Foreign exchange accumulation and the entrapment of Chinese monetary power: towards a balanced growth regime?
- Author
- Mattias Vermeiren (UGent)
- Organization
- Abstract
- This article criticises the notion that China’s foreign exchange reserves have strengthened its monetary power. While some scholars have argued that China’s international monetary influ-ence has been ‘entrapped’ by the domestic interests of its export sector, a one-sided focus on the export sector fails to identify the significant constraints on its macroeconomic autonomy. Therefore, I propose an extension of the concept of entrapment that draws attention to the key role of state-owned enterprises (SOEs) and their domestic fixed-asset investment in its growth regime: China’s external monetary dependency – which is understood as both export dependency and the need to maintain foreign exchange accumulation – has been caused by a disparity between fixed-asset investment and private consumption that reflects a redistribution of income from the household sector to the SOE sector. In particular, I expose the SOE sector’s rising interests in foreign exchange accumulation by uncovering a mutually reinforcing dynamic between China’s external monetary dependence and the financial repression of its banking system. By entrenching an investment-led growth regime that provides key benefits the SOE sector, this dynamic is found to have seriously constrained the macroeconomic policy autonomy of Chinese authorities to rebalance growth away from investments and exports towards private consumption.
- Keywords
- DEPENDENCE, HEGEMONY, IMBALANCES, MARKET, POLICY, SYSTEM, foreign exchange reserves, China, monetary power, STATE-OWNED ENTERPRISES, GLOBAL-CRISIS, RISE, ECONOMIC-GROWTH
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Citation
Please use this url to cite or link to this publication: http://hdl.handle.net/1854/LU-2985804
- MLA
- Vermeiren, Mattias. “Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime?” NEW POLITICAL ECONOMY, edited by Colin Hay, vol. 18, no. 5, Taylor & Francis, 2013, pp. 680–714, doi:10.1080/13563467.2013.736958.
- APA
- Vermeiren, M. (2013). Foreign exchange accumulation and the entrapment of Chinese monetary power: towards a balanced growth regime? NEW POLITICAL ECONOMY, 18(5), 680–714. https://doi.org/10.1080/13563467.2013.736958
- Chicago author-date
- Vermeiren, Mattias. 2013. “Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime?” Edited by Colin Hay. NEW POLITICAL ECONOMY 18 (5): 680–714. https://doi.org/10.1080/13563467.2013.736958.
- Chicago author-date (all authors)
- Vermeiren, Mattias. 2013. “Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime?” Ed by. Colin Hay. NEW POLITICAL ECONOMY 18 (5): 680–714. doi:10.1080/13563467.2013.736958.
- Vancouver
- 1.Vermeiren M. Foreign exchange accumulation and the entrapment of Chinese monetary power: towards a balanced growth regime? Hay C, editor. NEW POLITICAL ECONOMY. 2013;18(5):680–714.
- IEEE
- [1]M. Vermeiren, “Foreign exchange accumulation and the entrapment of Chinese monetary power: towards a balanced growth regime?,” NEW POLITICAL ECONOMY, vol. 18, no. 5, pp. 680–714, 2013.
@article{2985804, abstract = {{This article criticises the notion that China’s foreign exchange reserves have strengthened its monetary power. While some scholars have argued that China’s international monetary influ-ence has been ‘entrapped’ by the domestic interests of its export sector, a one-sided focus on the export sector fails to identify the significant constraints on its macroeconomic autonomy. Therefore, I propose an extension of the concept of entrapment that draws attention to the key role of state-owned enterprises (SOEs) and their domestic fixed-asset investment in its growth regime: China’s external monetary dependency – which is understood as both export dependency and the need to maintain foreign exchange accumulation – has been caused by a disparity between fixed-asset investment and private consumption that reflects a redistribution of income from the household sector to the SOE sector. In particular, I expose the SOE sector’s rising interests in foreign exchange accumulation by uncovering a mutually reinforcing dynamic between China’s external monetary dependence and the financial repression of its banking system. By entrenching an investment-led growth regime that provides key benefits the SOE sector, this dynamic is found to have seriously constrained the macroeconomic policy autonomy of Chinese authorities to rebalance growth away from investments and exports towards private consumption.}}, author = {{Vermeiren, Mattias}}, editor = {{Hay, Colin}}, issn = {{1356-3467}}, journal = {{NEW POLITICAL ECONOMY}}, keywords = {{DEPENDENCE,HEGEMONY,IMBALANCES,MARKET,POLICY,SYSTEM,foreign exchange reserves,China,monetary power,STATE-OWNED ENTERPRISES,GLOBAL-CRISIS,RISE,ECONOMIC-GROWTH}}, language = {{eng}}, number = {{5}}, pages = {{680--714}}, publisher = {{Taylor & Francis}}, title = {{Foreign exchange accumulation and the entrapment of Chinese monetary power: towards a balanced growth regime?}}, url = {{http://doi.org/10.1080/13563467.2013.736958}}, volume = {{18}}, year = {{2013}}, }
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