Is It Virtual or Real? An Empirical Study on the US-China Tension Index

Yenilmez Meltem Ince and Kantar Gökmen
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Yenilmez Meltem Ince: Izmir Democracy University
Kantar Gökmen: Namık Kemal University

Journal of Economic Integration, 2026, vol. 41, issue 1, 1-16

Abstract: The technical, economic, and military confrontation between the United States and China has marked the beginning of a new era in the global economy. This tension is more complex than a regular dispute since it is linked to both tangible policies (real tensions) and market speculations (virtual tensions). The primary goal of this research is to determine whether the increases in an indicator that measures multilayer strain are due to underlying structural issues or a speculative bubble. Advanced statistical tests were used to investigate the time series features of a discourse-based voltage indicator. These tests are intended to detect the presence of individual or several speculative bubbles in a time series. The analytical results suggest that increases in the indicator do not result in statistically significant balloon formations. Even during high-voltage periods, such as the 2008 Global Financial Crisis, the 2020 COVID-19 pandemic, and the 2022 Russia-Ukraine thriller, testing does not reveal the presence of a speculative bubble. This conclusion demonstrates that the indicator's changes are generated by structural and lasting geopolitical shocks, rather than transitory market sentiment. As a result, this research demonstrates that financial markets price US-China friction as a genuine and structural risk factor that threatens the global economy's basis, rather than as a phantom danger like a balloon. This approach contributes significantly to international relations theories, risk management, and investment techniques.

Keywords: China; United States; US-China Tension Index (search for similar items in EconPapers)
JEL-codes: C22 F51 F52 F59 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:022346

DOI: 10.11130/jei.2025012

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