a weak China could be just as vexing as a strong China.
could, for instance, engage in overseas adventurism to bolster its flagging popularity .
However, the empirical evidence that such diversionary wars happen isnt

strong . More likely, a China which reverted to the mean global growth rate, while
bad for the global economy, could be good for global security . It would give
its neighbours fewer incentives to engage in arms build-ups . Moreover, if
China also transitions towards democracy (which Summers and Pritchett suggest as
a likely reason why its growth could slow), then it would be still more
reassuring to outsiders . A future which includes a slower growing, democratic mainland China may be
less prosperous and more banal, but also less insecure. Perhaps were not cursed to live in interesting times after
all.

Economic decline doesnt cause war

Robert Jervis, Professor of International Politics in the Department of Political
Science at Columbia University, 2011 (Force in Our Times, Saltzman Working Paper
No. 15, July 2011,
http://www.siwps.com/news.attachment/saltzmanworkingpaper15-
842/SaltzmanWorkingPaper15.PDF)
Even if war is still seen as evil, the security community could be dissolved if severe conflicts of interest were to arise. Could
the more peaceful world generate new interests that would bring the members of the community into sharp disputes? 45 A
zero-sum sense of status would be one example, perhaps linked to a steep rise in nationalism. More likely would be a
worsening of the current economic difficulties, which could itself produce greater nationalism, undermine democracy, and
it is hard to believe
bring back old-fashioned beggar-thy-neighbor economic policies. While these dangers are real,
that the conflicts could be great enough to lead the members of the community
to contemplate fighting each other. It is not so much that economic interdependence has proceeded to
the point where it could not be reversed states that were more internally interdependent than anything seen internationally
even if the more extreme versions of free trade
have fought bloody civil wars. Rather it is that
and economic liberalism become discredited, it is hard to see how without
building on a pre-existing high level of political conflict leaders and mass
opinion would come to believe that their countries could prosper by
impoverishing or even attacking others. Is it possible that problems will not only become severe, but
that people will entertain the thought that they have to be solved by war? While a pessimist could note that this argument
the
does not appear as outlandish as it did before the financial crisis, an optimist could reply (correctly, in my view) that
very fact that we have seen such a sharp economic down-turn without anyone
suggesting that force of arms is the solution shows that even if bad times bring
about greater economic conflict, it will not make war thinkable.
Interdependence theory is false
Mearsheimer 16 (John J Mearsheimer R. Wendell Harrison Distinguished
Service Professor University of Chicago Co-director, Program on International
Security Policy University of Chicago, March 10, Peter Navarro (Huff Post) interview
with John mearsheimer, Mearsheimer on Strangling China & the Inevitability of War,
http://www.huffingtonpost.com/peter-navarro-and-greg-autry/mearsheimer-on-
strangling_b_9417476.html)//SLR
Many
As for the idea that economic engagement itself is a viable peace strategy, Professor Mearsheimer sees this as decidedly counter-historical:

people find it hard to believe that countries that engage in security competition also
continue to trade with each other economically. But if you look at Europe before
World War I and, indeed, if you look at Europe before World War II, what you see is
that there was a great deal of economic interdependence on the continent and with
Britain before both world wars. So I believe that if China continues to grow economically, there will still be much economic
intercourse between China and its neighbors and China and the United States. And I still think that you will have a lot of

potential for trouble between these two countries. And dont forget, even though you had all
this economic intercourse between World War I and World War II, you still got World
War I and you still got World War II. If you look at Europe before World War I, there
were extremely high levels of economic interdependence between Germany and
virtually all of its neighbors, certainly between Germany and Russia, Germany and France, and Germany and Britain, these were the
main players. And despite this economic interdependence , these high levels of

economic interdependence, you still got World War I . Another example would
be the period before World War II. The Germans invaded the Soviet Union on June 22, 1941. And for the previous two years,
Germany and the Soviet Union this is Nazi Germany and Stalins Soviet Union had been close allies in Europe. In fact, in September 1939 they had

there was a great deal of economic intercourse between

invaded Poland together and divided it up. So

Nazi Germany and the Soviet Union between 1939 and 22 June, 1941.
Nevertheless, that economic interdependence did not prevent World War
II from escalating into a major war between Moscow and Berlin . And, in fact, there
are all sorts of stories about the German forces invading the Soviet Union and passing trains that were going into the Soviet Union that were carrying

German goods, and trains coming from the Soviet Union towards Germany that were carrying Soviet raw materials and some Soviet goods as well. So
there was economic interdependence between Germany and the Soviet
Union and yet you still got a war. Closely related to the argument that economic engagement will prevent war
between the US and China is the economic interdependence argument. In Professor Mearsheimers world thats a dangerous gamble because

politics and nationalism can often trump economics . Ive talked about the fact that I think
China cannot rise peacefully , probably a hundred times; and the argument that is used
against me most often is clearly the economic interdependence argument , and it goes like
this: The United States and China, and China and its neighbors are all hooked on capitalism and everybody is getting rich in this world of great economic
interdependence; and nobody in their right mind would start a war because you would, in effect, be killing the goose that lays the golden egg. So that

what is happening here is that economic interdependence has created a situation where its a firm basis for peace. I think this is
wrong . Let me explain. I think theres no doubt that there are going to be certain circumstances where economic interdependence will be enough
to tip the balance in favor of peace; but I think as a firm basis for peace, it wont work because
there will be all sorts of other situations where politics trumps economics .
People who are making the economic interdependence argument are basically
saying that economics trumps politics. There are no political differences that are
salient enough, right, to override those economic considerations? Again, there will be cases where
thats true. But there will be many more cases , in my opinion, where political considerations are so

powerful, so intense, that they will trump economic considerations . And just to give you
an example or two. Taiwan : The Chinese have made it clear that if Taiwan were to declare
its independence now, they would go to war against Taiwan, even though they fully
understand that that would have major negative economic consequences for
Beijing. They understand that, but they would go to war anyway. Why? Because
from a political point of view, it is so important to make Taiwan a part of China, that
they could not tolerate Taiwan declaring its independence. Another example is the
conflict in the East China Sea between Japan and China, over the Diaoyu or Senkaku Islands. It is
possible to imagine those two countries, China and Japan, actually ending up in a
shooting match over a bunch of rocks in the East China Sea. How can this possibly be because it would
threaten the economic prosperity of both countries? It would have all sorts of negative economic consequences. But the fact is, from the

Chinese point of view and the Japanese point of view, these rocks are sacred
territory . The politics of the situation are such that it is conceivable that should a
conflict arise, it will escalate into a war because politics will trump economics.

Richter is in the context of Real estate companies leaving

China and never describes how that or investor confidence for
China implicates the global market

For some reason you cut an internal link turn to your aff no
internal link to global economy and deflation doesnt kill
investor confidence deflation of the RMB is key to lower
commodity prices that solve the economy better
1ac Chris Giles 1-7-16 (writer at Financial Times., World economy feels the
impact when China takes a knock, pg. online @
https://next.ft.com/content/30441208-b548-11e5-b147-e5e5bba42e51//)HBJ
If the past six months economic news has taught the world one thing, it is that a bump in Chinas economy cannot be ignored. The question is whether the rest of the world feels a

China is now the worlds largest economy measured by the quantity of

gentle ripple or a tidal wave.

goods and services produced, and the International Monetary Fund expects the country to account for almost 18 per cent of world economic activity
in 2016. This implies that the drop in its growth rate from an expansion of more than 10

per cent in 2010 to 6.3 per cent expected this year has directly knocked about 0.75
percentage points off the global growth rate . The spillover effects, however, are much broader than this direct calculation of Chinas
importance. Maury Obstfeld, the IMF chief economist, says he is most worried about these knock-on effects in 2016. The global spillovers from Chinas reduced rate of growthhave
been much larger than we would have anticipated, he said this week. What are the channels through which China affects the global economy? Trade and exchange rates Although
Chinas import volumes are still growing, a weaker than expected economy directly cuts the export growth of countries that are highly dependent on Chinese demand for oil, metals,

centres. Neighbours with integrated supply chains such as Japan and South Korea are deeply affected, Germany is most at risk in
materials and machine tools in its industrial

direct trade effects are

Europe as a producer of capital goods to China and commodity specialists such as Australia also stand in the firing line. But

rarely an immediate game changer and as the worlds largest net exporter , China is
more dependent on the world economy than it is on China . One way to amplify the
trade effects would be through a massive depreciation of the renminbi in an attempt
to revive Chinese export-led growth. The renminbi has dropped 6 per cent against
the US dollar since July, spreading fears of a currency war, but against its wider trading partners Chinas exchange rate appreciated marginally in 2015. A
currency war still seems some distance away. Oil and commodities Worries about Chinas economic strength is part
of the reason for the renewed drop in oil prices, dragging Brent crude down to an 11-year low, below $33 a barrel on Thursday. Weakness in oil and other commodity prices has pushed
Russia and Brazil into deep recessions and hit the finances of Gulf states. Global investment in oil extraction has slumped, undermining parts of the US economy and sectors in other
countries hosting capital goods manufacturers. But low oil and commodity prices mostly redistribute economic prospects around the world rather than diminish them. Oil producers lose,
but consumers, including those in China itself, gain from the equivalent of a tax cut. The IMF still thinks the net effect of lower commodity prices is positive. At worst, it damps the
otherwise more serious effects of lower-than-expected Chinese demand growth. Inflation and monetary policy Whether it is a weaker renminbi making Chinese goods more affordable,
lower commodity prices or reduced demand in the world economy, a China slowdown weakens inflationary pressures around the world, triggering fears of a global deflationary spiral and

if advanced economies genuinely appear to be suffering from flat lining

debt defaults. But,

prices, low inflation also gives policymakers additional leeway to keep monetary
policy looser for longer in the US and UK and to add to quantitative easing in
Europe. Fears of a downward spiral are exaggerated. Many of these lower
prices also increase the prosperity of consumers around the world and should boost
demand, thereby offsetting Chinese deflationary for ces.
 Financial Diplomacy Adv
Roach says the AIIB was an international embarrassment for
the US and they cant overcome it
Specifically, China has commanding veto power over all major
decisions it also has a $100 billion capital stock so the US
structurally cannot get large enough voting power to change
standards from within the bank
Japan Times, 1-17-2016, "Xi inaugurates Asian Infrastructure Investment Bank,
says China will take more international responsibility,"
http://www.japantimes.co.jp/news/2016/01/17/business/xi-inaugurates-asian-
infrastructure-investment-bank-says-china-will-take-international-
responsibility/#.V65Ns5grK00//)HBJ
BEIJING Chinese President Xi Jinping on Saturday inaugurated the Asian Infrastructure Investment Bank,
saying China will take more international responsibility with the birth of the new
lender. This is a historic moment, Xi said, adding that China wants to improve the investment
environment and integration in Asia through the 57-member AIIB. Xi made the remarks at a
ceremony in Beijing to mark the inception of the bank, which symbolizes Chinas rise and is seen as a challenge to
the U.S.-dominated global financial architecture. It will enable China to undertake more international obligations,
promote improvement of the current international economic system and provide more international public goods,
he said at the Diaoyutai State Guesthouse. The event came on the same as elections on the self-ruled democratic
island of Taiwan, which is seen by Beijing as a renegade province. Independence-leaning opposition leader Tsai Ing-
wen won the presidential election by a landslide amid public worries, especially among young people, about the
growing clout of mainland China. Chinese official media repeatedly reported the inauguration of the AIIB, but there
While a more than dozen European countries
was almost no coverage of the Taiwan elections.
decided to join the AIIB, Japan and the United States did not do so, citing such reasons as
skepticism over whether it will have sound lending standards and whether
infrastructure projects to be funded by it will be environmentally friendly. To begin with,
the investment bank has an authorized capital stock of $100 billion . China is its
largest shareholder, with a stake of about 30 percent, followed by India, Russia,
Germany and South Korea, none of which has a share of more than 10 percent.
China will effectively have veto power, as approval by at least 75 percent of those
with voting rights will be necessary for important issues such as changes to the
board of directors. At the ceremony, attended by about 450 people, including ministers and senior officials of
the founding members, Xi said China will invest an additional $50 million in the AIIB as a
special fund.

