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POLSCI 2I03 (101)
Andrew Lui (26)
Lecture 20

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McMaster University
Political Science
Andrew Lui

How to we evaluate change? We should be able to give educated responses to what is happening? Perceptions of China within US: china has been often looked as something of a threat. They see the rise of China as the rise of Soviet Union in post-war world. There is a lot of money put in to it. The perceptions amongst the many elites within US and Europe is that China is little unchanged since the Cold War. There is also the perception, the iconic photograph of June 1949, the Tiananmen Square massacre of university student in front of the tank. Where the end of Cold War youth thought they could change the Chinese government. The image was seemingly steered into the minds of statesperson of Europe, US, and Canada and they think of China like that, untouched and unchanged. But China does not look like that anymore. Theory is important for understanding world change. If you look at the world through the Hobbesian view, you will look at China as the next Soviet power. But China does not look anything like the Nazi Germany and Soviet Union. If we look within the Chinese government, it does not have ‘take over’ the world ambitions, it simply wants to restore part of what it lost in the year of ‘humiliation’. That does not mean necessarily going to war; they want to have some power over the international institutions and organizations. Many have said in 1980s that Japan is new rising power, but everything said and done US remains the hegemony. These hypotheses about US decline has come and gone, yet US remains the super power in IR. Some of the statistics are extremely revealing, most estimates by major financial institutions pin point the moment China will take over US in terms of absolute GDP output power in the next 8 years. China has the world’s largest millionaires; China’s tourism is rising they outstrip the number of Americans that visit Europeans each year. In terms of growth, they have accumulated huge amount of foreign reserves. That the issue of Chinese reserves is a thing of concern; China holds more US bonds and reserves than any other country. It is estimated they hold $1.3 trillion are being held in the accounts of Chinese state. What does that mean in terms of power? We have never see such a significant moment in which the US $ has seen such devaluation such as it has in the past years. Hegemony is not only about military, but also dollar hegemony. In 1917, the world went off gold standards, US said we will not have gold standardized currency, but let currency flow. It essentially replaced gold with US $, it became the key currency of IR. The world wanted to hoard all the reserves of US$ to ensure the stability of their own currencies as well as your ability to repay debts. How does it matter in terms of power? With the continually decline of US$ and the rise of euro, and China accumulating US$ reserves including the other currencies, the US currency is not as powerful as it once was. The structural power of US is declining in this economic and financial state. Neorealism looks at power in terms of military capabilities i.e. guns. This type of political power says that power comes from one state being so large, that economically it has consequences unintended on the rest of the world. 2008 reserves, it started off with banks loaning people with people they didn’t and were not capable of repaying. This was a domestic crisis, but because US is so large and their banks are so large and are connected with the liquidity of other banks it has a domino effect, this is the impact of structural power. Because you are so big, you had dollar hegemony other states have a vested interest in your state. The stability of US$ is not
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