More than twenty years ago, the West extended an olive branch to the Chinese Communist Party (CCP), hoping to open up the domestic market and achieve political freedom in China. However, today, Communist China, now the world’s second-largest economy, has weaponized Western gifts to combat international justice forces and maintain the security of the Communist Party’s regime.
From medicines, rare earth minerals, to the latest restrictions on Japanese tourism and trade imposed by the CCP triggered by comments made by Japan’s new Prime Minister Kaichi Hayashi, what lessons does the CCP’s economic coercion bring to the world?
On November 7, Japanese Prime Minister Kaichi Hayashi stated in the Lower House of the Japanese Diet that, “if there is indeed a military attack, it is highly likely to be considered a ‘situation endangering survival’,” which meets the legal standard for exercising collective self-defense rights, and also said, “we must imagine the worst-case scenario because the so-called ‘Taiwan issue’ has now entered a very severe situation.”
These comments by Hayashi struck at what the CCP considers a red line. The CCP fiercely criticized Hayashi’s remarks day after day, and has restricted Chinese tourists from traveling to Japan. At least two Japanese films have been suspended from showing in China. The latest news is that the concert of popular Japanese singer Ayumi Hamasaki, scheduled to be held in Shanghai on November 29th, was abruptly canceled.
People-to-people exchanges and film and television productions have always been indicators of the CCP’s political stance. After Deng Xiaoping’s visit to Japan in 1978, China imported a large number of Japanese films and animations. Many Chinese born in the 1970s and 1980s grew up watching Japanese films and animations.
Professor Fan Jiazhong from National Taiwan University told Epoch Times that in the past, the CCP hoped to isolate Taiwan internationally, internalize the Taiwan issue, and eliminate any room for other countries to interfere when dealing with Taiwan using military or other means. The international attitude towards Taiwan is relatively supportive but ambiguous. Hayashi is the first to break the ambiguous strategy, and of course, it is a major earthquake for the CCP, which finds it impossible to maintain Taiwan’s international isolation and thus feels very nervous.
Fan Jiazhong pointed out that by using economic coercion and various methods to pressure, the CCP’s efforts have had the opposite effect. Hayashi’s support in Japan has skyrocketed to 70%, unprecedented, indicating that the CCP is very unpopular.
At the beginning of this century, when China first joined the WTO, in order to win the trust of the West, China would usually adopt economic diplomatic methods. However, since the Western financial crisis in 2008, Beijing’s attitude has changed drastically. It no longer hides its actions and openly defends the CCP model.
After 2010, the frequency, scale, and means of CCP economic coercion increased significantly. Target countries include a wide range of nations, such as Japan (Diaoyu Islands incident), Norway (Nobel Prize). Since 2019, the Xi regime has regarded nationalism as the basis of legitimacy and has drawn more red lines, with a clear intention to use its economic strength to advance its strategic agenda. Economic coercion has become an indispensable part of its foreign policy.
The targets of CCP economic coercion have subtly changed. Previously, it often targeted smaller trading partners with economic coercion, but now the focus has shifted towards the United States and Europe. Western countries including Australia (COVID-19 origin tracing), Lithuania (Taiwan issue), the US (trade war), the Netherlands (microchips), as well as US companies like Walmart and the NBA, have become targets of the CCP.
In recent years, the CCP has also used control over key supply chains as a tool of coercion. By prioritizing control over critical minerals, the CCP has enforced export controls as a coercive tool, further strengthening this strategy.
In 2020, CCP leader Xi Jinping stated that they should forge “killer” technologies, gain all-industry chain advantages in areas such as high-speed rail, power equipment, new energy, communication equipment, increase international dependency on China’s industrial chain, and form a strong counterbalance and deterrent capability.
The CCP often warns of taking coercive economic actions. A typical example is a speech by a Chinese ambassador in New Zealand in 2022: “China has purchased nearly one-third of New Zealand’s exports. This economic relationship should not be taken for granted.”
