earticle

영어

Hedging is a technical term in finance used to describe a risk-aversion behavior with the objective of reducing investment risks and ensuring a certain degree of profit by simultaneously making two trades in opposite directions. As the rise of China and the relative decline of the United States led to changes in the international system in recent years, hedging is introduced into international relations (IR) and becomes a widely discussed strategy. Scholars on IR utilize hedging to describe risk avoidance observed in many secondary states in a highly uncertain and volatile international context. Academia makes contributions to this point. However, the existing research fails to reach a broad consensus on hedging studies. At present, the debate continues on the definition and measurement of hedging. Moreover, academia is divergent on which analytic approaches should be applied to hedging. System- and unit-level approaches exhibit apparent shortcomings. For this reason, a neoclassical realist approach, which well balances parsimony and explanatory power, is more constructive. Nevertheless, academic outcomes in this regard remain insufficient. In addition, paucity in research that evaluates hedging exists, which leads to the misleading assumption that hedging always works. Academia also overlooks the counteracting force of hedging on regional and international politics. If many secondary states employ hedging as a diplomatic strategy, then conducting an in-depth investigation on the impacts of collective hedging on regional and international politics as an independent variable is imperative. Unfortunately, the majority of scholars on IR neglect this aspect. Through a systematic review of hedging, the current study contends that a broad consensus on hedging studies is an urgent need and highlights that the future research scope lies in taking hedging as an independent variable that influences regional and international relations from an interactive perspective. Moreover, the implications of hedging exceed the theoretical dimension. From the perspective of China, it is of great policy and diplomatic significance. First, Beijing is supposed to adapt to the widely existing hedging employed by its neighbors in Asia. The situation requires China to carefully examine the hedging of secondary states to avoid confusing hedging with balancing, which is likely to upset the regional stability and the balance of power. China is also encouraged to follow a more pragmatic diplomatic paradigm, that is, encourage hedging states to remain neutral and refrain from taking a stance on the Sino-US competition instead of exerting effort to pull these states into its side. Second, China should take the initiative to fine-tune its foreign policies to match the momentum of hedging and aim to understand the domestic logic of hedging. To this end, China should clearly define its core interests, strengthen institutional mechanisms of communication and economic ties with its neighbors, and consolidate bilateral social connections. Foreseeable and stable economic benefits and increased interdependence will help China provide continuous incentives for its neighbors to conduct hedging.