Escalation is empirically denied- Kargil war and 2004 cyber

attacks proves that there wont be escalation
Our allies serve as proxies solves Financial diplomacy
Morris, 15 --- Senior Fellow, Director of Rethinking US Development Policy at
Center for Global Development (1/19/15, Scott, How China and the United States
Can Come To Terms on the AIIB,
http://www.boaoreview.com/Opinions/Finance/20150119/483.html, downloaded
4/23/16, JMP)
Concessions the US should makeFor the U nited S tates, the first step is to back off its AIIB opposition . Yes, the
Australians may have been temporarily persuaded to decline Chinas invitation as a result of US diplomatic efforts, but for the longer term, this is a

losing strategy since it amounts to telling countries not to do what they view is in
their best interests. And with little likelihood that the U nited S tates itself would ever
become a member of the AIIB legislative procedures alone make it prohibitive it
is all the more useful for the Americans to have like-minded countries as AIIB
shareholders who can serve as effective proxies for US views within the
institution . But the real opportunity for a constructive policy shift from the U nited S tates
comes in regards to the ADB, not the AIIB. After all, if the US wants to maintain
regional influence through a multilateral institution, then it ought to focus on the
regional development bank where it already has influence. To put it bluntly, the US strategic
aim should be to ensure that the AIIB does not eclipse the ADB. This is something
that cannot be achieved by criticizing the AIIB, but rather by making the ADB as
attractive and robust in the region as possible . Even better, a pro-ADB strategy
is something the Chinese will likely embrace . They have demonstrated
through their own engagement with the bank that the regional choice does not need
to be ADB or AIIB. It can and should be both. So what would make for a more
attractive ADB? Perhaps more than anything else, more capital. Fortunately, the U nited S tates will have an
opportunity over the next few years to lead a capital-raising effort

at no new cost to US taxpayers. The US stands to save about $60 million a year as
a donor to the ADBs grant-making activities as a result of the banks pending
financial reforms. Rather than pocketing that money, why not put it to use as new
paid in capital in the bank? Combined with other countries contributions to a capital increase
and the leverage of the ADBs own borrowing, that $60 million could boost the banks infrastructure

investment capacity by about $5 billion annually in just five years . The U nited S tates
could also ease tensions with the Chinese by dropping the wrongheaded drive to
kick China out of the ADBs club of borrowers. The banks lending to China actually
delivers financial stability to the institution and serves as a useful market test of the
ADBs products and services. After all, China, more than any other country in the region, has options when it comes to development finance. The
banks efforts to remain attractive to the Chinese, particularly when it comes to
technical assistance and knowledge products, is a useful discipline and motivator
for the institution that ultimately benefits all ADB borrowers.

Loss of lifeline deters ISIS

Walker 6/17 (Jamie Walker Middle East correspondent, Kurds cut ISIS lifeline to
supplies The Australian, http://www.theaustralian.com.au/news/world/kurds-cut-
isis-lifeline-to-supplies/story-e6frg6so-1227401204116) // CW
A lifeline to Islamic States proclaimed capital in Syria has been severed with the fall of the -
strategic border town of Tal Abyad to Kurdish-led forces. The collapse of the jihadists resistance was announced
last night in a telling blow for Islamic State, cutting a key supply route from Turkey to its
command centre in Raqqa. The Syrian Observatory for Human Rights, a well-regarded monitor of the see-
sawing war in Syria and Iraq, said Kurdish militia backed by Syrian opposition forces had seized Tal Abyad. Since
dawn this morning not a single shot has been fired in Tal Abyad, said the monitoring groups director, Rami Abdel
Islamic State, also known as ISIS, has used the
Rahman. The Kurdish fighters now have full control.
strategic town, on the Syrian side of the border with Turkey, as a funnel for fighters, weapons, -
ammunition and supplies. Tal Abyads recapture means the extremists must rely on border
crossings further west in neighbouring Aleppo province, adding hundreds of kilometres to the supply line and
increasing the likelihood of convoys being intercepted or destroyed. The opposition
attack was aided by heavy airstrikes by the US-led military coalition that is bombing
Islamic State and counts as a welcome success after the Iraqi city of Ramadi and
Palmyra in central Syria were overrun by the militants. The onslaught from the air and on the
ground forced thousands of civilians, inciting harrowing scenes on the border with Turkey as mothers pushed
children and babies through torn-down fencing at closed checkpoints. The loss of Tal Abyad, only 80km north of
Raqqa, the capital of the Islamic States self-declared caliphate, is the extremists biggest setback
since Kurdish fighters took control of Kobani.

Deterrence and diplomacy solve

PTI, 2-24-2016, (Press trust of India, Nuclear Deterrence a 'Factor of Stability' in
South Asia: Pakistan http://www.newindianexpress.com/world/Nuclear-Deterrence-
a-Factor-of-Stability-in-South-Asia-Pakistan/2016/02/24/article3294797.ece//)}HBJ
ISLAMABAD:Describing its nuclear arsenal as a "factor of stability in South Asia",
Pakistan today said it will maintain a full-spectrum deterrence and take steps to effectively
respond to the threats to its national security. During the 22nd meeting of the National Command Authority under
the chairmanship of Prime Minister Nawaz Sharif, the nuclear watchdog reviewed regional and international security
environment. "NCA took note of the growing conventional and strategic weapons' development in the region. It
expressed serious concerns over the adverse ramifications for peace and security on this account," a statement by
the army said. The NCA reaffirmed its determination to take all possible measures to make national security robust,
enabling it to effectively respond to the threats to national security without
indulging in arms race. "Reiterating that nuclear deterrence is the factor of stability
in South Asia, NCA expressed the resolve to maintain Full Spectrum Deterrence, in
line with the policy of Credible Minimum Deterrence ," the statement said. Today's meeting was
held ahead of the nuclear security summit scheduled next month in the US. It was attended by Federal Ministers for
Defence, Finance and Interior, Advisor on Foreign Affairs, Chairman Joint Chiefs of Staff Committee, Services Chiefs,
Director General Strategic Plans Division. In previous meetings, the NCA has noted with concern India's rapidly
expanding conventional military asymmetry and dangerous limited conventional war policy called the 'Cold Start'
it re-emphasised Pakistan's desire for establishing the Strategic
doctrine. Today,
Restraint Regime in South Asia and the inescapable need of a meaningful and
sustained comprehensive dialogue process for resolution of all outstanding disputes,
ushering in an era of peace and prosperity in the region. The NCA noted that Pakistan has the requisite
credentials to become part of all multi-lateral export control regimes, including the Nuclear Suppliers Group, for
which it seeks a non-discriminatory approach. The participants reviewed the security and safety
mechanism of Pakistan's nuclear programme and expressed satisfaction over the measures in-
place to ensure highly- effective security of strategic assets and installations. They reposed confidence in
the command and control system of the national strategic capability and
appreciated the standard of operational preparedness of strategic forces. Details of
inter-agency process to ratify the Convention on Physical Protection of Nuclear Material
(Amended) by Pakistan were presented to the NCA and it gave approval for its
ratification. The NCA said as a responsible nuclear State Pakistan would continue to
contribute meaningfully towards the global efforts to improve nuclear security and
non-proliferation measures.
2NC CP
2NC DA
 2NC Overview -- Resolve
China doesnt base action off capabilities but resolve---
focusing on de-escalation emboldens them.
Mastro, Georgetown Edmund A. Walsh School of Foreign Service
professor, 2015
(Oriana, Why Chinese Assertiveness is Here to Stay, Washington Quarterly,
Winter, http://www.ciaonet.org/attachments/27434/uploads)
These efforts are commendablethe United States rightly works to preserve its military superiority and retain its ability to project
power in the region. During the Cold War, when the greatest pacing threats were land conflicts, forward deploying U.S. forces in
China is
Europe and Asia were sufficient to demonstrate the credibility of the U.S. commitment to peace in those regions. But
currently testing the waters not because its leaders are uncertain about the balance
of power, but because they are probing the balance of resolve . This means that staying
ahead in terms of military might is insufficient in contemporary East Asia.
Chinas strategists are betting that the side with the strongest military does not
necessarily win the warthe foundation of the deterrent pillar of its A2/AD strategy.
Indeed, Chinas experience in fighting the Korean War proves that a country willing to sacrifice blood and treasure can overcome a
technologically superior opponent. The belief that balance of resolve drives outcomes more so
than the balance of power is the foundation of Chinas new, more assertive strategy;
but U.S. responses to date have failed to account for it. Canned
demonstrations of U.S. power fail to address the fundamental uncertaint y concerning U.S.
willingness, not ability, to fight. The U.S. focus on de-escalation in all situations only

exacerbates this issue . The Cold War experience solidified the Western narrative stemming from World War I that
inadvertent escalation causes major war, and therefore crisis management is the key to maintaining peace.74 This has created a
Chinese leaders do
situation in which the main U.S. goal has been de-escalation in each crisis or incident with Beijing. But
not share this mindsetthey believe leaders deliberately control the escalation
process and therefore wars happen because leaders decide at a given juncture that
the best option is to fight.75 China is masterful at chipping away at U.S.
credibility through advancing militarization and coercive diplomacy . It
often uses limited military action to credibly signal its willingness to escalate if its
demands are not met. Strategist Thomas Schelling theoretically captured this approach when he wrote it is the sheer
inability to predict the consequences of our actions and to keep things under control that can intimidate the enemy.76

Because China introduces risk for exactly this reason, the U.S. focus on
deescalation through crisis management is unlikely to produce any
change in Chinese behavior if anything it will only encourage greater
provocations. Beijing has identified the U.S. fear of inadvertent escalation, and is exploiting it to compel the United States to
give in to its demands and preferences. In this way, the U.S. focus on de-escalation may actually

be the source of instability by rewarding and encouraging further Chinese

provocations . To signal to China that the United States will not opt out of a conflict,
Washington must signal willingness to escalate to higher levels of conflict when
China is directly and purposely testing U.S. resolve . This may include reducing channels of
communication during a conflict, or involving additional regional actors, to credibly demonstrate that China will not be able to use
asymmetry of resolve to its advantage. The current mindsetthat crisis management is the answer in all scenarios will be difficult
to dislodge, given the tendency among U.S. military ranks to focus on worst-case great battle scenarios. While realistic in Cold War
operational planning, decision makers should consider instead the less violent and prolonged engagements that characterize
Chinese coercive diplomacy when evaluating risk and reward, such as the 1962 SinoIndian War or the 1974 Battle of the Paracel
The idea that any conflict with China would escalate to a major war, destroy
Islands.

