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Chinese Economic Power and the Effects of U.S. Economic Interdependence

PI: Shade Shutters, Arizona State

Growing Chinese Economic Power and the Exacerbating Effects of U.S. Economic Interdependence

Principal Investigator: Shade Shutters, Arizona State University

Co-Investigators: Cameron Thies, Arizona State University; Rachata Muneepeerakul, University of Florida

Years of Award: 2021-2024

Managing Service Agency: Air Force Office of Scientific Research

Project Description:
The foundation of U.S. power is its economy and that economy is critically dependent on a stable international order. Yet, globalization of trade and technological advancement over the past two decades have created an international economic system that poses several significant and interrelated threats to U.S. national security.

First, the interdependent nature of this system is a source, not only of strength, but also of vulnerability. The global nature of today’s economic systems means a disruption in one place can swiftly cascade across the world, disrupting global supply chains and national economies. Second, global economic interdependence has virtually replaced linear chains of cause and effect with a complex network of causal impacts. U.S. national policies such as tariffs, which once had largely predictable outcomes, now often lead to unanticipated and undesirable consequences for the U.S. economy. Third, the current structure of global economic systems exposes the U.S. to potential acts of coercion and extortion by other countries, including key trading partners. China, in particular, is increasingly adept at using such economic weapons.

However, in the peer-reviewed academic literature there exist two competing views of how interdependence affects the vulnerability and resilience of social systems. While one school highlights the benefits of interdependence, and even promotes economic interdependence as a path to global peace, a second school focuses on the dangers of deep interdependence. This lack of consensus has persisted for years with little progress towards generalizable theories. If knowledge in this area is to progress these divergent viewpoints must be reconciled.

This project addresses this intellectual discord and associated security needs by examining how economic interdependence induces vulnerability and creates threats to national security. We will construct (1) quantified metrics, models, and indices of global economic system and industrial sectoral vulnerability, and (2) a multilayer network analysis of U.S. interdependence with China and how those networks combine to exacerbate system vulnerabilities.