In Western countries, besides the containment of the Chinese Communist Party (CCP) in terms of technology and military, there is a growing call from Western governments, politicians, think tanks, and media to establish economic alliances to counter the CCP’s economic coercion, becoming a trend. Some relevant consensus and regulations have been put in place, making the future political and economic prospects of the CCP authorities even more bleak.
Since the 2008 financial crisis, the CCP has started using economic means to threaten global countries, including Western nations, in order to suppress competitors and control other countries.
From the sanctions against Norway following the 2010 Nobel Prize incident, to banning imports of Filipino bananas and pineapples after the 2016 South China Sea arbitration case, and the sanctions on South Korean tourism and entertainment industries after the deployment of THAAD missiles in South Korea in the same year, the CCP’s economic coercion has spread globally.
Since 2018, the number of cases of CCP economic coercion has significantly increased, mainly stemming from the continuous expansion of the “new red line” under the leadership of CCP leader Xi Jinping.
In April 2020, Australia called for an international investigation into the origins of the COVID-19 pandemic. Shortly after, the CCP imposed strict import inspections on Australian lobsters and implemented new bans on Australian timber and barley. They also imposed punitive tariffs of up to 212% on Australian wine, effectively halting Australian wine exports overnight.
In 2022, when then Speaker of the United States House of Representatives Nancy Pelosi led a congressional delegation to Taiwan, the CCP began refusing products such as seafood, beer, and citrus fruits from Taiwan.
According to a report by the Mercator Institute for China Studies in August 2022, from February 2010 to March 2022, 18 Western and Asian countries including Japan, Lithuania, Norway, and Australia, as well as more than 123 private companies including Walmart and the NBA, were targeted. This resulted in hundreds of billions of dollars in economic losses.
Analysts state that economic coercion has become a core strategy of the CCP, helping it to act maliciously domestically and abroad without repercussions. The CCP aims to control the global economic supply chain as leverage to coerce all countries.
Lai Rongwei, CEO of the Taiwan Inspiration Association, told Epoch Times that from the perspective of the CCP, if they see economic sanctions as effective, they will continue to use them. For example, in issues involving Taiwan, Tibet, or Xinjiang, imposing sanctions creates a form of pressure that can lead to internal divisions in Western societies.
“Some major countries may not be affected by CCP economic sanctions due to their economic strength, but it can trigger a chain reaction where other smaller countries become fearful. During the Cold War between the US and the Soviet Union, many small and medium-sized countries chose neutrality out of fear of being targeted by both sides.”
He gave an example that while large Taiwanese companies may have the ability to diversify their markets, smaller or micro-enterprises that have been operating between the two sides of the strait rely on the Chinese market. This discrepancy can create internal disagreements in democratic countries, which is what the CCP aims for.
The CCP’s economic coercion serves another purpose. Lai Rongwei said that the CCP’s investment in Africa aims to satisfy its ambition to be a spokesperson for the Third World, showing the US and Europe how the CCP operates in Africa. The goal is to use economic means to achieve its political dominance globally and then form an alliance with Russia to change the international order.
In recent years, calls from Western governments, politicians, think tanks, and media to establish economic alliances to counter CCP economic coercion have been on the rise. Some relevant consensus and regulations to combat CCP economic coercion have been put into effect.
Recently, US Ambassador to Japan Emmanuel wrote in The Wall Street Journal that the Biden administration has created a multilateral alliance system, combining security, political, and diplomatic partnerships in the Indo-Pacific region. The US and its allies can further establish new trade defense alliances to economically isolate Beijing.
In May this year, Dmitri Alperovitch, co-founder and chairman of the Silverado Policy Accelerator, a Washington, DC-based geopolitical think tank specializing in Russia issues, also wrote in Foreign Policy that the US needs to establish a new alliance framework in the Indo-Pacific region, similar to an “Economic NATO” alliance, to prevent future economic coercion by the CCP and let China know that bullying is not an option.
In February last year, bipartisan lawmakers in the US Congress introduced the “2023 Anti-Economic Coercion Act,” which provides the President with new tools to offer rapid economic support to partners and allies facing CCP economic coercion and hold the CCP accountable for its actions.
In May last year, at the G7 Summit in Hiroshima, Japan, the focus was on how the US would unite its allies to resist CCP economic coercion. Members of the US House Foreign Affairs Committee emphasized the need for a united action among countries in the Indo-Pacific region to counter CCP economic exploitation and coercion.