the global economy, and perhaps even escalate to a nuclear exchange has no
foundation in Chinese thinking , and causes the United States to concede in
even the smallest encounters. While the Chinese leadership has proven to be more
risk-acceptant than the United States (or perhaps more accurately, to assess the
risks to be less than those perceived by U.S. strategists), Xi still wants to avoid an
armed conflict at this stage. In his November 2014 keynote address at the Central Foreign Affairs Work Conference,
he noted that China remains in a period of strategic opportunity in which efforts should be made to maintain the benign strategic
environment so as to focus on internal development.77 Ultimately, the U.S. regional objective must be peace and stability at an
acceptable cost. Given this, it is critical to understand the four components of Chinas A2/AD strategy, the strategic foundation for
addition to regularly
Chinas recent assertiveness, and how best to maintain the U.S. position as a Pacific power. In
attending meetings in the region and developing new technology, new platforms,
and new operational concepts designed to defeat Chinas A2/AD strategy, the
United States needs to break free of its Cold War based paradigm paralysis and
rethink conceptions of limited war, escalation, and risk. Scolding China and
imposing symbolic costs for each maritime incident is unlikely to inspire the
corrective change U.S. thinkers are hoping for. The United States needs to
fundamentally change its approach by accepting higher risk and allowing
for the possibility of escalation both vertically in force as well as horizontally to include other countries.
This admittedly is a difficult balance, especially given the need to avoid emboldening U.S. allies to take actions that run contrary to
But only by mastering these two balancing actsfocusing on balancing
U.S. interests.

resolve, rather than forces, and prioritizing stability over crisis management will
the United States be able to maintain peace and stability in East Asia
without sacrificing U.S. or allied interests.

Rivalry is inevitable expanding economic or political

integration of China assists Chinese ascendancy
Tellis and Blackwill, CFR fellow and Carnegie senior asscoaite, 2015
(Ahley and David, U.S. Grand Strategy Toward China, 4-13,
http://carnegieendowment.org/files/Tellis_Blackwill.pdf)

Because the American effort to integrate China into the liberal international order
has now generated new threats to U.S. primacy in Asiaand could eventually result in a
consequential challenge to American power globally Washington needs a new grand

strategy toward China that centers on balancing the rise of Chinese power
rather than continuing to assist its ascendancy . This strategy cannot be built on a bedrock of
containment, as the earlier effort to limit Soviet power was, because of the current realities of globalization. Nor can it involve simply
jettisoning the prevailing policy of integration. Rather, it must involve crucial changes to the current policy in order to limit the
These changes, which
dangers that Chinas economic and military expansion pose to U.S. interests in Asia and globally.
constitute the heart of an alternative balancing strategy, must derive from the clear
recognition that preserving U.S. primacy in the global system ought to remain the central
objective of U.S. grand strategy in the twenty-first century . Sustaining this status in
the face of rising Chinese power requires , among other things, revitalizing the U.S. economy to nurture those
disruptive innovations that bestow on the United States asymmetric economic advantages over others; creating new preferential

trading arrangements among U.S. friends and allies to increase their mutual gains through instruments that
consciously exclude China ; recreating a technology-control regime involving U.S. allies that
prevents China from acquiring military and strategic capabilities enabling it to
inflict high-leverage strategic harm on the United States and its partners; concertedly building up the power-political capacities of
U.S. friends and allies on Chinas periphery; and improving the capability of U.S. military forces to effectively project power along the
Asian rimlands despite any Chinese oppositionall while continuing to work with China in the diverse ways that befit its importance
The necessity for such a balancing strategy that deliberately
to U.S. national interests.
incorporates elements that limit Chinas capacity to misuse its growing power, even
as the United States and its allies continue to interact with China diplomatically and
economically, is driven by the likelihood that a long-term strategic rivalry between
Beijing and Washington is high. Chinas sustained economic success over the past thirty-odd years
has enabled it to aggregate formidable power , making it the nation most capable of dominating the Asian
continent and thus undermining the traditional U.S. geopolitical objective of ensuring
that this arena remains free of hegemonic control . The meteoric growth of the
Chinese economy, even as Chinas per capita income remains behind that of the United States in the near future, has
already provided Beijing with the resources necessary to challenge the security of
both its Asian neighbors and Washingtons influence in Asia,

with dangerous consequences. Even as Chinas overall gross domestic product (GDP) growth
slows considerably in the future, its relative growth rates are likely to be higher than
those of the United States for the foreseeable future, thus making the need to balance its rising
power important. Only a fundamental collapse of the Chinese state would free
Washington from the obligation of systematically balancing Beijing, because even
the alternative of a modest Chinese stumble would not eliminate the dangers
presented to the United States in Asia and beyond. Of all nationsand in most conceivable scenarios
China is and will remain the most significant competitor to the United States for decades to come.6 Chinas rise thus far
has already bred geopolitical, military, economic, and ideological challenges to U.S.
power, U.S. allies, and the U.S.-dominated international order. Its continued, even if
uneven, success in the future would further undermine U.S. national interests.

Washingtons current approach toward Beijing, one that values Chinas economic and
political integration in the liberal international order at the expense of the United States global preeminence and
long-term strategic interests, hardly amounts to a grand strategy, much less an effective
one. The need for a more coherent U.S. response to increasing Chinese power is long
overdue.
2NC Yuan Adv
 2nc -- No impact (1:00)
1) Politics trumps trade in leaders calculus
Gartzke 16 Professor of political science @ UC-San Diego (Eric, The complex
structure of commercial peace contrasting trade interdependence, asymmetry, and
multipolarity, Journal of Peace Research, 53.3)
Conflict occurs because states possess incompatible interests , and because
adversaries are unwilling or unable to resolve differences nonviolently (Fearon,
1995). The prospect of trade losses can discourage con- flict where the risk posed to
commerce from fighting is large relative to the value of the stakes in a dispute. To
deter conflict, trade partners must prefer the status quo to making, or resisting,
demands for change. However, militarized conflicts tend already to be costly ;
additional incremental burdens due to trade are unlikely to significantly alter
states calculations of risk and return . If the cost of fighting varies with the
intensity of a dispute, then the deterrent effect of commercial ties should do more
to alter the intensity of contests than their propensity.
 2nc -- No Impact to Collapse

No impact causes peace

Barnett 9 (Thomas, Senior Strategic Researcher Naval War College, The New
Rules: Security Remains Stable Amid Financial Crisis, Asset Protection Network, 8-
25, http://www.aprodex.com/the-new-rules--security-remains-stable-amid-financial-
crisis-398-bl.aspx)

When the global financial crisis struck roughly a year ago, the blogosphere was ablaze with
all sorts of scary predictions of, and commentary regarding, ensuing conflict and wars -- a rerun of
the Great Depression leading to world war, as it were. Now, as global economic news brightens and
recovery -- surprisingly led by China and emerging markets -- is the talk of the day, it's interesting to look back over
the past year and realize how globalization's first truly worldwide recession has had virtually no
impact whatsoever on the international security landscape. None of the more than three-
dozen ongoing conflicts listed by GlobalSecurity.org can be clearly attributed to the global
recession. Indeed, the last new entry (civil conflict between Hamas and Fatah in the Palestine)
predates the economic crisis by a year, and three quarters of the chronic struggles began in the last
century. Ditto for the 15 low-intensity conflicts listed by Wikipedia (where the latest entry is the Mexican "drug war"
begun in 2006). Certainly, the Russia-Georgia conflict last August was specifically timed, but by most accounts the
opening ceremony of the Beijing Olympics was the most important external trigger (followed by the U.S.
presidential campaign) for that sudden spike in an almost two-decade long struggle between Georgia and its two
breakaway regions. Looking over the various databases, then, we see a most familiar picture: the usual mix of civil
conflicts, insurgencies, and liberation-themed terrorist movements.Besides the recent Russia-Georgia dust-
up, the only two potential state-on-state wars (North v. South Korea, Israel v. Iran) are both
tied to one side acquiring a nuclear weapon capacity -- a process wholly unrelated to global

economic trends. And with the U nited S tates effectively tied down by its two ongoing major
interventions (Iraq and Afghanistan-bleeding-into-Pakistan), our involvement elsewhere around the

planet has been quite modest , both leading up to and following the onset of the economic crisis: e.g., the
usual counter-drug efforts in Latin America, the usual military exercises with allies across Asia, mixing it up with
pirates off Somalia's coast). Everywhere else we find serious instability we pretty much let it
burn , occasionally pressing the Chinese -- unsuccessfully -- to do something. Our new Africa Command, for
example, hasn't led us to anything beyond advising and training local forces. So, to sum up: No significant
uptick in mass violence or unrest (remember the smattering of urban riots last year in places like Greece,
Moldova and Latvia?); The usual frequency maintained in civil conflicts (in all the usual places); Not a single

state-on-state war directly caused (and no great-power-on-great-power crises

even triggered); No great improvement or disruption in great-power cooperation regarding the
emergence of new nuclear powers (despite all that diplomacy); A modest scaling back of international policing
efforts by the system's acknowledged Leviathan power (inevitable given the strain); and No serious efforts by any
rising great power to challenge that Leviathan or supplant its role. (The worst things we can cite are Moscow's
occasional deployments of strategic assets to the Western hemisphere and its weak efforts to outbid the United
States on basing rights in Kyrgyzstan; but the best include China and India stepping up their aid and investments in
Afghanistan and Iraq.) Sure, we've finally seen global defense spending surpass the previous world record set in the
late 1980s, but even that's likely to wane given the stress on public budgets created by all this unprecedented
"stimulus" spending. If anything, the friendly cooperation on such stimulus packaging was the most notable great-
power dynamic caused by the crisis. Can we say that the world has suffered a distinct shift to
politicalradicalism as a result of the economic crisis? Indeed, no. The world's major economies
remain governed by center-left or center-right political factions that remain decidedly friendly to both
markets and trade. In the short run, there were attempts across the board to insulate economies from
immediate damage (in effect, as much protectionism as allowed under current trade rules), but there was no

