Professor Jonathan Kirshner is a Professor of International Political Economy at Cornell University. His research focuses on classical realism, the international political implications of the financial crisis, and the politics of mid-century cinema.
BPR: Last year, the Chinese government lowered the interest rate by 5 percent, leading to a significant depreciation. How would you describe the current dynamics of the Chinese and world economy?
JK: China’s leadership wants the interest rate reduction to help stimulate its economy, given that the country’s rate of economic growth rate is decelerating, but it’s inevitable that the measure will have a depreciatory effect on the exchange rate. So it’s a very politically consequential move, which has an effect on China’s trade competitors. That’s the fascinating complexity of the political implications of economic measures – it’s not necessarily about the aggregate consequences on the economy as a whole, but rather that all such policy choices generate winners and losers. In terms of the global economy, the main consequences of a depreciation are principally felt by those countries competing with China for export markets, because China’s products sell for less. From America’s political perspective, on one hand, Chinese imports become cheaper, so American consumers get to buy those products for less money. On the other hand, those lower prices undercut our own products on the market. The central point is there is constant political contestation between different groups who benefit or are harmed by different measures.
BPR: What’s your take on Chinese economic regulation and media censorship?
JK: I conceptualize these two issues differently. The control of information is solely an authoritarian act; although I can see the analogy that state’s intervention in the economy is somehow similar to the interference of information flows. The Chinese government does have a very large hand in the management of its economy, though most governments in the world, to some extent, also are engaged in that of theirs. There are libertarian philosophers who argue that any state intervention manipulation in the economy is an interference of human freedom. But in general, I share the view that government engagement in the management of the economy – what has been called the mixed economy – is not an affront to liberty. However, as an old-fashioned liberal, I’m always opposed to the idea of censorship and government interference with the flow of information between people, so my default setting is to oppose censorship in all its forms.
I should mention that I do have some wariness about the consequences of an information culture dominated by the Internet, because, as seen in the US, the Internet culture creates enormous quantities of unfiltered information that pollute civil discourse and make it harder for people to distinguish between opinions and facts, thus degrading the quality of discourse amongst people. What we should be concerned about is whether our society is losing the ability to distinguish between fact and opinion and whether this is having a negative effect on the conduct of politics. To be clear, I don’t think censorship is a solution to this problem. But to me, the real concern is that in such an unfiltered information environment, otherwise suspect, extremist, and dysfunctional arguments and perspectives are able to thrive and find apparent legitimacy.
BPR: How does the Asian Infrastructure Investment Bank frame changes in the world economy, particularly the rise of China?
JK: The Asian Infrastructure Investment Bank (AIIB) is one among many manifestations of dissatisfaction with America’s stewardship the global economy and the performance of institutions that are associated with America, like the International Monetary Fund. The global financial crisis heightened this sense of dissatisfaction with an America-run, dollar-centered world, and the crisis also exposed the vulnerability of the American financial system, which stimulated the desire for alternatives and for more heterogeneous forms of international governance. The AIIB is one manifestation of this search for a variety of options regarding the governance of the international economy. As for rise of China, it is a dangerous thing – not because of anything specific about China – because history shows, for a number of reasons, emerging great powers in the international system tend to create dangerous situations. One reason is that rising states tend to want a greater voice in how the world should be run or to have their interests respected. In a word, rising powers throughout history are annoying. They become very ambitious and arrogant, and that automatically causes problems because others may not look kindly upon this new arrogance and ambition. The second problem comes from the fact that established great powers are reluctant to acknowledge appropriately the fact that the balance of power has shifted in the world and are reluctant to acknowledge and reconcile themselves to these new realities. This is not a function of the specific relations between the US and China. Rather, great powers throughout history have been very sluggish to recognize the legitimate claims of rising states. Established great powers, accustomed to being on top, are also arrogant, unwilling to make concessions, and often overconfident. Eventually, however, if established great powers do come to recognize their own relative decline, they can become fearful and wary of making any concessions, fearing that the emerging power will simply want more and more. In sum, you have an annoying rising state wanting more and an established state reluctant and fearful to make concessions, and each tends to view the other with suspicion.