In June last year, the EU passed the Anti-Economic Coercion Act, aimed at deterring economic coercion, protecting EU member states from economic threats, and targeting the CCP.
Qiu Junrong, a professor of economics at Central University of Taiwan, told Epoch Times that the economy is a reflection of national strength, and in the long run, the competition between the Western world and Beijing will not just be about military power. Economic strength is more crucial.
“In recent years, as the CCP has been using unfair means to seek economic benefits, when economic activities or people’s livelihoods in Western countries, especially the US, are severely threatened, they have no choice but to take action against the CCP.”
Qiu pointed out that the Trump administration began a trade war against the CCP in May 2018, which later expanded to include technology and national security warfare. The Biden administration’s Indo-Pacific Economic Framework was clearly aimed at the CCP, described by many as an economic NATO.
He mentioned that the G7 Summit in May last year was essentially focused on economically containing the CCP, with security as the main axis, gradually shaping economic and trade policies that are not solely based on market profitability but on security considerations. Western countries, led by the US, started to suffer economically, combined with military, political, and ideological opposition, they gradually had to address the issue of CCP economic threats.
Lai Rongwei stated that because the CCP essentially controls the economy politically, with national security at the forefront, its economy is no longer purely economic, but will eventually involve political interference. Foreign businesses, capital, and even individuals are forced to help the CCP portray a positive image worldwide and tell China’s story.
“This goes beyond the mere pursuit of profits by many businessmen. Now countries around the world are reducing their economic ties with the Chinese market, encouraging domestic businesses and capitalists to divert their investments from China. Even if they do not divert, they can instead invest in friendlier countries outside of China, and such calls are increasing.”
The CCP’s authoritarian economic coercion methods have had an opposite effect. In fact, Beijing’s bullying often incurs long-term strategic costs for the CCP, with examples like Australia and Lithuania providing a blueprint for future developments.
In 2020, after Australia called for an independent investigation into the origin of the COVID-19 virus and faced CCP economic coercion, the result led to the establishment of a stronger strategic alliance between Australia and the US. By refusing to yield, Australia expanded its market through allies, reduced dependence on the Chinese market, and ultimately forced Beijing to compromise.
In 2021, after Taiwan opened a trade office in Lithuania, the CCP used trade as a weapon against Lithuania. Lithuania received similar support from allies, leading to the EU passing the Anti-Economic Coercion Act.
Qiu Junrong commented that this shows that the Western world, led by the US, is taking concrete steps to counter CCP economic coercion, mitigating the damage caused.
Lai Rongwei believes that the effectiveness of CCP economic sanctions is not as significant as before.
“The CCP’s continuous use of economic sanctions will eventually provoke collective resistance from the international community. This will spark discontent against the CCP among the populations of many countries, leading to a continuous decrease in favorability towards the CCP.”
He stated that many countries, especially the top 20 largest economies, have confirmed the economic risks posed by China. Thus, there is an encouragement for domestic businessmen and capitalists investing in China to reallocate their resources within friendlier countries if not back to their home countries.
A report by CSIS in 2020 suggests that the Biden administration, in its efforts to counter CCP economic coercion, has established “Nearshore” and “Seashore” supply chain strategies with like-minded partners, including the Quad mechanism of the US, Japan, Australia, and India, the Minerals Security Partnership (MSP), and the US-Japan-South Korea-Taiwan “Chip 4” alliance. While these strategies are commendable, they are essentially defensive and passive, and collective resilience is a complement to supply chain strategies.
The report suggests that instead of rallying a random group of victimized countries by the CCP to take action, it is better for the G7 to lead with Australia (G7 + A) to champion collective resilience. These like-minded countries have the impetus to resist CCP coercion, as they are more powerful, capable of exploiting CCP weaknesses, and have already participated in the EU’s anti-coercion efforts.
China’s high dependency on products from many countries is also notable. For example, over 90% of China’s silver powder is imported from Japan, over 80% of bluegrass seeds from the US, nearly 100% reliance on whiskey from the UK and Japan, and premium brandy from France.
The report indicates that the 18 countries that have been subjected to CCP economic coercion, both in the past and present, exported goods worth over $46 billion to China, with the CCP’s dependency on these 18 countries exceeding 70%. These countries can come together and pledge that if the CCP takes action against any one country, they will collectively retaliate against the highl…