Posted on: January 26, 2019 Posted by: Felicia S. C. Gooden Comments: 0
us-china policy

As United States international hegemony wanes, China is looking to fill the void through economic policy. Increased foreign direct investment in Africa and the Middle East, dominating the international trade landscape, and infiltrating foreign markets through international infrastructure projects have all contributed to China’s gradual growth in political and economic dominance. Now, with the proposition and celebration of China’s “One Belt, One Road” initiative that will essentially use modern technology to restore the ancient trade route known as the Silk Road, the country is set to solidify its place of world hegemony for some time to come.
The danger for the future of America’s position at the international table is exacerbated by criticisms of the International Monetary Fund and the World Trade Organization as well as America’s opportunity to increase foreign direct investment and develop policies that welcome global economic cooperation.  How can the United States revamp its trade policies and international commerce agenda to maintain a balance of power and counter the emergence of a China-based global economy? The U.S. should embrace the global economy, encourage an increase in foreign direct investment, and adopt trade policies with the purpose of encouraging mutually beneficial trade agreements that present an appealing alternative to potentially being indebted to China.

Literature Review

It is argued that the safety nets and restrictions of the IMF and WTO do not serve the international community well or yield desired results; however, they present much needed boundaries to bring order to international trade and markets in a global economy. China’s new economic policies capitalize on the criticisms of the IMF and WTO’s failures under American liberalized trade policies. While there is an opportunity for these institutions to improve on implementing policies that better serve the international community, they are vital to maintaining the balance of economic and political power among nations.


The International Monetary Fund serves as a world bank of sorts that regulates the flow of money in and out of countries and provide guidance and financial assistance during economic crises. After Communism collapsed, there was a rise in popularity of the “Washington Consensus”, which was the American influence through policies that led “liberalized trade and financial flows, privatization, and deregulation that were embraced by the advanced industrial countries, promoted by the Fund in cooperation with other international financial and trade institutions, and increasingly implemented in the developing world.” (Steinwand & Randall, 2007)
These policies as well as policies on providing government bailouts during economic crises are now criticized after the failed austerity measures in Greece, Mexico, Russia, and Argentina. (Sinha, 2014) While some believe that IMF policies should be revised and other believe the IMF should be abolished, the organization fills a need for the international flow of currency, including the potential for China or any other country to manipulate currency value and interest rates as well as provide a safety net for nations in dire need of assistance in order to avert economic crises and continue on the path to prosperity. All organizations have room for improvement, but ruling out the IMF could be an economic disaster leaving room for unregulated financial dominance of one country over the rest of the international community.


The General Agreement on Tariffs and Trade (GATT) was established to “facilitate mutually beneficial trade liberalization” and eventually morphed into what we now know as the World Trade Organization. (Baldwin, 2016) The organization has been criticized for allowing widely detrimental retaliatory trade measures to be implemented as well as the organization’s growing inability to serve as an “effective adjudicator of international trade law”. (Liebman & Tomlin, 2015) Such concerns have led to speculation that the WTO be abolished. However, abolishing the WTO would leave a void in the trade space that was the led to the GATT in the first place.
The GATT was created to quell the issues of high tariffs and reactive retaliatory measures that began in the 1930’s. (Baldwin, 2016) While the organization has had its mishaps and shortcomings, it has largely been effective since its inception. (Baldwin, 2016) Principles of the GATT include, nondiscrimination at or behind borders, transparency, reciprocity, flexibility, and consensus decision-making. (Baldwin, 2016) These principles ensure that American goods and good from other nations have access to international trading opportunities and prevent ambitious countries such as China from developing a trade monopoly.

American Isolationism

As the U.S. continues to lose its influence over Asia and Latin America, the notion of American Isolationism is becoming a growing trend. On one hand, Asian countries are courting the prospect and implementing policies that break with U.S. hegemony and align with a stronger China. (Bello, 2008) This is concerning as U.S. trade with China has created a situation where the U.S. is virtually indebted to China, and smaller Southeast Asian countries risk even more detrimental inequality in trade partnerships with China, such as the Philippines trading land and minerals to China when 7/10 Filipino farmers already do not have land. (Bello, 2008) Yet, Australia and other Southeast Asian countries along with thirty other Eurasian countries are lining up to engage in trade with China and participate in the “One Belt, One Road” initiative that will run through China, Kazakhstan, Russia, Belarus, and Central Europe. (Lee, et. al., 2015) This trend illustrates a world that is willingly turning its back on the United States in efforts to force isolation, and the current U.S. administration is adding insult to injury by implementing more sanctions, instigating more wars, and blocking international cooperation thorough international travel bans as well as the proposition to build a wall between its closest neighbor, Mexico.
This is not a time for America to isolate, as such policies will have to potential to render America ineffective on the international landscape where many countries clamor for American intervention during times of crisis. From an economic perspective, if America inadvertently submits to international pressure to isolate from the international community, then American trade will be in danger of losing access to trading partners, and the entire world will risk willingly giving into a China dominated economy that yields grossly unequal trade agreements.


