China's Continuous-Mode Sovereignty , China's Administrative Liquidity, External Illegibility, and the Architecture of Global Financial Friction

Abstract This paper extends and deepens the analytical framework developed in Triangular Liquidity Frictions by examining the Chinese case as a distinct mode of sovereign stabilization within the dollar-centered global financial system. While Triangular Liquidity Frictions introduced institutional legibility as a key variable explaining why similar volumes of state intervention are absorbed differently across the United States, Japan, and China, this paper focuses specifically on the internal logic and external consequences of China’s stabilization architecture. Building on the concept of continuous-mode sovereignty developed in CS 1.0, the paper argues that China relies on a form of administrative liquidity: stabilization is achieved not primarily through balance-sheet expansion or market-based signaling, but through discretionary coordination across banks, local governments, state-owned enterprises, and regulatory bodies. This governance-centric approach is highly effective for internal stabilization, but generates persistent external illegibility when interfacing with global financial markets structured around rule-based transparency, predictable exit conditions, and price-based risk assessment. Situating China within the triangular comparison developed in Triangular Liquidity Frictions, the paper shows that China’s external frictions are not the result of insufficient liquidity provision, credibility deficits, or transitional immaturity. Rather, they reflect a deliberate trade-off: China accepts higher risk premia, limited swap-line access, and persistent uncertainty in exchange for preserving political discretion and administrative control. From this perspective, external illegibility functions not as a policy failure but as a structural feature of China’s sovereign strategy. The paper further engages the critique that “institutional legibility” reflects a Western or dollar-centric bias by explicitly situating the analysis within the operational logic of the dollar system, rather than treating legibility as a universal norm. It treats the emergence of alternative legibility standards—whether commodity-anchored, platform-based, or politically mediated—as an open empirical question beyond the scope of the present analysis. By clarifying how China’s administrative liquidity regime interacts frictionally with global financial architecture, the paper complements Triangular Liquidity Frictions and contributes to broader debates on monetary sovereignty, currency rivalry, and the limits of global integration under heterogeneous governance regimes.