In this context, from medicines, drones, rare earth minerals to ASML chips, they have all become weapons for CCP economic coercion.
Fan Jiazhong believes that this is actually an extension of the previous wolf warrior diplomacy, which is essentially a form of unrestricted warfare. In the past, competition between countries was based on certain rules. However, unrestricted warfare has no rules, no moral boundaries, and any means can be used to defeat the opponent to achieve political goals.
He said that the CCP’s actions are also undermining the trading order and have no bottom line.
One example is about ten years ago when South Korea signed a Free Trade Agreement with the CCP. While it sounded like a good move, the result of signing with the CCP was that they did not follow free trade rules. A large number of products were then dumped into South Korea. South Korea’s trade balance with China shifted from a surplus to a significant deficit within a short period.
These bloody examples are numerous. Doing business with the CCP always involves various risks. While short-term trade benefits can be gained, in the long run, there are many political and social risks, with very high costs. Normal free trade rules cannot be applied to transactions with the CCP.
Professor Wanjun Qiu from the Department of Finance at Northeastern University in Boston, USA, told Epoch Times that Beijing often defends its economic coercion by maintaining its so-called core national interests. However, its core interests are in conflict with the order recognized by modern society. Issues of human rights within China, such as Xinjiang, Tibet’s ethnic genocide, cultural genocide, as well as the issues concerning Hong Kong and Taiwan, often lead to economic coercion.
“This is actually a serious threat to the international order and values since the end of World War II,” he said. Treating economic trade as a weapon will accelerate the pace of de-Sinicization of supply chains worldwide in the long run.
Since 2019, Beijing has increasingly imitated Washington’s practices and formalized punitive measures through a series of domestic regulations and laws. This reflects its tendency to weaponize supply chains and exert economic pressure on target entities by restricting the export of critical products.
After implementing export controls over indium, germanium, graphite, and drones in 2023, the CCP included antimony in the control range in August 2024. By December 2024, Beijing escalated its actions directly against the United States, expanding these restrictions to third parties. On January 2, 2025, the CCP further strengthened these restrictions by listing 28 U.S. entities on the export control list, prohibiting the export of dual-use items to these companies.
Some argue that the CCP following the practices of the US is not a problem.
Fan Jiazhong believes that such comparisons are invalid. To give an analogy, humans have two eyes and a nose, while gorillas also have two eyes and a nose, but you cannot say a human is a gorilla. Deliberately blurring the substantive differences between the two is very unreasonable.
He stated that any comparison must adhere to the principle of proportionality, meaning that the same things being compared must be in a similar proportion. For example, when Trump returned to the White House and started a tariff war, it was essentially about addressing trade imbalances and using economic means to deal with economic problems. The US has implemented similar measures in the past, with President Reagan in the 1980s also taking such actions. However, the CCP employs various forms of punitive measures to achieve political objectives. These are entirely different matters.
Wanjun Qiu expressed that while both the US and Beijing use economic sanctions, the frequency, means, procedures, and legitimacy differ significantly between them.
First,
It cannot be denied that US economic sanctions are related to US interests, but the US itself aims to uphold international norms, whereas Beijing’s goal is to maintain the CCP regime. It is not for the sake of national interests because the goals of the CCP government are in contradiction with those of the Chinese people.
Second,
When the US enforces sanctions, it has a legal basis to explain its actions and seeks support from other countries, so the US’s legitimacy is higher than Beijing’s. Beijing typically evades international rules, and its economic coercion is not based on internationally recognized order, making its legitimacy lower.
Third,
Before the US imposes sanctions, it communicates and expresses expectations; action is taken only if the other party does not comply. Beijing’s approach is more indirect, as in the case of sanctioning Japan. China used the method of banning Chinese tourists from going to Japan, claiming that Chinese citizens have safety concerns in Japan. However, the factual basis for this claim is weak; in fact, Chinese citizens traveling to Japan are generally very safe.
