Economic coercion is a key part of China’s foreign policy toolkit

Officials in developed democracies are increasingly talking about Beijing’s use of trade barriers in political disputes.

On May 20, the leaders of the Group of Seven (G7) announced an initiative called the Coordination Platform on Economic Coercion. The move is aimed at countering this, including by China.

“The world has been met with a disturbing increase in incidents of economic coercion that seek to exploit economic vulnerabilities and dependencies with a view to enabling sustainable economic relations with China and strengthening the international trading system, we will build resilience to economic coercion,” the G7 leaders said in a joint statement released on the second day of the G7 summit in Japan.

Chinese state newspaper Global Times criticized the statement, saying that China does not participate in such activities.

“Indeed, China never wages tariff wars or unreasonably hinders any foreign company,” China’s Foreign Ministry said recently. “Affirming that China [está] involved in so-called ‘economic coercion’ is nothing more than filing false charges, and the accusation is totally untenable,” he said. Global Times in an article published on May 21.

a false claim

China’s increasing use of economic coercion has manifested itself in various forms of pressure that Beijing systematically imposes on the companies it targets in pursuit of foreign policy objectives.

The German Marshall Fund, a think tank on public policy, defines economic coercion as “the use of commercial, financial, or other economic tools and resources for foreign policy purposes, including to establish agencies that influence foreign governments, entities, or individuals.”

China is currently the top trading partner for more than 120 countries, giving Beijing leverage against those who want access to its huge market.

Australia’s Strategic Policy Institute said in a report released last February that enforcement actions have become “a key part of the PRC’s toolkit” as it takes a more assertive stance in international disputes and it seeks to reshape the global order in its favor.

The institute’s report, titled “Countering China’s Coercive Diplomacy,” stated that between 2020 and 2022, China targeted 19 countries plus the European Union with various forms of economic pressure, including trade restrictions, barrier reversals, tourism restrictions, boycotts, cyberattacks and sanctions against individuals.

Such economic coercion was directed at countries that engage with Taiwan, oppose China’s maritime claims regarding the South China Sea, criticize China’s oppression in Xinjiang and Tibet, or cross other political red lines for Beijing.

The European Council on Foreign Relations said in a 2022 report that China’s economic coercion against Europe was “on a deeply worrying trajectory.”

A March 2023 report by the Washington-based Center for Strategic and International Studies analyzed eight cases of Chinese economic coercion since 2010. It concluded that “the most salient feature of China’s economic coercion is that it simply isn’t very effective.” Still, the report indicated that as China has grown economically, so has its propensity to engage in economic coercion against other nations.

Here are some recent examples of China’s economic coercive activities:

USA: Micron Technology (2023)

as reported The Wall Street Journal In 2018, China has been using more and more advanced chips to keep tabs on its citizens.

In October 2022, the US Commerce Department’s Bureau of Industry and Security announced that the new measures would “restrict the ability of the People’s Republic of China to purchase and manufacture certain high-end chips used in military applications.”

On May 20, the G7 announced an allied position on protecting dual-use technologies from falling into the hands of strategic rivals.

The next day, May 21, China announced it would ban products made by US memory chip giant Micron Technology, citing serious network security risks. The move is widely seen as a retaliation for Washington’s efforts to restrict Beijing’s access to key technology.

Ukraine: Vaccines against COVID-19 (2021)

In June 2021, Ukraine withdrew its support for a call to allow independent international observers into China’s western Xinjiang region, after China threatened to withhold COVID-19 vaccines destined for Ukraine.

According to Associated PressBeijing threatened to block a planned shipment of at least half a million doses of COVID-19 vaccines.

China denied putting pressure on Ukraine on this matter. Still, after Kiev withdrew its support for the Xinjiang proposal, the two sides reached an agreement under which China indicated it was prepared to lend Ukraine up to $1 billion to finance highway construction projects.

Lithuania: Taiwan Representative Office (2021-2022)

In November 2021, Lithuania opened a “Taiwanese Representative Office” in Vilnius, its capital. Beijing saw the choice of the word “Taiwan” instead of “Taipei” as a serious violation of its One China Principle, according to which Beijing views Taiwan as one of its provinces.

According to the New York-based Council on Foreign Relations, after the opening of the Taiwan Representative Office in Vilnius on November 18, 2021, data from Chinese customers showed a 90% drop in shipments of goods from Lithuania in December 2021, compared to the same period in the previous year.

As of early 2022, some 60 Lithuanian companies said they were facing problems caused by China’s unofficial sanctions. According to the Confederation of Lithuanian Industrialists, a major industrial group, more than 1,200 containers of goods, with an estimated value of $260 million, were not reaching Vilnius.

Beijing then began targeting companies in other countries that source Lithuanian products. Some German automakers that purchased auto parts from Vilnius later found themselves unable to clear customs in China.

Australia: Cancellation of Belt and Road projects (2021)

In April 2021, Australia’s Foreign Minister Marise Payne canceled two deals under the Belt and Road Initiative, or BRI, Beijing’s $1 trillion trade and diplomatic program to connect Eurasia. and Africa with infrastructure built with projects in China.

Payne said the agreements were “inconsistent with Australia’s foreign policy or adverse to our foreign relations”.

As a result, ties between China and Australia, which were strained in 2018 when Canberra became the first country to ban Chinese tech giant Huawei from its 5G network, have further slumped, with Beijing indefinitely suspending activities under the Australian Bilateral Strategic Economic Dialogue.

[Adaptación de un artículo de Lin Yang para Polygraph]

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