The Economic Interdependence between the US and China: The Chimerica and G-2 Hypotheses

This thesis explores the economic interdependence between the United States (US) and China in order to assess the evolution of the Chimerica framework and whether it could realistically sustain the emergence of a Group of Two (G-2). The first chapter will outline the historical context of Sino-American relations, focusing on the Nixon Administration's opening to China, Deng Xiaoping’s economic reforms, the normalization of relations, and China’s integration into global trade dynamics, culminating in its accession to the WTO. The second chapter will introduce the concept of Chimerica, which highlights the intricate economic interdependence between the US and China. It will then analyze how this economic partnership laid the foundation for the G-2 concept, before assessing the implications of US-China cooperation for the global order. The third chapter will examine this economic interdependence through trade imbalances and investments. It will explore the significant US trade deficit and China’s surplus, as well as their respective causes and impacts. It will subsequently concentrate on mutual investments. The final chapter critically analyzes the recent shift from cooperation to competition, which eventually undermined Chimerica and the very idea of a G-2. After discussing the US-China trade war, this chapter will consider how broader geopolitical and military tensions complicate bilateral relations. It will then focus on recent developments. The conclusion will evaluate the overall findings and results of the research.