Trade, security, and authoritarianism: domestic politics of foreign policy making in China

Abstract

Could trade bring security and stability to international relations? China has become one of the most important players in the global economy without being democratized. In this article, I present a game-theoretic model in which an authoritarian state would behave more cooperatively in international relations if internationalists are empowered vis-à-vis hardliners in domestic politics. Reformists and internationalists are likely partners. The reformists have a strong incentive to use the free trade agreements’ (FTAs) stipulating domestic regulations as external pressure to advance structural reforms: they see intra-industry trade, enhanced by global value chains (GVCs), as a means to achieve sustainable economic growth. This article breaks down the broader claim that FTAs regulating GVCs-based intra-industry trade are connected to regional security in two steps: first, FTAs empower the reformist-internationalist coalition; and second, the empowered reformist internationalists make the state’s behavior more cooperative in the international sphere. The model’s equilibrium outcome implies that the FTAs that require the signatories to be committed to domestic economic reforms will promote international cooperation and strengthen regional security by empowering people who favor reform and internationalism in each state’s domestic politics. This means, if an authoritarian state is involved in the global economy and benefits from international economic transactions, like China does, then concluding and spreading FTAs requiring domestic economic reforms would be more effective policy to bring security and stability than promoting democratic transitions.