Social Sciences in China (Chinese Edition)

No. 2, 2024

Trade, Power and Welfare: An Analysis of Great Power Games from the Perspective of International Political Economy

(Abstract)

Zhang Yuyan and Xia Guangtao

The traditional theories of international trade fail to consider the pursuit of power aimed at maintaining and expanding countries’ relative strength in inter-country competition. In the context of great power gaming, the importance of power in the trade between first-mover and late-mover countries is even more striking. On this basis, a concise, convenient, realistic and widely applicable analytical framework for great power gaming from the perspective of international political economy can be established by introducing the power element into the classical theory of trade between two countries, taking absolute economic welfare and relative political welfare as the dual goals of the actors and using game theory methodology. It will be seen that in a two-country game composed of first-mover and late-mover countries, the latter prefer the strategy of “promoting their strengths and compensating for their weaknesses,” but the former prefer “coming down hard on the other side’s weaknesses while promoting one’s strengths.” Once the technological gap that determines comparative advantage dwindles, first-mover countries are more inclined to come down hard on late-mover countries in every way or even decouple from them.