great slide into "trade wars." Instead, the W orld T rade O rganization is functioning as it was
designed to function, and regional efforts toward free-trade agreements have not slowed. Can we say Islamic
radicalism was inflamed by the economic crisis? If it was, that shift was clearly overwhelmed by the
Islamic world's growing disenchantment with the brutality displayed by violent extremist groups such as al-
Qaida. And looking forward, austere economic times are just as likely to breed connecting evangelicalism as
disconnecting fundamentalism. At the end of the day, the economic crisis did not prove to be sufficiently frightening
to provoke major economies into establishing global regulatory schemes, even as it has sparked a spirited -- and
much needed, as I argued last week -- discussion of the continuing viability of the U.S. dollar as the world's primary
reserve currency. Naturally, plenty of experts and pundits have attached great significance to this debate, seeing in
it the beginning of "economic warfare" and the like between "fading" America and "rising" China. And yet, in a world
of globally integrated production chains and interconnected financial markets, such "diverging interests" hardly
constitute signposts for wars up ahead. Frankly, I don't welcome a world in which America's fiscal profligacy goes
undisciplined, so bring it on -- please! Add it all up and it's fair to say that this global financial crisis has proven the
great resilience of America's post-World War II international liberal trade order. Do I expect to read any analyses
along those lines in the blogosphere any time soon? Absolutely not. I expect the fantastic fear-
mongering to proceed apace. That's what the Internet is for.
2NC Financial Diplomacy
 2nc No internal Link
Nonregional members have a maximum of 25% voting share
means US cant determine its governance once inside the
institution
Eugene Beaulieu and Wendy Dobson, April 2015, (Eugene Beaulieu is a
Professor in the Department of Economics and the Director of the International
Economics Program at The School of Public Policy at the University of Calgary.
Eugene has been at the University of Calgary since 1997 after completing his Ph.D.
at Columbia University in New York City. Eugene has worked as economist for the
government of Kenya and the Bank of Canada and has been a visiting professor at
Carleton University and the University of Western Australia. He has held numerous
awards including the Petro-Canada Young Innovators Award, the Killam Resident
Fellowship, and the Norman Robertson Fellowship at the International Trade Canada.
Wendy Dobson is a professor at the Rotman School of Management and Co-director
of the Rotman Institute for International Business. She is a former Associate Deputy
Minister of Finance in the Canadian government and a former President of the C.D.
Howe Institute, Canadas leading independent economic think tank and a non-
executive director of Canadian companies in finance and energy. She is also a
director of the Canadian Ditchley Foundation, Senior Fellow at Massey College and
member of the Advisory Committee of the Peterson Institute of International
Economics. She chairs the Pacific Trade and Development Network (PAFTAD)."WHY
DELAY THE INEVITABLE: WHY THE AIIB MATTERS TO CANADAS FUTURE" School of
Public Policy University of Calgary, http://poseidon01.ssrn.com/delivery.php?
ID=654125087110031102008006091031024076025033067063006028024025079
01810208512110511100602501100101602612405501
908107710010711209411702303707702909807002110212311408209809505204
61130770050031130230290900770841
20105023005071001083125081067066064127120019021&EXT=pdf//)HBJ
One of the American concerns about the Bank stems from issues of governance.
However, Korea and other US-allies who are joining the Bank as founding members recognize this as a big
founding members, countries will participate in shaping the
advantage to joining now. As
Banks governance and operations . We are learning more about the governance
structure as countries negotiate membership and the details of the Bank are rolled out. For
example, it was recently announced that the new Bank will perhaps not surprisingly - be located in Beijing.9 As
the number of shares is not only based on the size of the country (i.e.
Table 2 indicates,
GDP) but on other factors as well. Regional members will be treated differently in
terms of shares, than non-regional members. Non-regional members are limited to a
total of 25 percent of the voting rights of the Bank whereas Asian members will
control 75 percent of the shares. There was initially some concern that China would impose a veto
power on decisions made by the Bank. However, China is apparently foregoing veto power at the bank in an effort
to attract European countries and other U.S. allies as founding members. Shi Yaobin, Chinas Vice Finance Minister,
pointed out that the banks shareholding structure is still under negotiation10- So the number of countries as
founding members continues to increase. It looks like most of Europe and Asia, excluding Japan, will join, which
There will likely be a formula for
account for around $30-$40 trillion (U.S. dollars) of global GDP.11
limiting non-Asian countries to three board seats (of something like 20). Australias Prime
Minister pointed out that the bank is an important development as long as the governance piece is adequately
addressed. This is part of the reason Australia and so many other countries have
stepped forward as founding members keen on negotiating the governance
structure at the ground level.
 2nc SQ solves China Institutions
Current Cofinancing projects solve financial diplomacy but
dont take out the Da
World Bank 4/13/16 (World Bank and AIIB Sign First Co-Financing
Framework Agreement; 2016;http://www.worldbank.org/en/news/press-
release/2016/04/13/world-bank-and-aiib-sign-first-co-financing-framework-
agreement//)HBJ
WASHINGTON, April 13, 2016 World Bank Group President Jim Yong Kim and Asian Infrastructure Investment Bank President Jin Liqun
today signed the first co-financing framework agreement between the two institutions .

The agreement outlines the co-financing parameters of World Bank-AIIB investment projects , and

paves the way for the two institutions to jointly develop projects this year. In 2016, the
AIIB expects to approve about $1.2 billion in financing, with World Bank joint
projects anticipated to account for a sizable share . I am delighted that today we are raising our partnership to a
new level, Kim said. Signing this agreement enables our institutions to finance development

projects together, and that is an important first step toward working with a new partner to address the worlds huge
infrastructure needs. As the worlds multilateral development banks collaborate ever more closely, leveraging each
others financing and expertise, the people who will benefit the most will be the worlds poor. Some 1.2 billion people in the
world lack access to electricity and 2.4 billion people don't have access to basic sanitation services. The World Bank Group invested $18.8 billion in

infrastructure in the fiscal year ending June 30, 2015. The institution will leverage even more private finance
through new partnerships, such as the Global Infrastructure Facility, and the growing portfolios of the International Finance
Corporation and the Multilateral Investment Guarantee Agency. I am very pleased today to sign this co-financing agreement together with World Bank
Group President Kim, Jin said. The AIIB is very grateful for the generous and timely support offered by the World Bank Group throughout our
establishment process, and we look forward to a long and fruitful relationship with ongoing cooperation in project co-financing and other areas. The World
Bank and the AIIB are currently discussing nearly one dozen co-financed projects in sectors that include transport, water and energy in Central Asia, South

the World Bank will prepare and supervise the co-financed

Asia and East Asia. Under the agreement,

projects in accordance with its policies and procedures in areas like procurement,
environment and social safeguards. The AIIB, located in Beijing, aims to promote regional
cooperation in addressing development challenges by working with other
multilateral and bilateral development institutions. It is expected to advance
sustainable economic development and to improve infrastructure in Asia.
1NR IFI DA
 Impact o/v
US heg collapse outweighs and turns case economic prowess
is key to preventing international conflict through US influence
Turns econ collapse from the collapse of the yuan prevents
escalation of any conflict because US economic power holds
everything together the opposite is false about china being
able to prevent escalation if US econ declines because they
dont have the same international coalition of allies
Turns currency wars maintains US primacy meaning everyone
is racing for second place prevents proliferation and
disincentivizes lashout
Turns ISIS and other terror attacks 2NC on the resolve disad
proves only US dominance prevents ISIS escalation
 2nc Link Currency Swaps
Their attempts to spike out of the link are illogical
They say they dont increase the value of the yuan, they just
prevent collapse thats impossible integrating the yuan into
global banks as a result of currency swaps with the US means
that the value of the yuan has to increase, also it takes away
trade and diplomacy that is conducted with the US dollar
Lines of credit undercuts the USD as the reserve currency
which kills dollar heg multiple warrants
Daniel C.K. Chow, 2-25-2016, (the Frank E. and Virginia H. Bazler Chair in
Business Law at The Ohio State University Moritz College of Law. He teaches and
writes in the areas of international trade law, international business transactions,
international intellectual property, and the law of China, Why China Established the
Asia Infrastructure Investment Bank Ohio State University Moritz College of Law;
Public Law and Legal Theory Working Paper Series No. 333; Pg 28-31//)HBJ
The AIIBs current obligations are to make loans in dollars but the AIIB might in the
future make loans in Renminbi (RMB or the peoples currency). China has been seeking to
promote the RMB as an international currency for some time and these efforts recently were rewarded
when on November 30, 2015, the IMF declared the RMB as one of its official currencies.252 Promoting the RMB will
add considerable prestige to the currency . For example, the Wall Street Journal states: It confers a
measure of international legitimacy to Chinas currency as the government starts to
liberalize its rigidly controlled exchange rate and financial system. For the Chinese, it is a matter
of prestige, a plank in Beijings strategy to elevate the countrys economic role in
the global economy as it challenges U.S. political and economic dominance around
the world.253 Much more than prestige is involved, though. The point missed by this observation is that China will also
gain significant political power as well if the RMB becomes an established
international currency frequently used in international transactions . Today, most
international transactions are conducted in U.S. dollars.254 Transactions in U.S.
dollars create great power for the United States over the international
financial system. Trade in U.S. dollars, even if initiated overseas, requires the
clearance through banks in the United States. 255 The United States can effectively freeze any transaction by
blocking the transfer of dollars by U.S. banks. For example, the United States can impose sanctions on a country such as Iran by
prohibiting the transfer of U.S. dollars through U.S. banks to Iran.256 Since oil is paid for in U.S. dollars, the United States can
effectively restrict the sales of oil by Iran through controlling U.S. banks. In the case of Iran, China was able to circumvent many of
the Wests restrictions in buying Iranian oil (using means that are undisclosed) but was careful not to violate U.S. restrictions on
It is apparent that if China is able
banking because China must deal with U.S. banks on a regular basis.257
establish the RMB as a currency that can be regularly used in international
transactions, China can circumvent future U.S. sanctions since China will not
need to use U.S. dollars or U.S. banks . China can deal directly with countries subject to U.S. sanctions. In
addition, China would now have the same power to control international financial
transactions in RMB through its control of Chinese Banks. China can suspend or use
the threat of suspending RMB transactions through Chinese Banks to add weight to
its dealings in international transactions. Using the AIIB to promote the RMB as a
currency regularly used in international trade not only creates prestige for China,
but could also add immense power over the international financial system. V. Conclusion
The establishment of the AIIB as a multilateral institution represents a diplomatic triumph as China was able to attract dozens of the
United States closest allies in defiance of U.S. opposition. Beyond this diplomatic coup, however, there are larger potential
AIIB might
consequences for the future of the international global system. Despite Chinas own assertions to the contrary, the
emerge as a direct rival to the World Bank and the International Monetary system.
This rivalry will consist not only in the amounts of loans made, but also in the rules of international lending and the rule of
international trade in general. Will China use the AIIB to counter the Washington Consensus, laden with its western values, with its
own approach that pursues Chinas own policy goals under what might become known as the Beijing Consensus? Aside from the
doctrine of non-interference, the Beijing Consensus might include policies intended to promote
SOEs and the use of the RMB as a regularly used currency for international
transactions. In addition to these policies, the Party may well have other goals in mind. The governance structure of the AIIB,
the role of the Party, and Chinas own global ambitions suggest that China is posed to use the AIIB as a policy
tool just as the United States and its closest allies have used the World Bank and the IMF as a policy tool. This potential conflict
represents for the future a clash between rival multilateral financial institutions led by the United States and by China. The
clash could elevate the longstanding conflict between the United States and China over the
rules governing international trade to the multilateral policy level for the first time. This
portends a larger struggle over who will write the rules for international trade in the future.

