International Relations Theories and China's Economic Ascent

This report delves into the multifaceted rise of China, examining it through the frameworks of neo-realism and neo-liberalism within the context of international relations. The analysis highlights key factors contributing to China's economic growth, such as its vast labor surplus, low export prices, and substantial foreign currency reserves. The report contrasts neo-realist and neo-liberal perspectives, discussing how each theory explains China's increasing influence on the global economy. It explores the impact of privatization, the role of consumer behavior, and the dynamics of international trade. The report references influential figures like John Maynard Keynes and scholars such as Axelrod, Keohane, Mearsheimer, and Zoellick to support its arguments. It also examines the interplay between China's internal market dynamics and its global economic strategies, including its approach to foreign investment and its relationship with transnational corporations, and its effect on the US and other countries.

Running head: INTERNATIONAL RELATIONS
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Abstract
Four important factors that has been identified behind the rise of China is that huge
surplus of labour has actually created a hub for the cheap supply of labour. Low export price
of goods have enabled the other country to get access to products at a low price. The third
factor that has popped up is that Chinese economy had the largest amount of foreign
currencies that has helped them to establish as the main driver of this world. John Meynard
Keynes claimed that fear and desire are two things that actually helps in the identification of
global demand.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Neo- realism theory and its impact on rise of China..................................................................4
Neo-liberism theory in the rise of china.....................................................................................6
Conclusion..................................................................................................................................8
Reference list..............................................................................................................................9

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Introduction
In order to increase the trade and commerce in the modern world of business, it is
important to bring in better amount of policies. Neo-realism and Neo-liberism theories are
definitely going to help the economic activities and realism theory is claiming that social
interactions is more important compared to the social interest. On the other hand, neo-liberal
theory claims the fact that trade and commerce is only thing that will definitely look into the
matter of growth. China in recent years is one of the top-most exporters of world goods and
services but they even today fail to compete within internal china. There are about 100
automobile companies that has been originated in China and market share is less than 30%.
Rest of the market share is made by GM, Volkswagen and Toyota. It is clearly conveying the
fact that internal demand of China is key and main point factor behind the rise of markets in
China.
Discussion
According to the view of neo-liberal policies, implementation of neoliberalism is
going to be successful and in order to do this, a specific environment need to be established
that will help the capitalists to prolong their power and decision making abilities. For
neoliberals to get the taste of success, the global powers need to be transferred to the
capitalists so that they can have an impact on the decision making abilities. However, in case
of China, the rise and growth of their economy played a crucial role in helping China to
transform into a capitalists country. After 1992, the Chinese economy took the decision of
privatising majority of their state owned sectors. The immediate impacts of privatisation had
fell on the rural health and education sectors.
Millions of presents started to migrate in urban areas and by 2000 Chinese economy
became the hub of worlds export house of most of the goods being manufactured in the

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international market. Another positive impact of rise of Chinese economy on the global
economy is that huge supply of cheap labour took place in global perspectives and situation
of labour surplus came into presence. The second economic impacts of rise of china is that
world economy got low price of goods as China’s low cost manufacturing exports made them
lower the price (Axelrod and Keohane, 1985). Thirdly the China’s share of world GDP
increased by huge margin and due to this, they became driver of global economy. Lastly
Chinese economy gathered huge amount of foreign reserves that has helped them immensely
to increase the growth rate of the economy. Moreover, the incorporation of capitalism is
important and beneficial in the early stages of development as the capitalist or mercantilists
will be keen to invest in the economy if the economy is having fine prospects in future.
Neo-realism theory vs. neo-liberism
The contrast of international relationship during the period of 1970-1980 is mainly
known as classical tradition of international relations theory. However, among the contrast,
the realism has been dominant stand. The second string of the liberal or the Grotian tradition
that mainly stress on the impact of domestic and international society, interdependency and
international institution. Sharp disagreement among the two theories are overstated. One of
the major weakness of neo-realism theory is that over importance of states and their interests.
Realism theory maintains that states learn by responding to structural changes in their
environment and in game theory language, they adjust their behaviour responding to changes
in payoff matrix (Nye, 1988). They only bats for interactions among various parties
compared to the interest that is lying from the social perspectives.
On the other hand, theories of neo-liberism mainly signifies the development of
international trade and commerce. They thinks that only international relationship can

