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EU–China relations in financial governance: cooperation, convergence or competition?

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Abstract

The global financial crisis (GFC) and subsequent Eurozone sovereign debt crisis (ESDC) have made reform of the global financial governance regime a priority for governments around the world. Prior to the crisis, neoliberal policies agreed between the European Union and the USA created a financial governance regime based on the principle of free operation of the market through the norms of market self-regulation, equal access to the market, and stability via institutional supervision. How will global financial governance look like after these crises? And what role can the EU and China play in shaping this regime? This article argues that as a result of the GFC and the ESDC, stability is becoming a second principle of global financial governance, along with the free operation of the market. Meanwhile, European and Chinese views regarding the norms, rules, and decision-making procedures designed to implement those principles do not differ as much as they used to. Thanks to interactions at the bilateral and multilateral levels, the EU and China now have knowledge regarding how the other understands the role and characteristics that financial governance should have. This is leading to convergence in some areas and cooperation in others. Concurrently, there are also areas of competition. Analysing all of these is essential to understand how global financial governance might evolve, given the central role that the EU and China now play in this regime.

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Notes

  1. Hong Kong is not discussed in this paper, since it has its own monetary authority and regulatory and monitoring mechanisms independent from those in mainland China.

  2. Rosemary Foot and Andrew Walter reach a similar conclusion with regards to the main norms governing the global financial regime. They argue that financial stability through minimum bank capital requirements, competitiveness through a level playing field and, decentralised, market-base regulation are the three main norms that underpin this regime. See Foot and Walter (2011).

  3. See dataset available at http://web.pdx.edu/~ito/Chinn-Ito_website.htm (accessed 24 October 2012).

  4. For a detailed examination of the close links between the influence of the behaviour of financial firms and the ESDC, see Blundell-Wignall and Slovik (2011).

  5. See, for example, European Commission (2007).

  6. The IOSCO and the International Association of Insurance Supervisors are not discussed in this section due to their limited interest in the context of EU–China interactions with regards to global financial governance.

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  1. Department of European & International Studies, King’s College London, London, UK

    Ramon Pacheco Pardo

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  1. Ramon Pacheco Pardo
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Pacheco Pardo, R. EU–China relations in financial governance: cooperation, convergence or competition?. Asia Eur J 12, 63–77 (2014). https://doi.org/10.1007/s10308-014-0372-z

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