The current economic policy trends are troubling. As the WTO and IMF are facing growing criticism for failed trade and monetary policies under the leadership of American hegemony, the desire of the international community to separate from the United States reaches far beyond American military intervention. (Bello, 2008) While most across the world would like to see America retreat from a military perspective, including many Americans, failed liberalized economic policies are causing other nations to turn their back as well, leading to American isolationism that could prove detrimental not only for the state of the U.S. economy but also the global economy. (Bello, 2008)
In order to maintain the U.S.-China balance of power in a global economy the IMF must rework policies that will benefit all nations and their various economies to regain legitimacy in its effectiveness to manage the flow of currency across nations and prevent China from manipulating currencies, single-handedly driving inflation, and using predatory trading practices that virtually rob other countries blind. (Sinha, 2014) The WTO must remain as a trade law regulation agency that can prevent China from engaging in trade practices that are not mutually beneficial to both countries. The maintenance of both of these organizations will also place a global check and balance on international majority rule through political and economic isolation as a means of “soft-power” or coercion to support China’s economic policies, creating a government trade monopoly and preventing competitive trade agreements from being proposed.
As for America’s international policies, the country must adapt to the changing times and not retreat into isolation but find a balance that will allow America to be economically competitive and continue to engage in mutually beneficial trade agreements. (Drezner, 2016) Recommended economic policies would be an American answer to China’s growth through foreign direct investment, actively proposing and accepting mutually beneficial trade agreements, as well as focusing on infrastructure, or sustainable development – within the country and in building up other countries as well. (Gooden, 2017)
Limitations on this strategy to remain active include pushback from the American populace to become more economically involved without the populous being able to readily gauge and direct return on investment. Another concern includes the IMF and WTO adapting polices that favor Chinese dominance, which inadvertently isolate the U.S. further. Another concern is the ability to the Americas to benefit from the “One Belt, One Road” initiative, as North and South America and not directly linked to this historically lucrative trade route. If America has lost confidence from most of its allies, then there may not be an opportunity to benefit by proxy or trade by air.


China’s new economic policies position the nation for a successful transition into global dominance. As U.S. hegemony wanes and China shows itself to be the only country with the ambition to replace to U.S. as the next hegemonic superpower, America faces the prospect of being isolated not only by international policies but also by domestic policies. As the IMF and WTO have failed Asia and Latin America with failed policies in currency flow and trade policies, more countries are not only looking to China as an alternative leader but also looking to abolish the IMF and WTO as a whole, leaving a vacuum where China can step in an utterly initiate a Chinese new world order where the nation holds a totalitarian grip on the international community through predatory economic and trade policies that are not mutually beneficial. Such a transition cannot be allowed to manifest, as the human populous is constantly awakening to and fighting for the principles of individual liberty and popular sovereignty.
In order to protect a global sense of sovereignty and liberty for nations and individuals alike, there must be a balance of power that allows humanity to exercise their natural rights to life, liberty, and the pursuit of happiness. An effective solution is for the IMF and WTO to objectively work with the international community to improve their policies in a way that will benefit as many countries as possible and prevent China from becoming a government monopoly with America in complete isolation due to international and domestic policies. America must remain economically active in the international community and match China’s game of conquest through soft power and economic coercion. While even these recommendations have their shortcomings, and can be susceptible to China’s growing power, America must act through increased FDI, mutually beneficial trade policies, and domestic and international infrastructure to maintain a balance of power while it still has great international influence.




Baldwin, R. (2016). The World Trade Organization and the Future of Multilateralism. The Journal of Economic Perspectives, 30(1), 95-115. Retrieved from
Bello, W. (2008). Towards a new american isolationism: An asian viewpoint. Journal of Australian Political Economy, the, (62), 5-15.
Drezner, D. W. (2016, July). The Challenging Future of Strategic Planning in Foreign Policy[PDF]. Brookings Institution.
Lee, J. Y., Hyun, K., & Jin, L. (2015). China’s new silk road: Policies and implications *. Journal of International Logistics and Trade, 13(2), 55-70. Retrieved from
Liebman, B. H., & Tomlin, K. (2015). World trade organization sanctions, implementation, and retaliation. Empirical Economics, 48(2), 715-745. doi:
Sinha, M. (2014). Re-imagining the international monetary fund. South Asian Survey, 21(1-2), 194-210. doi:10.1177/0971523115592523
Steinwand, M. C., & Stone, R. W. (2008). The international monetary fund: A review of the recent evidence. The Review of International Organizations, 3(2), 123-149. doi:10.1007/s11558-007-9026-x

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