Global Imbalances and Trade Conflict in a Financialized World: The US–China Case

This thesis investigates how increasing financialization contributes to trade conflict, focusing on the US–China trade war as a case study. It argues that trade tensions cannot be fully explained by tariffs or bilateral disputes alone, but must be understood as the political outcome of deeper macroeconomic dynamics. The analysis links the expansion of finance and asset markets to distortions in capital allocation, weaker real economy performance, and distributional pressures. These domestic tensions interact with persistent global imbalances, structural current account surpluses and deficits, which become central drivers of incentives in international trade relations. Methodologically, the thesis combines a political-economy framework inspired by Klein and Pettis with a qualitative repeated game interpretation in which external imbalances enter the payoff structure and shape strategic incentives over time. Descriptive empirical evidence on financialization indicators, productivity and manufacturing outcomes, and external balances supports the proposed mechanism. The conclusion discusses policy implications, emphasizing that the key issue is not simply free trade versus protectionism, but how to regulate international adjustment to reduce destructive imbalances.