Triggers Of Chinese Economic Coercion

This book considers the triggers that may cause China to use economic coercion in bilateral state disputes. The literature reviewed shows that economic statecraft and coercion is a viable policy tool for shaping an opposing state's behavior and the degree to which a state holds an asymmetrical economic advantage influences its ability to wield this tool. China's rising power has made the study and understanding of the conditions under which China will utilize economic coercion an imperative as more states become vulnerable to it. China has already revealed that it is willing to shape state behavior through economic "carrots" and "sticks." As demonstrated by the case studies explored in this book, China uses economic coercion to defend its territorial integrity and sovereignty and its understanding of the status quo. Where it holds an economically asymmetrical advantage, China has targeted specific sectors for coercion as a way to signal resolve. As Chinese economic power continues to rise relative to regional neighbors and the U.S., the feasibility of using economic coercion also increases, making the future employment of economic coercion likely wherever China perceives a threat to its interests that is cannot be solved with its increasing military might.

This monograph analyzes the political impact of the rapidly growing economic relationship between the People's Republic of China (PRC) and Taiwan and evaluates the prospects for Beijing to exploit that expanding economic relationship to employ economic coercion against Taiwan. It also identifies China's goals for applying economic pressure against Taiwan. To establish a framework for evaluating China's relative success or failure in using economic coercion against Taiwan, this work draws upon the conclusions of the large and empirically rich body of studies of economic diplomacy that have focused on economic coercion and trade sanctions. A large portion of this monograph is devoted to evaluating the cross-strait economic relationship and Taiwan's potential economic vulnerability to Chinese efforts to cut off or disrupt key aspects of that relationship. But this document also extensively analyzes the challenges that China has faced in its efforts to convert this raw, potential economic influence into effective political leverage.

"This study provides an original contribution to the literature of economic coercion, based on empirical analysis of signaling from China to the US from late 2012 to late 2022, President Xi Jinping’s first two terms. I argue that Xi has expressed more assertive economic coercion toward the US because he wants to build China’s reputation as a powerful state to both foreign and domestic audiences; these coercive actions, however, have been largely performative because of interdependence. I present a theory of reputation building and provide a 2x2 typology that helps us understand why China has changed how its economically coerces the US over this time period. One dimension is the means of coercion. Over this time period, China changed its means from informal methods that gave the government plausible deniability to formal acknowledgment by the Chinese Communist Party with a corresponding legal framework. The other dimension is the target; China changed from targeting non-state actors (US corporations) to states (US government entities and officials). State actors have a lower likelihood of bending toward China’s will and represent stronger resolve from China by attempting to coerce them. These two dimensions combine to explain high, medium, or low reputation-seeking actions from China. Through comparative qualitative analysis of 52 events, I found that early in Xi’s tenure, China displays low reputation-seeking actions based on coercing firms via informal means. By the end of the studied time period, China displays high reputation-seeking behavior by constructing a legal framework of sanctions and signaling these sanctions to the US. These moves are frequently in reaction to similar moves from the US, however, and are without much bite because of possible blowback, leaving economic coercion as largely a performance to domestic and international audiences."--Abstract.

China's dramatic reforms are usually said to have been caused by the policies of state leaders under Deng Xiaoping. This fascinating new study by one of the West's leading authorities on contemporary China shows, however, that reforms began and are maintained by local networks. They emerged first in the economy -- partly as unintended results of previous policies. Agricultural extension in Mao Zedong's time freed so much labor from the land in rich areas, such as the Shanghai delta, that peasant leaders set up rural industries to employ clients. Many of these leaders were avowed "state cadres", but they acted for local constituencies more than for Beijing. Their initiatives can be documented in the early 1970s, long before the 1978 proclamation of new enterprises, which the central bureaucracy could not monitor, taking materials and markets away from state industries. This caused socialist control of input prices and commodity flows to collapse by the mid-1980s. As a result, shortages and inflation bedeviled the economy, the state ran deficits, management decentralized local banks proliferated, and immigration to cities soared.

In Chinese Economic Statecraft, William J. Norris introduces an innovative theory that pinpoints how states employ economic tools of national power to pursue their strategic objectives. Norris shows what Chinese economic statecraft is, how it works, and why it is more or less effective. Norris provides an accessible tool kit to help us better understand important economic developments in the People’s Republic of China. He links domestic Chinese political economy with the international ramifications of China’s economic power as a tool for realizing China’s strategic foreign policy interests. He presents a novel approach to studying economic statecraft that calls attention to the central challenge of how the state is (or is not) able to control and direct the behavior of economic actors. Norris identifies key causes of Chinese state control through tightly structured, substate and crossnational comparisons of business-government relations. These cases range across three important arenas of China’s grand strategy that prominently feature a strategic role for economics: China’s efforts to secure access to vital raw materials located abroad, Mainland relations toward Taiwan, and China’s sovereign wealth funds. Norris spent more than two years conducting field research in China and Taiwan during which he interviewed current and former government officials, academics, bankers, journalists, advisors, lawyers, and businesspeople. The ideas in this book are applicable beyond China and help us to understand how states exercise international economic power in the twenty-first century.

Introduction -- Techniques of statecraft -- What is economic statecraft? -- Thinking about economic statecraft -- Economic statecraft in international thought -- Bargaining with economic statecraft -- National power and economic statecraft -- "Classic cases" reconsidered -- Foreign trade -- Foreign aid -- The legality and morality of economic statecraft -- Conclusion -- Afterword : economic statecraft : continuity and change / Ethan B. Kapstein.

How globalized information networks can be used for strategic advantage Until recently, globalization was viewed, on balance, as an inherently good thing that would benefit people and societies nearly everywhere. Now there is growing concern that some countries will use their position in globalized networks to gain undue influence over other societies through their dominance of information and financial networks, a concept known as "weaponized interdependence." In exploring the conditions under which China, Russia, and the United States might be expected to weaponize control of information and manipulate the global economy, the contributors to this volume challenge scholars and practitioners to think differently about foreign economic policy, national security, and statecraft for the twenty-first century. The book addresses such questions as: What areas of the global economy are most vulnerable to unilateral control of information and financial networks? How sustainable is the use of weaponized interdependence? What are the possible responses from targeted actors? And how sustainable is the open global economy if weaponized interdependence becomes a default tool for managing international relations?

China has been a practitioner of economic statecraft throughout its history, and in recent decades since Deng Xiaoping opened the country in the 1970s. Chinese use of economic coercion is likely to shape U.S. policy options in Asia and constrain both U.S. policymakers’ and companies’ maneuverability globally. Yet, the fact that China often relies on informal or extralegal measures to implement its economic coercion, the lack of a coordinated U.S. government response, and major methodological differences between Chinese and U.S. approaches to economic coercion have resulted in relatively limited study of this tool. This report sheds light on the nature and breadth of China’s coercive economic policies. It analyzes and classifies the major features of China’s economic coercion and its implications for the United States. It also offers preliminary recommendations for U.S. policymakers and stakeholders to begin addressing the challenge.