Continuing to Contest the Liberal Imaginary: The Rise of the RMB and the Future of Dollar Hegemony

The position of the US Dollar as the default global reserve currency has long been considered a foundational element of American global economic hegemony. Yet America’s ‘exorbitant privilege’ was one cause of its 2008 financial crisis, and its future is now less assured as its long-term fiscal position weakens, and emerging economies assume an ever-greater global economic role. The symbiotic economic relationship between the US and China, the development of which has attended China’s economic rise, will influence not only the long-term stability and sustainability of the global economy, but the role of the USD within it. There is seemingly widespread recognition that achieving such stability and sustainability demands shifts in China’s international monetary policy. Chinese policymakers are struggling to chart a viable course between maintaining domestic stability, and China’s role as a ‘responsible stakeholder’ in the global political economy. Standard accounts hold that as soon as China is able to bring its tightly controlled banking sector into line with the norms of the prevailing liberal global economic order, greater global monetary stability will follow from the accelerating liberalization of the RMB. This paper argues however that the presumption that China is seeking to integrate seamlessly into an established global financial system is unwarranted. The different vision of its policy-makers as to the extent to which the mobility of capital must remain embedded within broader social structures and institutions indicates that in doing so, it will continue to contest the salience of the disciplining logic of the public/private divide that currently informs commentary on the International monetary system. China may well be desirous and willing to move towards a multi polar system of reserve currencies. However the prospects of China seeking to deploy the RMB as a means of supplanting US hegemony in a eoliberal global economy are limited, at best.