From an economic perspective, economic coercion is the least wise choice. Such practices not only harm oneself but also gradually lead to a loss of market share.
Victor Cha, an expert from the Center for Strategic and International Studies (CSIS) in 2023, testified in Congress, stating that most countries targeted by CCP economic coercion export goods worth over $46 billion to China each year. China’s dependency on these goods exceeds 70% of its total imports. In addition, there are goods valued at over $12 billion, with China’s dependence on them exceeding 90%. These countries can unite and implement economic deterrence by promising collective retaliation if the CCP takes action against any of them.
As the CCP normalizes economic coercion, countries are beginning to take the risks of CCP’s “economic coercion” seriously.
The first to learn lessons is Japan, where in 2010, the imposition of a rare earth mineral embargo by China revealed the risks of dependence on a single supplier. This incident was not only a warning bell for Japan but for the international community as well. Despite this, Japan is the only country taking major measures to reduce reliance on the CCP.
Changes in the situation are occurring, with Europe and the US making it clear that they aim to address CCP’s economic coercion.
In 2023, one of the key points in the G7 statement was to “address economic coercion,” emphasizing the opposition to weaponizing economic dependency relationships, and leveraging domestic tools to address economic coercion. An “Economic Coercion Coordination Platform” is to be established to strengthen international cooperation; the US has proposed the “2023 Economic Coercion Act.”
Qiu Wanjun stated that in the past, Beijing’s economic coercion might have had some effect on relatively smaller economies or Southeast Asian countries, but the impact on more progressive developed countries has been limited. For example, if it imposes economic coercion on a country like Lithuania in Europe, Lithuania might think about how to counteract it, leading to a decline in China’s economic interests in Lithuania. Even when dealing with medium countries and regions like Taiwan, Australia, and South Korea, the effectiveness of these sanctions is very limited, with long-term negative effects.
He emphasized that in 2024, China had a trade surplus with Japan of approximately $43 billion. If the economic and trade relations between Japan and China cool down, it is certain that China will earn less money. How much leverage does China have in damaging long-term economic relations with Japan using economic means?
Qiu Wanjun stated that Beijing is very sensitive whenever it comes to its so-called core national interests, and almost always unilaterally forces other countries to accept them. However, more and more countries are realizing that while Beijing is angry and throws tantrums over these issues, it doesn’t actually have a viable solution. Over time, more countries will not pay much attention to it. Moreover, China’s economic situation has indeed deteriorated significantly compared to ten years ago, even five years ago.
Fan Jiazhong pointed out that the focus now is not on CCP’s economic coercion but on its worsening economic development, lack of funds, and loss of control. The resistance against the CCP from the international community is growing stronger, while the CCP is gradually weakening.
The professor noted that about five or six years ago, it was impossible to see the flag of the Republic of China on websites worldwide. When registering on websites and choosing nationality, it was not possible to select Taiwan as a separate country; it had to be labeled as a province of China because the CCP would pressure all websites. However, now in many websites worldwide, Taiwan is listed as a separate country.
“This is just an example showing that the CCP’s control is beginning to decline, and all aspects of their attempt to isolate Taiwan from the international community are becoming weaker and less effective.”
Fan Jiazhong believes that this is related to a major shift in the international situation and the failures of Xi’s wolf warrior diplomacy. The entire international strategy of Xi has been a failure, and while he continues with this wrong policy, it causes great harm to various levels within China. The political instability will become more severe.
He said, “China’s economic problems are getting worse, with no signs of improvement. The economic indicators released in October were increasingly unfavorable, the real estate market has not bottomed out and continues to decline, debt issues are accumulating, the government’s financial situation is worsening, unemployment is becoming more severe, and international trade is getting more precarious.
Everything is in a mess, and people’s life pressures are very significant. Nowadays, the Chinese people are much more dissatisfied with the government compared to ten years ago because of the growing political instability, and incidents that could spark more widespread dissatisfaction are not surprising at all.”