US heg is predicated off of monetary leverage and leadership,

but they wont give up their currencys preeminent status
without a fight
Jos Miguel Alonso Trabanco, 1-20-2014, (degree in International Relations from
the Monterrey Institute of Technology and Higher Studies "Dollar
Hegemony,Monetary Geopolitics and the IMF: The Symbiosis between Global
Finance and Power Politics," Global Research, http://www.globalresearch.ca/dollar-
hegemony-and-monetary-geopolitics-the-symbiosis-between-global-finance-and-
power-politics-2/5362357//)HBJ
there has always been a strong connection between
Along these lines, since Classical Antiquity,
wealth and military power and therefore, in the most simple and direct way, between economics
and national security. Not surprisingly, modern times are not so different. (Friedberg, 1991).
Therefore, the trends that rule the behavior of currencies are strikingly similar to those
that govern the conduct of national states. They both seek dominance in highly
hierarchical and dynamic systems where competition, conflict and confrontation are commonplace. They
both gain and lose power and prestige at the expense of one another in zero-sum
games (Cohen, 2003). Therefore, the realpolitik balancing instinct would apply to currency politics as well as
geopolitics (Drezner, 2010). The evident overlapping parallel implies that, paraphrasing Robert Mundell (1993),
powerful States have powerful currencies. In fact, history provides many examples
that demonstrate that currency can enhance the power of the state that issues it
(Cohen, 2009). Thus, it would be mistaken to disregard that Money Rules now more than ever but those rules
serve political masters [so] students of money in general and political scientists most particularly must return to
that basic starting point money is politics. (Kirshner, 2003).Indeed, World
history demonstrates that
there is a close relationship between monetary systems and war and peace (Lips,
2004). Furthermore, since the dawn of human civilization, the issuance of currency has invariably
carried heavy political connotations related to territorial considerations : governments
have been assumed to enjoy a natural right of monopoly control over the issue and management of money within
their borders [and following a model akin to a]Westphalian model of monetary geography [whereby] each state
was expected to maintain its own exclusive territorial currency (Cohen, 2008). Consequently, not unlike nations,
reserve currencies shows the
currencies rise and fall too. An examination of the long history of
tendency for one currency to dominate , with any change in status often reflecting a
shift or rebalancing of economic and political power (Lee, 2010). Accordingly, currency
internationalization does indeed impact directly on the power position of issuing
states (Cohen, 2009). Hence, there seems to be a persistent symbiotic link between geopolitics
and finance that represents an element which is considered by statesmen in order to properly assess
national power. Indeed, it is known that nowadays Central Bankers and political leaders actively collect
intelligence information on the behavior of currencies and periodically test their relative strength, in order to adjust
their strategies accordingly (Stroupe, 2005). However, hegemonies, both geopolitical and monetary, are not
perpetual: historical experience demonstrates the speed and pervasiveness of changes in national economic
power; since hegemony is transitory, so must be any international monetary system that takes hegemony as its
basis (Eichengreen, 2003), which indicates that the international monetary system has always rested and
depended upon political foundations (Kirshner, 2003). The following graph, based on data from a study on the
evolution of monetary hegemony (Dwyer & Lothian, 2002), shows the historic succession of dominant international
currencies occupy a
currencies from the 5th century B.C. onwards. Not surprisingly, as can be clearly seen,
dominant position when the nation that mints them becomes a great power . However,
since states are no longer able to exercise supreme control over the circulation and
use of money within their own frontiers, they must instead do what they can to
preserve or promote market share. As a result, the population of the monetary universe
is becoming ever more stratified, assuming the appearance of a vast Currency
Pyramid narrow at the top, where the strongest monies dominate; and increasingly broad below, reflecting
varying degrees of competitive inferiority (Cohen, 2003). At this point, it is important to emphasize
that reserve currency status is the highest position a currency can attain because it
is something which evolves over time through combination of international
economic and political power and convenience to the greatest number of users
rather than abruptly as the result of conscious decisions by a single country(Eslake, 2009). Moreover, there
are other evident advantages provided that the issuers of currencies that are widely used by
others as reserve assets [] can finance deficits simply by printing more of their
own money (Cohen, 2008). Therefore, there is a link between the distribution of economic power and the
allocation of reserve currencies (Drezner, 2010). Hence, the great bulk of reserves is held in the form of highly
liquid assets denominated in one of the small handful of moneys at the peak of the Currency Pyramid (Cohen,
2009). A reserve currency is thus defined by three essential attributes: a) It provides a store of value, i.e.
confidence that the currency will retain its value, so making it a safe place in which to invest official reserves or
denominate contracts (Dobbs, 2009). Confidence is critical because economies operate on trust as a foundation
(Stroupe, 2006). Thus, reserve assets serve as a store of value that can be used directly for intervention purposes
or else can be more or less quickly converted into a usable intervention medium (Cohen, 2009). b) It is employed
as a medium of exchange that offers the ability to transact globally in the currency in an easy and low-cost way
(Dobbs, 2009). As such, a reserve currency facilitates trade and finance by decreasing the number of bilateral
exchange markets that need to be created, thus reducing transaction costs (Carbaugh&Hendrik, 2009). Therefore,
it provides a reference to set the bilateral exchange rate quotations (Oxford Analytica, 2008). c) As a unit of
account, it is a widely held and recognized currency that can be used to denominate international contracts [
and] to invoice contracts (Dobbs, 2009) and it is the currency in which many commodities including fossil fuels,
strategic raw materials, precious metals and financial instruments available in capital markets are priced and
traded (Oxford Analytica, 2008). The latter is particularly important because there is a strong link between finance
and hydrocarbons market, due to the fact that black gold has other pseudo-monetary characteristics as an
indispensable commodity that practically begs to be controlled. In an increasingly industrialized world, this fungible
primary energy source is everywhere in demand [and, as result] the spectrum of thought on national security and
foreign policy [is taken] into the realm of high finance, capital flows and the trump asset of energy resources (Roby,
2010). Hence, this research paper must be understood in the context of the United States dollars decades-long role
as the first among equals in the international monetary system. The following graph, based on data from a paper
written by a prominent scholar of International Political Economy (Cohen, 2009) illustrates the current hierarchical
pyramid of currencies, classified as top currency, patrician currencies and elite currencies. In geopolitical
the Dollar hegemony held the American alliance system
terms, during the Cold War period,
and the world economy together [because] Americas major allies and economic
partners were willing to hold dollars for political as well as for economic reasons
(Engdahl, 2006). Therefore, the privileged position of the dollar has been a key contributor
to US global hegemony (Oxford Analytica, 2008) for it provides advantages derived from the Federal
Reserves absolute monopoly of the printing of a currency needed by countless national economies to survive
(Engdahl, 2003). Thus, thanks to of its wealth, America
has been able to irresistibly influence all
the other players on the geopolitical chessboard because it has led the global economy , and
historically it could therefore greatly reward or severely punish in ways and to an extent no one else could
(Stroupe, 2006), attaining both political and diplomatic power, as well as formidable power projection capabilities.
For this reason, Americas
dominant position as the sole superpower ultimately rests
upon two pillars: its overwhelming military superiority and its control of the global
economic system by the unique role of the dollar as the World Reserve Currency
(Clark, 2005). According to this reasoning, it might be considered an elemental interest of the United States to
maintain the system which also includes intense diplomatic and limited military operations in order to preserve its
abundant financing for as long as possible. After all, there seems to be a strong interdependence among nations.
The US is dependent on cheap financing from abroad and is even willing to apply some military power to protect
these interests (Schulz, 2009). Moreover, it cannot be denied that the
dollars leading role in foreign
exchange transactions also is reinforced by this currencys widespread use in the
invoicing of international trade (Goldberg, 2011). That is especially true about oil markets, given that
since oil trade was and still is noted, as well as traded in US Dollars, every nation has to purchase huge amounts of
this currency for its national reserves in order to maintain its ability to purchase the required energy (Schulz,
2009). Consequently, monetary dependence of others on the issuing country confers the
latter significant geopolitical power(Cohen, 2003). The unavoidable reasoning that arises is that a full
challenge to the domination of the US dollar as the world central-bank reserve
currency entails a de facto declaration of war [on American power] and, as a result, the United
States is willing to fight wars to defend its national currency (Engdahl, 2006) because an
end to the dollars reserve currency status would impose material constraints on the
United States to finance its deficits, and lead to a major loss of prestige and power
projection capabilities (Drezner, 2010). A possibility is that widespread oil pricing in alternative currencies
or perhaps the bartering of oil would then threaten U.S. hegemony by crimping the relative global demand for
dollars (Roby, 2010). Nevertheless, perpetual hierarchic supremacy of the dollar cannot be taken for granted:
Sooner or later, confidence in the dollar is bound to be undermined by Americas chronic payments deficits, which
add persistently to the countrys looming foreign debt [] The exorbitant privilege obviously cannot endure forever;
Americas spending cannot indefinitely exceed its income. In the absence of significant policy reforms to reverse the
deficits, the worlds trust in the dollar is bound [] to be eroded. Dollar accumulations will eventually dry up and
could even turn into massive sales (Cohen, 2008). The feasibility of said scenario has been enhanced by recent
events. Indeed, the [2008 and 2009] financial crisis and its aftermath have triggered uncertainty about the future
of the dollar as the worlds reserve currency (Drezner, 2010) because it revealed the inherent weaknesses of the
current international monetary system that contributed to global financial instability and a weak global economy
and [said crisis has also] hampered the long-term prospects of both the US dollar and the euro as reserve
currencies. The crisis has compromised both currencies as safe-haven stores of value (Lee, 2010). The following
chart, based on official IMF data (International Monetary Fund, 2013) reflects the composition of foreign exchange
the US dollar still occupies a
reserves held on a global basis by early 2013. As can be seen, nowadays
predominant position which is unmatched by other inhabitants of the worlds
current monetary universe. At first, it appears that the current system of dollar dominance will persist
provided that geopolitical tensions do not become too important for policymakers or not important enough
(Drezner, 2010), yet appearances can deceiving and potential challengers might become increasingly assertive:
several states around the world today are thought to harbor ambitions to amplify their monetary power
including, most prominently, the four BRIC countries (Brazil, Russia, India, and above all China). One way to do this
is to promote internationalization of their currency (Cohen, 2009) by trying to establish their own financial
regimes as the international payment vehicle (Schulz, 2009). It is telling that, back in 2008, Vice Admiral J. Michael
McConnell, then Director of National Intelligence voiced before the United States Congress Intelligence Committee
his concerns about the financial capabilities of Russia, China, and OPEC countries and the potential use of their
market access to exert financial leverage to achieve political ends (McConnell, 2008). The senior American
officials threat assessment is not mistaken: influence might be increased directly through the use of newly
acquired reserve stockpiles to threaten manipulation of the value or stability of a key currency such as the dollar
(Cohen, 2008). The Vice Admirals statement, which needless to say goes beyond the conventional world of
spycraft (Shelton, 2008), implies that the US intelligence Nomenklatura has already acknowledged the threat
posed by the geopolitical manipulation of financial forces by foreign powers hostile to American interests. It might
be interpreted as the confirmation that the United States may be expected to resist any
compromise of the greenbacks historical dominance (Cohen, 2008). Indeed, McConnells
concern is not unsubstantiated at all, taking into account that [ the] US increasingly came to rely on the
governments of countries that were neither democracies nor US allies for
financing [and since such States] with large quantities of reserves have more strategic freedom of action;
they are less likely to be deterred from taking geostrategic risks by the
possibility that their actions could precipitate a financial crisis (Setser, 2009). Actually, the
unleashing of financial warfare seeks the infliction of economic damage as it
involves malicious acts in markets for stocks, bonds, currencies, commodities and
derivatives (Rickards, 2012). The same author points out that, unlike conventional warfare, it can be waged
stealthily enough so as to obscure the identities of the attackers as well as their channels. Thus, it requires a
remarkably high degree of sophistication. The aforementioned has engendered, paralleling Cold War terminology, a
system akin to a balance of financial terror (Summers, 2004) whereby Americas overall stability could potentially
be threatened due to the fact that Americas partners in NATO are no longer the dominant holders of US dollars in
reserve as they were during the cold war. The connection between dollar holders and security partners has been
severed [and, as a result,] the dollar depends on the kindness of strangers (Drezner, 2010). At this point, it is vital
to underscore that [regarding monetary concerns] politics will mater greatly [because] States do not typically
(accumulate claims on) countries that are, or may be, their geopolitical competitors if they can help it, that is, or if
there is any credible alternative (Jaeger, 2010). In the light of the above, based on data from the CIA World
Factbook (Central Intelligence Agency, 2012) and the World Gold Council (2011), the following chart reveals the
largest proprietors of financial assets, including foreign currency reserves, gold and holdings of SDR. The list
includes industrial economies, emerging powers, world-class financial centers and oil exporters. Not many of them
are staunch US allies, some might eventually reconsider their Foreign Policy vis--vis America and only one of them,
namely Germany, is a NATO member, for the time being. It must be borne in mind that for historical reasons gold is
still included in the reserve stockpiles of many countries, despite the fact that it is no longer directly employable as
a means of exchange. So too are SDRs [and that both of them] must be exchanged for a more utilizable instrument
when the need for financing arises (Cohen, 2009). Indeed, given the fact that the aurous metal has been used as
money to a greater or lesser extent for much of the history of civilization (Michaud, et al., 2006), it fulfills the
unique function of a global store of value (Faugre& Van Erlach, 2005). Incidentally, even though the US is not
among the top ten holders of financial assets, most the US currency reserves are not denominated in dollars (!) but
in gold: Its 8,133.5 tons represent 76.6% of its national currency reserves (World Gold Council, 2011). Even though
this paper does not focus on the yellow metal, its significance in terms of monetary politics is deservedly
acknowledged because from the beginning of recorded history some 6,000 years ago, gold made a profound and
lasting impression. Gold was, and still is, the ultimate symbol of wealth, power, beauty and prestige. It has been
deeply rooted in the consciousness of man ever since (Lips, 2001) and, as a result, gold is a political metal (Lips,
2004). As such, it is highly susceptible to geopolitical factors [because] during periods of fiscal or monetary
mismanagement, crises of various kinds or fundamental changes in the dominant currency, gold may be a very
dollar hegemony went
useful asset for hedging risk (Michaud, et al., 2006). In other respects,
unchallenged during six decades because no competitive rival emerged, yet ample evidence exists to
suggest that the distribution of power in international monetary affairs is changing (Cohen, 2008).
Especially, the rise of the Peoples Republic of China as an economic superpower has enhanced the possibility that
the Middle Kingdom could become, in the long run, a financial superpower (Makin, 2011). Naturally, many
PRC scholars and policy makers [] aspire for a world economic and financial order less
dominated by the US and in which the PRC can play a more influential role (Lee, 2010). Accordingly, by
proposing alternatives to the US dollar as reserve currency like Special Drawing Rights,
China desires to decrease the financial and political power of the Un ited States
(Carbaugh & Hendrik, 2009) and, it has to be taken into account that If any nation is in a position to use its newly
acquired influence in this manner, it is China. At any time, Beijing could undermine Americas money by dumping
greenbacks on the worlds currency exchanges or even simply by declining to add dollars to Chinas reserves in the
future (Cohen, 2008). Both options are not mutually exclusive and they can be advanced simultaneously. Indeed,
the Peoples Bank of China could covertly and progressively diversify its massive currency reserves by ceasing to
buy American dollars and, simultaneously, stockpiling growing reserves denominated in other currencies and even
in precious metals. This deceptive strategy is meant to preserve wealth without precipitating a sudden dollar
collapse, along with some political consequences such move would recklessly unleash. Therefore, it is not surprising
that the composition of its foreign currency reserves is one of the highest state secrets of the People Republic of
China (Stroupe, 2006). Even if Chinas tactics suggest that it is not prepared to challenge the dollars hegemonic
status at any point in the near future (Drezner, 2010), it actually looks like, in the long term, Beijing is interested in
forging a new monetary system in which the US dollar is no longer the only reserve currency available and
overreliance on the American currency is not a necessary evil anymore. Chinese statesmen can accomplish such an
ambitious objective through the application of two strategies: a) contributing to the strengthening of Special
Drawing Rights (DSR)[1], in order to establish a multilateral reserve currency under which financial power will be,
more or less, evenly distributed and b) unilaterally promoting the internationalization of the Renminbi as a
the international monetary
growingly solid currency (Chin & Wang, 2010). Interestingly,
diversification away from the dollar is enthusiastically welcomed by Russia (Drezner,
2010),an utmost resourceful challenger of American geopolitical interests which , as
such,would be more than glad to witness the accelerated decline of the US as the
internationals system top power. If the economic rise of China is uninterrupted during the next few
decades, there will be profound financial and, above all, geopolitical consequences: If the yuan emerges
as a reserve currency potentially rivaling the dollar, China will become more
powerful and the US less powerful in international and financial affairs [In that sense,]
the emergence of the yuan as a major reserve currency will reflect the underlying shift in
economic and financial power, even if it does, independently, provide tangible benefits to China [but]
this is likely to have ramifications for Washingtons political position in the world (Jaeger, 2010).

