Linkage politics in Sino-American relations.

Abstract

A common phenomenon that exists in any complex relationship between two countries is "linkage" across different policy issues. Linkage means to establish a relationship making progress in one area dependent on, or affecting progress in another area between the two countries. This thesis explores how linkage has evolved in the U.S.-China relationship across three different issue areas: currency, trade, and investment. The thesis argues that, as China's economy has grown more quickly relative to the United States economy, China has gained advantages in bargaining with the United States. Unlike linkage politics of the 1980s and 1990s, more recently, the United States has been less able to put the same pressure on China that it used to because China has been able to minimize linkages across different areas. In particular, China's participation in multilateral governance arrangements such as the World Trade Organization (WTO) shields it from direct pressure in the Sino-American bilateral relationship. In contrast, China has been able to make use of American vulnerabilities, particularly those arising from America's trade and budget deficits, to deflect pressure to make concessions on trade, investment, and currency issues. These three areas not only link with each other but also have linkage with some other non-economic areas in Sino-American relations.