An Analysis Of US Dollar Hegemony And China's Response Strategies

In recent years, the hot topic for academia and the policy authorities is the viewpoint of America that buys the world through the issuance of U.S. dollar notes. According to the survey of relevant literature at home and abroad, different academic perspectives and policy recommendations varied greatly. Nonetheless, most of them neglected the complexity of the U.S. dollar hegemony in the present international monetary system, and seldom of them have made any systematic analysis under the framework of that system. This era is the era for USA to control the world through the dollar hegemony. Obviously, living spaces for countries that under the reign of U.S. dollar hegemony system, especially for those developing countries, is rather limited. The most stringent and significant tasks for China is to rethink the U.S. dollar hegemony from the angle of national strategy, explore its overall strategy and specific means, and thus seek a greater living space and maximize our strategic interests.The thesis combines the reality of U.S. monetary hegemony and China's national conditions. Regarding the historical involvement as the clue, the analysis of the power structure as the main axes, the America's economic strength and its monetary strategy and international monetary cooperation as the variable, analyzes the connection between the change of America's economic status and dollar, and predicts the future of the dollar as well as the international monetary system. And in the last part of my thesis, I analyze the U.S. dollar hegemony's affections that China will suffer and the possible strategies we should take.The thesis includes three parts: the introduction, the text, and the conclusion. The text is divided into four chapters. The theme and the conceit of my thesis are as follows:Firstly is the introduction. It summarizes the theoretical and practical significance of my selection, addresses itself on the relevant research in U.S. dollar hegemony from both the domestic and overseas standpoints, chiefly introduces the paths of thinking and the methods of researching; sums up the main innovations as well as the inadequacies.The first chapter is about the conception of U.S. dollar hegemony and its historical involvement. On the basis of other scholars' researches, I redefined the U.S. dollar hegemony, and then reviewed the history and actuality of it. The U.S. dollar hegemony experienced three stages: the confirmation and consolidation, the fluctuation and regulation, the revival and strengthen. Bretton Woods System, whose focus is the dollar, is the symbol of the establishment of the dollar hegemony. With the development of the international political and economic situation, the Bretton Woods System winded up eventually. Nonetheless, it's not the doomsday for the hegemony, on the contrary, after the adjustment, it revived and thrived under the Jamaica system. The "Core-Periphery" framework manifested the consolidation of dollar hegemony, which was presented through the international monetary system.The framework of the second chapter is the discourse of the theoretical analysis about the U.S. dollar hegemony. It includes the essence of the international monetary system, the international political analysis about the international monetary system arrangement, and the redefinition of the new U.S. dollar hegemony. The essence of the international monetary system is a hegemonic system, only those financial hegemonic countries have the power to affect it. Its money is the basic of the international financial relationship. In the systematic arrangement of the international monetary system, the Interdependence Theory and the Hegemonic Stability Theory can explain it satisfactorily. The Original Sin Hypothesis, the Hypothesis of the Vanishing Intermediate Regime, and the Fear of Floating Hypothesis, which were promoted by western scholars can also provide new explanations of why dollar can keep its reigning status in the international monetary system.The third chapter narrates the affections and prospects of the U.S. dollar hegemony in detail. From one hand, I systematically analyze the economic affection of U.S. dollar hegemony: it not only maintains the U.S. economy to operate in balance, but also shares economic interests with other countries and at the meantime, controls the lifeblood of the global economy. The abuse of the U.S. dollar hegemony also shows adverse influence to America itself, and leads to serious imbalances to the world economy. From the other hand, I clarify the political affection of the U.S. dollar hegemony: it is essential for America to gain the dominant status in the international political pattern, if it can technically manipulate the tremendous economic interests of the U.S. dollar hegemony. Under the international monetary system where the dollar is the autarchy, the startup of Euro challenged the hegemonic position of him, and adapted to the trend of the multi-polar world economy. The international monetary system is doomed to be diversified.In chapter four, I focus on the strategy for China to deal with the U.S. dollar hegemony. I suggest the overall strategy and specific means for China to cope with, included the coping policy for the morass of RMB interests rates: expand the domestic demand and transform the mode of economic growth, persist the initiative, controllable and gradual principle, adjust money's variety in the currency basket and the weights of different types of moneys; the management strategy of foreign exchange reserves: promote the diversification of the investment structure, choose the direction of foreign exchange reserves investment rationally, and command the growth of the international reserves strictly; the realistic approach for us to participate the international financial cooperation: to maintain our monetary financial sovereignty and safety, recognize the significance of the financial diplomacy, try to apprehend and master the regulation , and thus promote the RMB internationalization.The final part is the conclusion of my thesis. After the analysis of the four chapter, we can get the following conclusions: the U.S. dollar hegemony in its essence is a geographic phenomenon, is a leading pattern which internalized in the growth of the global economy, and determines the world's peace and development; the U.S. dollar hegemony has the direct proportion with its economic strength, America's power that determines such hegemony; the startup of Euro has became the main competitor and the chief challenge of the dollar hegemony, with the development of the multi-polarization of the world economy, the same tide in the field of international monetary system will also become irresistible. In order to cope with the U.S. dollar hegemony effectively, it is necessary for Chinese authority to take the positive measures in RMB interests rate, foreign exchange reserve management policy and the choose of our way to participate in the international financial cooperation.