Yuan depreciation doesnt cause China to rapidly sell treasury

bonds they dont have a card for this and it shouldve already
happened if their advantage is unique

Their args about how the dollar and heg arent inextricably
linked dont apply because there wasnt a challenger that the
US was literally inviting to exchange currency in 2008 their
graph is irrelevant because it doesnt assume the aff
Empirically proven existing IFIs are the foundation of the
USs status as the internationally dominant economy
Min-Hua Chiang, 12-9-2015, "The US hegemony, East Asia and global
governance" Bandung Journal of Global South,
http://download.springer.com/static/pdf/842/art%253A10.1186%252Fs40728-015-
0023-9.pdf?originUrl=http%3A%2F%2Flink.springer.com%2Farticle
%2F10.1186%2Fs40728-015-0023-9&token2=exp=1472526896~acl=
%2Fstatic%2Fpdf%2F842%2Fart%25253A10.1186%25252Fs40728-015-0023-9.pdf
%3ForiginUrl%3Dhttp%253A%252F%252Flink.springer.com%252Farticle
%252F10.1186%252Fs40728-015-0023-
9*~hmac=e1368b4e7dbf71f147f85d7d984079636a12c897dc9fd0767093c5edf0ff9
774//)HBJ
The end of World War II (WWII) marked the start of a new global order. The UK economic power in the world since the nineteenth
century was evidently replaced by the US in the twentieth century. Instead of simply being the dominant economic power with its
the US has even been able to exercise its political
highly developed capitalist economy,
ascendancy over all capitalist nations. Nonetheless, the arrival of US as a global power
did not make the world economy to be developed more stably . According to Perroux,
because of IDEs superiority in economic performance and industrial production,
its influence on a dominated country is quite significant and irreversible. The principal
methods that an IDE exerts on a dominated nation are the modification in the
investment or trade volume, leading to an improvement or deterioration of
dominated nations commercial balance. The development will thus inevitably become a confrontation
between the two countries because the improvement in the trade balance of a country is considered as a deterioration of the trade
balance of the other one. In terms of global governance, Perroux indicated the unsuccessful Bretton-Woods system was due to the
incompatibility between its semi-liberalism and Americas strong dominant characters in the world. The Bretton-Woods system that
sought to avoid repeating the financial crisis in the 1930s actually resulted in more gaps between the countries (Perroux 1987).
The hegemonic states character was further visualized by Keohanes theory of hegemonic
stability. According to Keohane, hegemonic powers must have control over raw materials,
sources of capital, control over market and competitive advantages in the
production of highly valued goods (Keohane 1984). Unlike the Marxists focus on the class interest and
production relations in a hegemonic system and the liberalists emphasis on the institutional power of the hegemony, the
realist theories highlight the indispensable role of the hegemony in maintaining the
world order. During the Cold War era, the US constructed an economic interdependence
framework with its major allies in both Europe and Asia within which the global
economy functioned. The security interest and alliance cohesion further provided
political glue that held the world economy together and facilitated compromise of
important national differences over economic issues (Gilpin 2001).

