Challenging Global Neoliberalism? The global political economy of China's capital controls

This article engages with critical IPE scholars who have examined the rise of China and its impact on the neoliberal world order by analysing whether China poses a challenge to the neoliberal norm of free movement of capital. We argue that China's capital control regime is marked by a contradiction between its domestic social relations of production and its global geo-economic ambitions. On one hand, the key raison d'etre of China's capital controls is to protect and consolidate an investment-led accumulation regime that redistributes income and wealth from Chinese workers to its state-owned enterprise sector. Dismantling these controls would result in changing social relations of production that would not necessarily benefit Chinese industrial and financial capital. On the other hand, China's accumulation regime has found itself increasingly constrained by the dynamics of US monetary hegemony, making the contestation of US structural monetary power a key global geo-economic ambition of China's ruling elites. In this regard, China would have to challenge the dominance of the US dollar by promoting the international role of the renminbi and developing liquid financial markets. Since it would have to abolish its capital controls in order to achieve this, there is a plain contradiction between its domestic and global objectives. A good understanding of this contradiction is necessary in order to be able to assess whether China will be capable of challenging the neoliberal world order in general and the norm of free movement of capital in particular.