chapter  5
The false promise of economic interdependence
Chinese foreign policy in North-East Asia
WithNicholas Khoo
Pages 9

China is regularly referred to with terms such as ‘global trade power’ and concepts that rely heavily on economic indices, such as ‘soft power’. China’s seemingly inexorable economic rise is such that analysts seriously debate whether the 21st century will see it overtaking the USA. Economic interdependence theory has its roots in the work of Adam Smith. In 2001, Bruce Russett and John O’Neal focused attention on the role of economic interdependence, both independently and in conjunction with democracy and international institutions in reducing conflict between states. David Shambaugh has identified expanded economic relations between China and its Asian neighbours as one of the four pillars of a more activist and successful foreign policy. The positive spill-over effect of economic ties on Sino-Japanese relations is much weaker than expected by economic interdependence theory. Since normalization of relations in 1992, economic interdependence has flourished between Seoul and Beijing.