The Repercussions of Realignment: United States-China Interdependence and Exchange Rate Politics

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Date: Sept. 2015
From: International Studies Quarterly(Vol. 59, Issue 3)
Publisher: Wiley Subscription Services, Inc.
Document Type: Report
Length: 240 words

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Abstract :

Byline: Robert A. Galantucci Analysts generally believe that a weaker currency primarily benefits a country's manufacturing and primary goods sectors. However, many of these industries-and the elected officials who represent them-frequently oppose legislation designed to combat the dollar's overvaluation relative to the Chinese yuan. I argue that legislators hesitate to take aggressive action on the exchange rate issue because doing so could lead to a disruption of the broader United States-China economic relationship. The threat of an economic conflict emerges as a particularly important consideration in the context of currency bills, where proposed legislation is linked to trade policy and other areas of international economic regulation. A Bayesian statistical analysis of legislative behavior on two recent exchange rate bills in the US Congress provides overall support for my hypotheses. Legislators with ties to business interests that rely heavily on the Chinese economy were more likely to oppose the bills, while the strongest support came from legislators representing import-competing domestic producers. The results highlight the ways that economic interdependence shapes bilateral exchange rate politics in particular, and United States-China interactions more generally. Article Note: The author benefitted from helpful feedback on this project, at various stages, from Sarah Bauerle Danzman, Elizabeth Menninga, Layna Mosley, Thomas Oatley, the editors of ISQ, and several anonymous reviewers. Replication data and supplementary materials are available at the journal's Web site and are also available at http://galantucci.web.unc.edu. CAPTION(S): Appendix S1. Diagnostics, Robustness Checks and Supplementary Information.

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Gale Document Number: GALE|A427486710