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<p>How does the geopolitical environment shape economic cooperation with rising powers? We address this question by studying China’s bilateral swap agreements (BSAs) and evaluating how China’s external security dynamics influence secondary powers’ decisions to sign them. We build our theory using elite interviews with financial leaders from China’s swap partners, and argue that geopolitical proximity and security considerations significantly shape monetary cooperation. Using a cross-national panel of China’s BSAs, we find that US allies near China are less likely to sign BSAs compared to non-allied states, and territorial disputes with China also decrease the likelihood of agreements. Security cooperation with China on the other hand, increases the likelihood of monetary collaboration. China’s expanding monetary initiatives are thus another example of the constraints that rising powers’ security interests have on their economic pursuits, especially near its borders, where US allies view China and US-China tensions as security threats.</p>

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The limits of financial statecraft: China’s bilateral swap agreements and the external security environment

  • 期刊论文

  • 发表日期：

    2026年6月17日

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  • Siyao Li,
  • Aditi Sahasrabuddhe

摘要

How does the geopolitical environment shape economic cooperation with rising powers? We address this question by studying China’s bilateral swap agreements (BSAs) and evaluating how China’s external security dynamics influence secondary powers’ decisions to sign them. We build our theory using elite interviews with financial leaders from China’s swap partners, and argue that geopolitical proximity and security considerations significantly shape monetary cooperation. Using a cross-national panel of China’s BSAs, we find that US allies near China are less likely to sign BSAs compared to non-allied states, and territorial disputes with China also decrease the likelihood of agreements. Security cooperation with China on the other hand, increases the likelihood of monetary collaboration. China’s expanding monetary initiatives are thus another example of the constraints that rising powers’ security interests have on their economic pursuits, especially near its borders, where US allies view China and US-China tensions as security threats.