When it comes to China’s use of economic coercion to influence global affairs, the Center for Strategic and International Studies (CSIS) recommends a two-pronged approach of resilience and relief to counter it. As a corollary, the CSIS suggests avoiding retaliation.
The CSIS recently hosted a roundtable to discuss how the U.S. and its partners should respond to China's economic coercion, introducing its latest report on the topic and detailing its resilience and relief recommendations.
Many of the participants agreed with assertions in the report, and one thing was clear, as Sen. Todd Young (R-Ind.) said, there is “no silver bullet” singular approach that could be applied across the board. That was a guiding philosophy behind his recently introduced legislation, the Countering Economic Coercion Act, in which he and Sen. Chris Coons (D-Del.) propose a variety of “carrot-and-stick” authorities that the U.S. government could employ in this battlefield.
“There will be no silver bullet for managing China’s external actions over the coming decades,” Young said. “No single trade deal, no single speech, no visit by a delegation is going to be sufficient.”
That’s why the Countering Economic Coercion Act, if passed, would allow for the president to take actions such as easing trade duties on the country being hurt by China or any other authoritarian regime, increasing duties against the bad actor and expediting the regulatory process for increasing bilateral trade. It also directs the coordination of U.S. efforts with partners and allies to ensure that China faces a united front, an aspect of the bill that Young calls key.
The event brought together a panel of experts from the U.S. and partner countries to explore the most feasible and effective ways to jointly address this issue.
It opened with an overview of the latest CSIS study, “Deny, Deflect, Deter: Countering Chinese Economic Terrorism,” a 16-month project in which Matthew P. Goodman, senior vice president for economics at CSIS, and Matthew Reynolds, a CSIS fellow, examined how China uses economic leverage to achieve political objectives.
The study evaluates eight instances since 2010 in which China has resorted to economic coercion to try to force an outcome it wants.
U.S. Ambassador to Japan Rahm Emanuel defined economic coercion as trying “to achieve a political objective with economic tools.”
In looking at today’s global situation, Emanuel said the world has seen a reshuffling of the strategic deck, and three components of that reshuffling have been COVID-19, conflict and coercion.
“China has used coercive measures as a cudgel to force governments to accede to their propaganda and policies on things as diverse as Taiwan’s sovereignty and the origins of the COVID pandemic,” Young said in defining one concern about the economic coercion.
China can be beaten on this, Emanuel said, but it requires a concerted effort in which the other country, with support from allies, uses economic tools in return. The U.S., as one of the leading global economic powers, can’t sit on the sidelines, but rather needs to assume a leadership role in the matter.
The report looks at three approaches, termed the three R’s, to achieve this end: retaliation, resilience and relief. It says the latter two would be more productive.
“We want to instill in China a fear of failure instead of a fear of retaliation,” Reynolds said.
Panelists included Andrew Jory, a minister-counsellor for trade at the Embassy of Australia, who discussed how Australia relied on that resiliency to survive an offensive by China that was brought on by his country’s pointing the finger of blame for COVID at China. China responded by cutting off Australian imports, affecting the Aussie wine industry, among others. To answer that, Australia worked on beefing up trade agreements with India and the United Kingdom to make up for the lost export business brought on by China.
In further discounting the retaliation approach, including increased trade tariffs against any aggressor, Goodman said, “It’s not clear that the retaliation effect is really going to change China’s behavior and there’s a cost on us to take those steps.”
Young responded to the need to have retaliatory options available, though not necessarily as a first option.
“Sen. Coons and I thought it was important to have both a carrot-and-a-stick dimension to this legislation,” Young said.
With the possibility that there will be retaliation, not just from the U.S. but by other leading global economies, “I think you’re going to see considerable leverage potentially brought to bear against the CCP,” he said, adding that this is expected to be a topic of discussion at the next G7 summit in Hiroshima, Japan, this May.
The aim of the Senate bill is to give the country more available tools, not that all will be used in every case.
“As this plays out in the real world … the president can decide either to exercise the punch in addition to the helping hand, or just the helping hand if that makes more sense,” Young said.
Most participants agreed that a strong front is needed by the U.S. and its allies to keep China from succeeding with its economic assaults because success there could embolden further political and/or military action.
“The CCP (Chinese Communist Party) thinks it can drive a wedge between our allies and partners by using economic intimidation or by harming economies through opaque, informal actions,” Young said. “By supporting our partners under threat, we protect America’s own national security interests.”
A video of the meeting in available on YouTube.