Their Zou and Garten cards are directly indicted by the above
link cards other countries do perceive the collapse of the
dollar as US weakness other countries do expect the fed to
care about them
Allows economic dominance across the globe forces allied
cooperation and US led global order
Hanyu Chwe, 4-7-2015, (Swathmore College, "The Most Important Bank Youve
Never Heard Of," Daily Gazette, http://daily.swarthmore.edu/2015/04/07/the-most-
important-bank-youve-never-heard-of///)HBJ
Why is this new bank such a big deal? To explain why, Ill go back to 1945 and the creation of the post-World War II
the United States and its allies built a framework
international order. During that tumultuous period,
for global governance; this included dozens of institutions, many of which youve probably
heard of, including the United Nations, NATO, the IMF, and the World Bank. These last two, along with
what would become the World Trade Organization, represented an American-sponsored
commitment to free trade, open markets, and privatization . To many, the Bretton Woods
institutions, as the IMF and the World Bank are sometimes called, represent American
dominance. Through the IMF and World Bank, the U nited States was able to impose its
particular economic ideology. Conditional loans given out by the Bretton Woods institutions to developing
countries required privatization, deregulation, trade liberalization, and the general implementation of neoliberal
economic ideas. These reforms have been met with mixed success; many thinkers blame the U.S. for intentionally
IMF and World Bank have always been
weakening developing countries. In addition, the
dominated by the United States and its European allies. The president of the World Bank is always
American, and the director of the IMF is always European. The United States has the most votes in both the IMF and
World Bankin both, it holds more than double the votes of the runner-up, with 16% of votes to Japans 6%.
However, after sixty years of dominance, it seems as if the United States monopoly on
international institutions and the global economic system is weakening. The AIIB is a
challenge to the American-led global order. Although its unlikely that the AIIB will completely
replace the World Bank (and its regional offshoot, the Asian Development Bank), it still represents a Chinese
alternative to an American-dominated system. It was not obvious to international observers that
this bank was going to be created. Even in a future world where China dominates the United States economically, it
would not be certain that China would create a completely new alternative to the Bretton Woods institutions. China
could have attempted to reform international institutions from the inside in other words, within the framework
created by the United States. Instead, the Chinese have rejected a major part of the current global government.
American dominance in the global system doesnt only cover economics, of course.
American hegemony is maintained in part by the cooperation of its allies. After all, the
United States might have the most votes in the World Bank, but it only has 16% of them it needs a fair
amount of help to get things passed. The exact reason why so few countries have acted contrary to
 the United States enjoys the friendship of
the United States wishes is a controversial topic, but clearly,
dozens of countries. More importantly, almost all countries are a part of the IMF, World
Bank, United Nations, etc., and in doing so, they accept the institutional frameworks that the
United States have created.
 2nc UQ Dollar Heg
Their uq ev hickey is aff evidence it says that the US dollar
is stable now because other countries perceive it as the
premier currency of choice the link debate proves that the aff
results in the renminbi supplanting that
Dollar heg is high leading foreign exchange, investor
confidence and world reserve currency those are specifically
things that the aff destroys
Doug Stokes, 5-09-2013 (Department of Politics, University of Exeter, Exeter,
UK, Achilles deal: Dollar decline and US grand strategy after the crisis Routledge,
Review of International Political Economy, pg 2-12//)HBJ
As examined above, declinists identify a range of indicators on the relative health of US monetary leadership. Key
indicators identified above include significant weakening of purchases of US debt by central banks and investors
that would signal a broader move towards currency diversification and would be one of the most important
canaries in the coalmine for a loss of the dollars international reserve currency status. A corollary of this would be
an increase in the amount of interest that the US was forced to pay to incentivize potential debt purchasers.
Second,if the dollar was in decline, we would expect to see a decrease of foreign
exchange market turnover and the loss or (minimally) the weakening of the dollar
as a lead transaction currency. This is very important as the willingness to hold and use dollars is a key
part of dollar liquidity. Third, declinists have also identified a weakening of US financial institutions and leadership
more generally. What does the data show? CAN THE US SELL ITS DEBT? One of the principal weaknesses identified
by declinists is the very heavy reliance on the US capacity to issue debt to foreigners, mostly in the form of
government bonds and US treasuries. Foreign reserves are the foreign exchange (FX) deposits and bonds held by
central banks and are used to back the various liabilities they face as well as hedge against crises. Additionally,
foreign reserves are used to also anchor export-sensitive currencies to an
international stable unit of value, usually the dollar the worlds reserve currency.
The vast majority of foreign reserves are held by the export-sensitive East Asian states of China and Japan.
According to US Treasury figures, in July 2012, the states holding the most foreign reserves were China, with
$1149.6 billion and Japan, with $1117.1 (US Department of the Treasury, 2012a). At the end of 2011, according to
both the International Monetary Fund (IMF)
and the European Central Bank (ECB), foreign exchange
reserves stood at more than $10 trillion globally (IMF, 2011). Accordingly, the key question in the
context of the US decline is: have we witnessed a decline in dollar hegemony through a
weakening of the US capacity to issue debt to non-US banks and dollar purchasers?
To date, the data shows quite conclusively that US capacity to issue debt has not
only continued, but has in fact strengthened to the extent that, in 2011,
purchases of US treasuries rose to their highest rate since 1995 (Kruger, 2011). In
one purchase in 2011, the Bank of Japan bought $102 billion of US debt, the largest purchase ever (Mackenzie,
2011). Tellingly, the post-crisis figures differ little from those prior to the onset of the 2008 financial crisis. The ECBs
data show that in 2007, foreign reserves denominated in the dollar stood at around
65 per cent of global FX reserves. In 2010, this fell slightly to around 62 per cent, but remained
well within the broad range of percentage movements in the previous decade. In comparison, there was no
noticeable upwards movement in foreign holdings of alternatives to the dollar as a
result of the US-centred financial crisis of 2008. The second and only viable contender to global
reserve status, the euro, stood at just over 26 per cent in 2010, the same percentage that it held in 2003 (ECB,
2011). Data for 2012 shows that in the first quarter, the global currency composition of official foreign exchange
reserves in the dollar was more than $3.5 trillion, with claims in the second largest transaction currency, the euro,
at just over $1.4 trillion, under half that of the dollar (IMF, 2012). Declinists often interpret the alleged decline of
dollar reserves in the portfolios of foreign countries as signalling a broader loss of US dollar hegemony, particularly
the decline witnessed in the years prior to the financial crisis. The data given above not only
significantly weaken this interpretation, but the longer term pre-crisis declinist
prognosis of US dollar decline based on depreciation is also seen to be inaccurate . As
a Federal Reserve study concluded, most of the pre-crisis decline reflected the dollars depreciation between 2005
and 2008, which raised the value, and hence the share, of other currencies in the portfolios. The report continues
that if we: adjust the portfolio shares to be valued at constant exchange rates, the dollar share in developing
although a decline in
countries reserve portfolios has actually been quite stable since 2000. Furthermore,
reserve holdings occurred during the global financial crisis, the dollar share of
reserve holdings for both industrialized and developed countries remained
high ... . Overall, despite market turbulence and substantial movements in the value of
the dollar over the past decade, the dollar has not declined in prominence either as
a central currency for exchange rate arrangements or as an international reserve
currency (Goldberg, 2010: 4). As such, the argument that states were moving out of the
dollar was based on relative dollar depreciation rather than holdings per se, with the
dollar continuing to act as a primary reserve currency even after the financial crisis.
The interest rates offered on US treasuries reflect this strength. For example, in one short-
term 2011 bond auction, the US Treasury offered a zero per cent interest rate on $30 billion of US debt. When
factoring inflation into this, yields are effectively negative (Weissmann, 2011). Similarly, data drawn from the US
Treasury on its real yield rates show that interest rates paid on US debt across the range in 201112 have in fact
dropped to historically unprecedented lows, a pattern that began in 2008 and has continued downwards ever since.
These negative yields are a considerable boon to the US, with no other advanced
industrialized economy enjoying this privilege. The data thus shows not only a continuity in post-
crisis demand for US debt, but in fact a sharp increase, with the US having the luxury of lowering its effective
Non-US central banks and overseas
interest payments on that debt to zero in many cases.
investors continue to purchase these debt instruments, which are, in turn, predicated on
US dollar longevity. In a very real sense, the financial crisis that rippled out from the US in 2008 has
triggered a reverse wave of cash into US-centred debt and financial products as risk-averse surplus cash holders
Global market turnover in dollars
and non-US banks seek a safe harbour for their money.
signifies liquidity status and what this represents more broadly, investor confidence,
so it is also an important indicator of US dollar hegemony. According to a
percentage currency breakdown provided by the Bank for International Settlements (BIS), the US dollar
continues to dominate the majority of FX trades with very little indication of a
decline in US dollar hegemony since the financial cris is. In 2001, the dollar accounted for just
under 45 per cent of global FX turnover. In 2007, a year before the crisis, it accounted for just under 43 per cent,
and in 2010, just over 42 per cent. The euro is the second highest and has remained similarly stable: in 2001, it
accounted for 19 per cent, in 2007, just over 18 per cent, and in 2010, just over 19 per cent (BIS, 2010). This data
lends itself strongly to the interpretation that investor confidence continues to remain very high in the dollar as a
medium of exchange even after the financial crisis, with very little movement in either the dollar or its main rival,
the euro. An important secondary point is that use of the euro continues to be very geographically specific. It is
used primarily in states either within or neighbouring the EU or states that have strong institutional ties to the
region. Tellingly, the dollar is used globally, particularly by the principal contender state of China. This is a clear
indication of central bank and investor confidence; for the euro to emerge as a potential challenger, it would have
to break out of its regionally-specific circulation networks. Importantly, the data examined above does not reflect
recent developments in the Eurozone, including the potentiality for a domino effect of sovereign defaults that has
seriously weakened confidence in the euro. If the declinist argument is correct that the capacity of the dollar to
remain an international reserve currency that grants a range of privileges is on the decline, the data examined
above shows quite clearly that the financial crisis has yet to weaken this capacity. In fact, the opposite has
happened and the European crisis has served to weaken the only currently viable rival currency, the euro. HAVE US
Third, an unintended side-effect of the financial crisis has been a
INSTITUTIONS DECLINED?
corresponding strengthening of US financial institutions: both an indicator of where
panicky investors will move and a fillip to US command capacity within the global
economy. A Federal Reserve study concluded that by June 2008, non-US banks had accumulated approximately
$27 trillion in cross-border liabilities denominated in currencies other than that of their home country. More than
$18 trillion of this amount was denominated in dollars (Goldberg, 2010: 6). When the crisis hit, and credit dried up,
the Federal Reserve established crucial financial lifelines to other central banks to maintain their respective dollar
funding needs. In the early stages of the crisis, these swap lines accounted for $70 billion. By the end of 2008, the
 the trade activity and range of financial transactions
amounts increased to $560 billion, thus
suggest that the dollar remains a leading transaction currency
associated with these figures
(Goldberg, 2010: 6). This power to switch on liquidity, coupled with the euro crisis of 2011, has now
effectively made the Federal Reserve the lender of last resort for the world
economy. This is a crucial fillip to US global monetary leadership and broader dollar
hegemony. In sum, foreign exchange holdings of the dollar have not changed significantly since the 2008
financial crisis. In fact, there has been a remarkably narrow band within which the US dollar has moved in the
the dollar continued to not only dominate non-US
decade ending in 2010. Moreover, in late 2012,
foreign holdings, but was qualitatively different in the sense that it was a globally
used store of value, and not a regionally-specific currency, as is the case with what is seen as the principal
challenger currency to the dollar, the euro. Additionally, the dollar continues to dominate the purchases of the East
Asian states, in particular China, the primary rising power according to declinist accounts of hegemonic transition.
In short, the dollar continues to remain the key global currency by a considerable margin, with
no other currency even close to competing. A question emerges from this: how do we explain this remarkable
continuity in post-crisis US monetary hegemony?
 2nc Internal Link IFIs k2 heg

The perception that the US is economically weak leaves open

the door to challenges from competitor nations and allows for
the possibility of global nuclear war
Simmons, Miami IR PhD, 2015
(Terry, Commentary: The Paradox of American Global Power, 3-24,
http://inhomelandsecurity.com/commentary-the-paradox-of-american-global-power/)

perceptions of diminishing American will and fiscal inability to sustain the global
In addition, political

American post-Cold War Empire, have created an opportunity by the Russian Federation, The
Peoples Republic of China, and the BRIC countries, to seize the political initiative in

international relations. Current data support the proposition that the Russian Federation has reached
nuclear strategic parity with the United States while China is currently surpassing the
American gross domestic product. As the perceptions grow concerning American
retrenchment from global leadership, the unilateralism and previous status of the United States is rapidly becoming an
international multilateralism that now diminishes long-term American dominance. As America stands down, others will stand up .

