Power Contention and International Insecurity: A Thucydides Trap in China–US Financial Relations?

Abstract

ABSTRACT The China–US financial contention or confrontation comes to the fore, given the pivotal role of finance in the international system and the current international order transition. Will there be destructive conflicts or a Thucydides Trap in China–US financial relations? By adopting a power analysis framework, the China–US financial contention is observed from four types of international financial power: structural, relational, institutional and ideational. The competition for these powers results in reform divergence of global financial governance and thus international financial insecurity. The contention and consequent insecurity, however, do not necessarily mean an inevitable ‘Thucydides Trap’ in China–US financial relations. Elaborated and issue-specific ways of management could alleviate the contention, including shunning RMB-USD strategic confrontation, refraining from a debt weapon and aggressive imbalance adjustment, enhancing the legitimacy of international financial institutions and avoiding a new Cold War.