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increase the development of resources that can improve the situation of China and will
definitely help in the rise of China.
Neo- realism theory and its impact on rise of China
The concept of neo-liberism and neo-realism is having some extent of common
characteristics but there is a thin line of difference. The concept of neo-realism is mainly
lying on the thinking that policymakers is relying on the real patterns of consumer behaviour
and it actually have a deep impact on the growth of a country. John Maynard Keynes in 1949
in his theory of Benthamite Calculus, showed that Fear and Desire are two important
characteristics that actually determines the consumer behaviour. In the given context, the rise
of China is depending entirely on the consumer preferences that is being designed by strong
desire of the consumers to get the best products that are easily available within the economy.
One of the main and significant point behind the rise of China is the high growth of
the consumer market for all its products. The concept of classical is quite different form neo-
realism. Classical realism still bats for the dynamic distribution of power compared to the
static distribution of power (Jie, 2017). On the other hand, neo-realism theories bats for the
gradual change in the power. The economy of China took the concept of neo-realism into
action. Taking this concept the Chinese economy has developed the industrial belt as per the
requirements of the country and skills of their employees. This is because, states in the world
politics is more or less similar to large oligopolists compared to small firms under perfectly
competitive market. Structural theory that was penned by Waltz is claiming the fact that
every state needs to take survival as the goal of development. In 1981, Gilpin in his axioms
claimed that power of any state increases as it expands its political influences (Kirshner,
2012).

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Most important contribution of The Peloponnesian War is the uneven distribution and
growth of powers among states. Contemporary international politics is mainly responsible for
the rise of China and responses of other states regarding to the rise. China is one of the
biggest market of power and is deeply indulged in the lack of security. Demand of energy by
China is the potential reason for the friction with other states. The main consequences of
China’s rise is that realist default setting is pessimistic in nature. China’s participation in the
international agreement will be meaningful in the sense that access to US has been only
sustaining because of the relationship. Moreover, it is important for the world economy to
think of policies and strategies that has been taken by China in order to indulge in the
development of international politics.
John Mearsheimer in his theory claimed the fact that growth of china is not possible
in a peaceful manners. In order to achieve regional hegemony, China will become more
aggressive in political contexts. Now in order to implement the resources and capital
distribution, the government is indulging in mixed method and is trying to bring more deep
socialistic approaches in the international trades with relaxing trades and commerce. Current
US policy of engaging china is misguided and failed. China is becoming so strong that it will
seek ‘to dominate Asia the way the United States dominates the western hemisphere’ and US
need to slow down the growth of China. All the states must get the chance of equal
distribution of resources so that economies in other parts of Asian continent can improve their
situations.
Neo-liberism theory in the rise of china
The concept of liberism is deeply associated with the instuitions that are closely
related with liberism. It directly does not ask the question of what is not causing peace but it
definitely focus on the less ambitious goals of the society if the state interest are not fully
opposed. This mainly focus on the fact that weather the states are failing to co-operate with

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the central and is having deep problem will obviously be a significant factor. Goal directed
behaviour with mutual agreements so that each party can be benefited will be the main focus
of the Neo-liberism theory. The main argument against the state is that all the members of
state thinks of cost and benefit and do not think of mutual benefits. Most of the economists
bats in favour of mutual agreement and mutual benefit by incorporating Pareto optimisation
within their growth models.
In the era of modern globalisation, the contribution of transnational corporations is
becoming important for the development of trade and growth in GDP. Since 2004, the
Chinese economy is the largest exporter of electronic goods but this does not mean that
Chinese firms are the leaders in the electronic market (Mearsheimer, 1994). China has virtual
monopoly on export of I-Phones but the Apple reaps majority of the profit from the sales of I
phone. Taking the foreign transnational corporations from the countries like USA, the
Chinese automobile industry has exploded by huge margin.
The true story of Chinese Automobile industry is they even cannot compete within
China through the vehicles that are being produced within China. There are about 100
Chinese auto firms and irrespective of having huge number of state subsidy the market share
of these firms is less than 30%. Rest of the market share is make up by companies like
General motors and Volkswagen.
In the modern world of business, the Chinese economic achievement is more than
they had even expected. Currently the Chinese economy is one of the biggest country in the
world with GDP of $19.5 trillion against $17.9 trillion for US (politico.com, 2019). In spite
of having this much of economic income, Chinese economy is one of the middle income
country, as the per capita income of the country is around $12000 (politico.com, 2019). This
is an important aspects in whole course of the study because of the fact that rise of China is