Axiomatic is the political principle that all power vacuums will be filled . Just a few short years ago, American military hegemony
was a foregone conclusion. As sequestration in particular begins to actuate a force posture readiness toll on American strategic force architecture, the
military establishment and the American Intelligence Community are increasingly alarmed at how quickly that traditional American dominance is
dissipating. Whereas there have been wars and rumors of war throughout history, those rumors now take on a new urgency as pointed up by the recent
political machinations arising out of the Nemtsov assassination recently in Moscow. With the subsequent highly visible absence of Putin from public view
for 11 days from public appearances recently and his verified order of a strategic heightened alert status for the Russian Arctic Command and Northern
Fleet out of Murmansk, the speculation has increased exponentially that he is preparing for war. Rumors of Russian and American alerts are now reaching
the press and social media outlets. As American-NATO readiness begins to actuate in Europe and potentially Ukraine and as Congress intensifies debate on
an array of strategically important strategic issues, the operational tempo of both military deployments, both Russian and American, as well as the
intensity and specificity of diplomatic discourse on a number of critical issues, is clearly identifiable to the careful observer. The inter-relationship of
important issues is also coming into focus: Iran and the nuclear agreement, the ongoing war against the Islamic State and Russian-American juxtaposition
in Syria, the last of the Arab Spring states, as well as security alerts issued by the United States warning of terrorism possibilities in Venezuela and Saudi
Arabia causing the American Embassy to be temporarily closed, the continued bombastic rhetoric out of North Korea, all create an increasingly alarmist
international political environment. If a time of calamity does indeed approach, is it business as usual in the international political community? Is it simply
another chapter in tumultuous international relations, or is it unique in the following ways: The tectonic plates of the New World Order that followed the
demise of the Union of Soviet Socialist Republics on December 25, 1991 under Mikhail Gorbachev, are definitely moving! There is a persistent and growing
threat that the map of Europe is being redrawn. Obviously that is in motion in Crimea-Ukraine. China is challenging the American Lake concept in the
South China Sea as she claims sovereignty in the Spratley Islands and pursues a serious blue water navy challenge of traditional American naval power
supremacy in the greater Pacific. At the urging of the United States in coordination with President Obamas pivot strategy to the area, Prime Minister

Abe is reorienting Japanese international force posture from the defensive to the
Shinzo

offensive, possibly to include the staging of nuclear weapons in traditionally pacifist post-World War 2 Japan,
igniting a new fierce competition among old geopolitical competitors Japan, China,

Korea, the Philippines and others. As the undeniable challenges to the post WWII and post Cold War geopolitical constructs
advance and intensify, the potential for low-intensity warfare and regional conflicts grow. The evidence of jihadist audacity to establish a supreme
caliphate by Islamic State erasing the Syria and Iraq borders is a prime example of this trend. On the jihadist side, it is easy to identify remnants of al-
Qaida Central coalescing for a new push for a worldwide confederation of fundamentalist Sunni emirates centered on Sharia rule. Antithetically the Shia
Islamic Republic of Iran maintains a traditional nation-state construct while challenging the expansionist Sunnis doctrine of Caliphate only delineations of

power. The paradox of American power lies in that no individual country or federation
or fundamentalist jihadist caliphate appears ready to precipitate global nuclear
war with the United States although the signs are increasingly visible that that is a
consideration in some tactical application while not in the strategic realm; MAD lives on in the current strategic
context. However, as in Vietnam, the Iraq wars, long term struggle in Afghanistan, and now the re-intensified struggle against revanchist Russian

reclamation of post-Soviet space, U.S.-Allied deterrents still remain effective .

Empirics prove loss of dollar heg leads to collapse of
hegemony overall
Looney, 03 professor of National Security Affairs at the Naval Postgraduate
School, (Robert, From Petrodollars to Petroeuros: Are the Dollar's Days as an
International Reserve Currency Drawing to an End? November 2003, Strategic
Insights, 2/11/03, http://www.ccc.nps.navy.mil/si/nov03/middleEast.asp)
Political power and prestige. The benefits of "power and prestige" are nebulous.
Nevertheless, the loss of key currency status and the loss of international creditor
status have sometimes been associated, along with such non-economic factors as
the loss of colonies and military power , in discussions of the historical decline of
great powers . Causality may well flow from key currency status to power and prestige and in the opposite
direction as well.[8] On a broader scale, Niall Ferguson[9] notes that one pillar of
American dominance can be found in the way successive U.S. government sought
to take advantage of the dollar's role as a key currency. Quoting several noted authorities, he
notes that [the role of the dollar] enabled the United States to be "far less restrainedthan all other states by
normal fiscal and foreign exchange constraints when it came to funding whatever foreign or strategic policies it
decided to implement." As Robert Gilpin notes, quoting Charles de Gaulle, such policies led to a 'hegemony of the
dollar" that gave the U.S. "extravagant privileges." In David Calleo's words, the U.S. government had access to a
"gold mine of paper" and could therefore collect a subsidy form foreigners in the form of seignorage (the profits that
flow to those who mint or print a depreciating currency). The web contains many more radical interactions of the
World trade is now a game in which the
dollar's role. Usually something along the following lines:
U.S. produces dollars and the rest of the world produces things that dollars can buy .
The world's interlinked economies no longer trade to capture a comparative advantage; they compete in exports to
capture needed dollars to service dollar-denominated foreign debts and to accumulate dollar reserves to sustain the
exchange value of their domestic currencies. This phenomenon is known as dollar hegemony, which is created by
the geopolitically constructed peculiarity that critical commodities, most notably oil, are denominated in dollars.
Everyone accepts dollars because dollars can buy oil. The recycling of petro-dollars is the price the U.S. has
America's
extracted from oil-producing countries for U.S. tolerance of the oil-exporting cartel since 1973.[10]
coercive power in the world is based as much on the dollar's status as the global
reserve currency as on U.S. military muscle. Everyone needs oil, and to pay for it, they must have
dollars. To secure dollars, they must sell their goods to the U.S., under terms acceptable to the people who rule
America. The dollar is way overpriced, but it's the only world currency. Under the current dollars-only arrangement,
U.S. money is in effect backed by the oil reserves of every other nation.[11] While it is tempting to dismiss passages
There are tangible benefits
of this sort as uninformed rants, they do contain some elements of truth.
that accrue to the country whose currency is a reserve currency . The real question is: if this
situation is so intolerable and unfair, why hasn't the world ganged up on the United States and changed the
system? Why haven't countries like Libya and Iran required something like euros or gold dinars in payment for oil?
After all, with the collapse of the Bretton Woods system in 1971 the International Monitary Fund's Standard Drawing
Rights (unit of account) was certainly an available alternative to the dollar.[12]
 2nc Impact Heg
Strong statistical evidence supports the claim that
international power vacuums triple the risk of armed conflict
and intensify other forms of political violence.
Ramsey et al., VMI political science professor, 2015
(J. Patrick, Order and disorder across geopolitical space: the effect of declining
dominance on interstate conflict, Journal of International Relations and
Development, October, Palgrave)

Findings for each of the three models are listed in Table 2. Each model offers results
that appear to support our theory of dominance vacuums and conflict on set. Regardless of
the unit of analysis or controls present in the testing of our hypothesis, the influence of vacuums on MID
onset is substantively and statistically significant.22 Model 1, using ten
degree by ten degree geographic spaces as the unit of analysis, demonstrates that
geographic spaces in a space of complete dominance area 3.6 times more likely
to experience a MID than those in a space where a single state's projected
capabilities are unchallenged. The presence of a border within the geographic space is also statistically
significant and increase the odds of MID onset by 9.2 times, underscoring the significant number of MIDs that are territorial disputes
and demonstrating the particular potential for MID onset within dominance vacuums that contain borders [Table 2 About Here]
Figure 4 illustrates the predicted probabilities of MID onset for these geographic spaces depending upon whether they include
interstate borders and the strength of the dominance vacuum.23When the space includes a border, the
effect of a vacuum is even more dramatic, with the predicted probability of conflict
onset in a dominance vacuum containing a border at 25%, and the degree of
dominance vacuum present increasing the probability of conflict across the range of
observations by 18%. Model 2 repeats the analysis but restricts the dependent variable to joint major power MID onset
within a geographic space, as a test of hypothesis 2. Results confirm our expectations, with geographic
spaces in a complete dominance vacuum 16.9 times more likely to experience joint
major power conflicts than geographic spaces where a single state's projected
capabilities dominate. Figure 5 illustrates the predicted probability of Joint Major Power MID onset for geographic
spaces, with the probability rising rapidly as relative projected parity increases between the top two projecting dominant states, and
at a greater rate if the space includes a border. In the absence of a dominance vacuum, joint major power conflict is almost entirely
absent. [Figure 5 About Here] The effect of dominance vacuums on conflict is confirmed by the dyadic test in Model 3, testing
Hypothesis 3 expectations regarding all contiguous dyads. Even when controlling for joint democracy, perhaps the most consistently
powerful indicator of conflict behavior in the literature (Levy 1989), we find a strong substantive impact, with the existence of a
dominance vacuum in the geopolitical space increasing the probability of experiencing a MID within a dyad by 18%, as illustrated in
Figure 6. [Figure 6 About Here] Dominance Vacuums and Politics On the chessboard of international politics the dynamics of regions
and the security of states are subject to the ordering influence by dominant powers. However, their influence is not constant across
Within dominance vacuums, where
geographic space, as their relative capabilities deteriorate across distance.
no clear leader exists to structure international politics, the formation of
shatterbelts is likely as other states are less restrained by dominant power s. As
demonstrated by our findings and descriptive analysis, these vacuums
present the most likely contexts of geopolitical spaces for conflict onset in
the international system. We may expect, for instance, the clustering of conflicts in the Middle East and Africa to
continue until a shift in the power hierarchy within these geographic spaces terminates the vacuum. By contrast, the implications for
states moving out of vacuums may be observed in the rapid evolution of the preexisting European Economic Community into the
more sophisticated and cooperative institutional structures of the European Union with the Maastricht Treaty following the end of the
While we provide an important component to explaining the opportunity for
Cold War.
states to engage in conflict given the contextual salience of the systemic
environment, willingness to engage in conflict remains a product of dyadic and
domestic level indicators, ranging across historical, cultural, national, and
ideological grievances, territory, and economic interests. Yet, our theory also
provides a compelling case in those instances where these willingness measures are
present, but conflict does not occur, including many ongoing territorial disputes
such as Japan and Russias continued disagreement over the Kuril Islands,
Guatemalas territorial claims on Belize, or British and Spanish disagreement over
Gibraltar. The framework for identifying probable conflict locations in this effort has the potential for numerous other
applications. First, further exploration of the regional dynamics identified by Lemke (2002) is warranted. We examined only the
projected capabilities of the most powerful states in a geographic space. Applying our analysis to regional subsystems nested within
the dominant power reach used here to define vacuums may have important implications for regional politics, as well as the
prospects for regional powers such as Brazil and India to achieve future major power status as they attempt to reconcile regional
concerns and focus globally (Volgy et al. 2014). Consistent with the literature on regional politics over the past century, it is likely
that the intersection of dominant power capabilities with regional power dynamics is an additional component influencing regional
stability (e.g. Buzan and Waever 2003; Katzenstein 2005). In fact, an analysis of regions based in part on the extent to which those
geopolitical spaces vary according to the extent of the existence of dominance vacuums may yield fruitful inter-regional
Second, our theory is based upon the stability of a
comparisons regarding conflict processes.
clear hierarchy in international politics and the instability resulting when
hierarchical dominance is degraded over geopolitical spaces . Logically, the
byproducts of this instability should not simply be restricted to MIDs, but
also other forms of political violence. For example, the decline of piracy in the South China Sea
coincides with the rise of Chinese dominance in the geographic space in the early 1990s (Prins and Daxecker 2011) and domestic
conflicts in Central and Eastern Africa likely reside within very consistent power vacuums .
The absence of a clearly
defined hierarchy over a geographic space may increase the probability of civil war,
separatist movements, terrorism, and perhaps even the ending of enduring rivalries.
Research relating such vacuums to the locations of extraand intra- state violence is
a logical next step toward a better understanding of peace and conflict in the
international system.