Is China an Exception to the Commercial Peace? Trade Interdependence and Chinese Uses of Military Force

Jack Zhang, Postdoctoral Research Fellow, Niehaus Center for Globalization and Governance, Princeton University
| CSCC Conference Room, Perelman 418, 133 S. 36th St.

Contrary to commercial peace theories, which predicted that economic engagement would make possible China's peaceful rise, China seems to be engaging in more militarized disputes with its neighbors and trade partners. I offer an explanation for this apparent anomaly by examining the relationship between borders, trade, and conflict in a new dataset on Chinese Foreign Relations (CFR). Conflict over unresolved territorial disputes account for 84% of Chinese uses of military force and these rates are unaffected by China's growing trade dependence with other claimants. While disputed borders have been found to depress international trade flows in other regions, they have not impeded China’s growing trade with its disputant neighbors. I show that trade can lead to stability at high levels of conflict --making wars more unthinkable-- but creates instability at lower levels of conflict -- incentivizing calibrated uses of military force, against which revoking trade would not be a credible response. Therefore, as long as China's territorial disputes remain unresolved, economic interdependence can increase the frequency with which China uses military force in these disputes while putting a ceiling on the intensity of these conflicts.