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good for itself but if the country is not being able to distribute the income to its countryman
then the country is not going to have benefits. In order to introduce the development of
economy, rise of the economy is not going to help in increasing the power of the government
and the government will not be able to reimburse the development.
Since the end of cold war, the emergence of China in the international market is itself
one of the surprising event. Currently the education system of the China is not up to that
mark. Now in order to indulge the renovation of economy it is important for the economy to
identify the gaps that are lying within the economy. Even after having high growth of income
in the country, the peoples are living in a poor condition compared to US (Zoellick, 2010).
Perhaps this is one of the important factor because of the fact that China will not be able to
emerge as one of the ruling country in the world as the policymakers of the country has
focussed on the external development of the country and the internal development of country
is being ignored.
The current leadership of China is more or less facing some kind of paradox and they
need to reform the ruling policy in order to rule the country more effectively. Currently the
Chinese economy is facing internal challenge and they are having strong rules that are
actually going to bring more complexity in the ruling of the country (Zoellick, 2010).
Currently the economy of china is building up reputation in order to bring in high grade of
economic performances. Developed markets central bank is going to invest heavily on the
purchase of heavy materials and in order to increase the development of resources, heavy
industrialisation is important. Chinese economy is definitely aiming to indulge in the
development of better level of policies. In order to implement, theory of neo-liberalism, the
economy of China is mainly aiming to bring in high class of technological up gradation that
is going to bring in high class of economic advantages (Zoellick, 2010). Now in order to
increase the development of resources, the China is mainly aiming to rule on the rest of the

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world. Now in order to increase the effectiveness of ruling the socialistic approach needs to
fulfil the demand of the internal peoples. Government need to implement better amount of
fiscal and monetary policies so that they can increase the development of employment and
other facilities.
Both the theory of neo-realism and neo-liberalism is mainly batting in form of
resource development. In order to highlight the importance of resource development the
economy of china has predominantly followed the incorporation of better improvement.
Personal opinion
Through the study, it has been identified by the researcher is that in order to improve
their business in international market, countries other than China should bring in high quality
of policies and they should relax the trade and commerce restrictions. Now in order to
indulge the development of economic variables taking the economic advantages are
important.
Conclusion
The study has successfully claimed that taking the advantage of neo-realism and neo-
liberal theories, the China has successfully increased their social and marketing position. The
rise of China is indeed alarming for many resources as in recent period, the economies that
has not been able to rise need to look into the policy framing of China. In order to indulge the
better amount of development, the Chinese economy has relaxed the rules and regulations
that are present in the international trade. Through the relaxation of the rules. The Chinese
economy has focused more on the development of mixed society.

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Reference list
Axelrod, R. and Keohane, R.O., 1985. Achieving cooperation under anarchy: Strategies and
institutions. World politics, 38(1), pp.226-254.
Jie, Y. 2017. FROM DENG TO XI ECONOMIC REFORM, THE SILK ROAD, AND
RETURN OF MIDDLE KINGDOM. LSE Ideas.
Kirshner, J., 2012. The tragedy of offensive realism: Classical realism and the rise of China.
European Journal of International Relations, 18(1), pp.53-75.
Mearsheimer, J.J., 1994. The false promise of international institutions. International security,
19(3), pp.5-49.
Nye, J.S., 1988. Neorealism and neoliberalism. World Politics, 40(2), pp.235-251.
www.politico.com (2019). [online] Available at:
https://www.politico.com/magazine/story/2014/02/america-didnt-declin [Accessed 18 Jul.
2019].
Zoellick, R.B., 2010. The end of the third world? Modernizing multilateralism for a
multipolar world.