After a hiatus since 2019, Beijing will host its third Belt and Road Forum on October 17 and 18. China will certainly do its best to promote the achievements, as well as the planned upgrades, of the Belt and Road Initiative (BRI) during the forum, which doubles as a celebration of the BRI’s 10th anniversary. Almost as certain, the United States as well as some of its allies and partners in Europe and Asia will tout the relative merits of various proposed alternatives to the BRI.
As part of such efforts, Western officials and pundits will surely emphasize China’s track record of “economic coercion” and its willingness to “weaponize” foreign trade, investment, and lending to maximize China’s leverage and influence over foreign governments and businesses. Yet such claims overlook how relatively ineffective and even counterproductive Chinese efforts to use punitive economic tools to achieve geopolitical aims have often been. Moreover, a focus on Chinese economic coercion threatens to obscure the need for practical problem-solving of a host of global development challenges in which China, the United States, and many others must inevitably play a role.
Russian efforts to cut off supplies of natural gas to Europe to pressure countries to reduce support for Ukraine, including EU support for sanctions against Russia, has dramatized how supply chain dependencies can expose vulnerabilities in a time of crisis. Yet well before the Ukraine war, officials and researchers had already drawn attention to an uptick in Chinese efforts to use restrictions on trade or investment to pressure countries and companies in parts of Asia and Europe to alter political or economic policies that Beijing disliked.
Well-known, and often-recited, early examples include Chinese calls to restrict rare earths exports to Japan as part of a territorial dispute in 2010 and a de facto embargo on Norwegian salmon imports after the Nobel Peace Prize was awarded to a critical Chinese intellectual in 2011. Although these and many similar Chinese efforts to restrict commerce as part of a political dispute had the flavor of more standard sanctions, they increasingly were labeled as “economic coercion” because of their more informal, extralegal, and therefore deniable nature.
Concerns about Chinese economic coercion have only grown in recent years, in particular because of high-profile disputes with South Korea, Australia and Lithuania. China attempted to cut off key imports in the wake of political rows with all three countries.
In response to Chinese efforts to leverage commercial interdependence as part of its more assertive foreign policy, the United States, Europe, and parts of Asia have pursued collective responses to Chinese economic coercion, or “weaponization” of supply chains. For example, at the G-7 summit in Japan in April of this year, participants argued for a coordinated response to China’s efforts to “weaponize economic dependencies” and the “disturbing rise of incidents of economic coercion that seek to exploit economic vulnerabilities.”
While such concerns, and proposed efforts to “de-risk” and shore up supply chains in response, have mostly focused on richer countries in Asia and Europe, criticisms of Chinese economic bullying have also extended to its use of economic carrots, especially via the BRI. For example, in the build-up to the G-20 summit in India in September this year, U.S. officials pointed to “China’s coercive and unsustainable lending” via the BRI, and the subsequent need for viable, non-Chinese alternatives.
The problem with all this focus on Chinese economic coercion, and the related anxieties about its ability to weaponize trade, is that China hasn’t been particularly good at it. A growing body of recent reports converges on the same conclusions: Despite Chinese efforts to restrict trade or investment as a response to political disputes in a range of countries, both governments and businesses have responded with resilience and efforts to limit exposure to potential Chinese leverage.
Citing examples of attempted Chinese economic coercion in places like Australia, Lithuania, and South Korea, one recent article from Australia’s Lowy Institute noted that “there is little evidence China’s [economic] coercion has generated meaningful political concessions.” A major report from the Center for Strategic and International Studies (CSIS) in Washington, D.C., covering eight cases since 2010 was even more emphatic in arguing that “the most salient characteristic of China’s economic coercion is that it simply is not very effective.”
Other research focused more on the full range of Chinese economic statecraft, including carrots as well as sticks, similarly highlighted that China’s economic influence does not always align with its geopolitical objectives and can even lead to unwanted outcomes – including backlash in neighboring regions like Southeast Asia.
If China’s efforts at economic statecraft, or the use of economic means to achieve foreign policy aims, have often proven ineffective, led to backlash, or produced unexpected and disruptive outcomes, what does this imply for China as well as others looking to provide more sustainable approaches? At the very least, the challenges China has faced and the backlash it has elicited because of its efforts at punitive, unilateral controls on international trade or investment should give pause to Chinese decision-makers about the limits of the country’s economic power. Outside of China, these same difficulties should also prompt more scrutiny by leaders and analysts of China’s capabilities to weaponize global trade, investment, and financial networks in line with its interests.
As China prepares to burnish the image of its BRI – and others to criticize it as contributing to China’s coercive economic capacity – many developing countries in parts of Asia, Africa, and Latin America will instead be searching for leadership to address a host of pressing, shared challenges. Just one among many shared global development challenges is the need to ensure both the supply as well as the efficient use of scarce raw materials, including the critical minerals required for the green energy transition that will be vital to economic prosperity and well-being in poorer and richer countries alike. Mutually exclusive or unilateral efforts by countries to control critical mineral supply chains in the name of economic security are likely to undermine well-functioning markets for the technologies of today and those of the future.
In the end, and amidst determined Chinese and U.S. efforts to win over the sympathies of the “Global South,” jettisoning efforts at weaponizing global commerce and instead seeking practical solutions to truly shared development challenges is more likely contribute to actual economic security.