Tricky situation, useful illustration. In the wake of a recent debate around China’s efforts at economic coercion and whether they are successful or not, a new case study has dropped. China’s Ministry of Commerce just announced it will start inspecting 2,455 products entering China from Taiwan — including agricultural products, textiles, metals, coal and minerals — ostensibly to check if they conform to its fair trade rules, because Taiwan blocks imports of those same products from China.
While the specifics of this decision are new, they fit neatly into the key characteristics of Chinese economic coercion efforts of the last 12 years identified by a newly-released report from the Center for Strategic and International Studies (CSIS). They thus serve as an up-to-date illustration of how this strategy operates.
Firstly, the report outlines rather obviously that China’s economic coercion efforts usually emerge from perceived challenges or threats to the country’s territorial integrity, domestic political legitimacy, national security, economic security or Chinese citizens. Obviously, in this case, Taiwan President Tsai Ing-wen’s recent high-profile visit to the U.S. can be read — from China’s perspective — as ticking a number of those boxes. China claims Taiwan is part of its territory and sees Taiwan’s president holding high-profile meetings in other countries as running counter to this view. So, enter a timely fair trade investigation.
Then there’s how it’s done. The report notes that China’s attempts at economic coercion, in contrast to the U.S.’s, are often implemented informally. That is to say they operate through administrative tools, or influence over domestic state-owned enterprises, media or public opinion, rather than formal instruments like unreliable entities lists which more explicitly act as political sanctions. There are more boxes ticked here: In this case, the product inspections are being framed as an administrative matter, ordered by three Chinese chambers of commerce (albeit they were tellingly announced by China’s Ministry of Commerce.) What’s more, the advantage of this approach, according to CSIS, is that ambiguity creates flexibility to recalibrate and mitigates diplomatic costs, and guess what? The new investigation is scheduled to finish up on October 12, but China’s Ministry of Commerce said it could be extended to January 12, 2024, if necessary (directly before Taiwan’s national election).
Of course, the backlash to President Tsai’s visit to the U.S. has not just been economic. Military drills have been held around the Taiwan Strait this month. But this too is identified by the CSIS as a standard part of the playbook. The report says China’s economic measures tend to be backed up by non-economic ones, such as non-violent military posturing and diplomatic freezes.
Finally, there’s who this kind of coercion is usually aimed at and the scale of it. The CSIS report notes coercion tends to be deployed against smaller opponents which China has asymmetric advantages over, and that the individual costs are usually not that high. Targeting Taiwan with an added layer of bureaucracy and the implied threat of future tariffs fits this bill very neatly.
Where this new case is not all that instructive, however, is in analysing the most controversial part of the CSIS report. That is, its claim that most of the time these kinds of economic coercion efforts don’t succeed.
Responding to the investigation, Taiwan’s Minister of Economic Affairs Wang Mei-hua (王美花) said this week that if there were “no preconditions, [and] China wants to consult with us, we are willing to do so.” But beyond that there’s no way of knowing how this plays out from here.
We can look at why the CSIS report believes these efforts tend to fail, though. It studied eight cases of Chinese economic coercion since 2010 — against Japan, Norway, the Philippines, Mongolia, South Korea, Australia, Canada and Lithuania — and concluded that in each of these cases China has a poor track record of achieving its “immediate policy aims.” For instance: Lithuania faced a barrage of negative economic measures after opening a “Taiwan Representative Office” in its capital, breaking the norm of using Taipei in relations with Taiwan, but it did not rename the office and ultimately “EU views toward China have hardened due to the dispute.”
In general, the other countries didn’t back down.
However, there is an issue with this analysis. The key frame here is focusing on so-called “immediate policy aims” as the measure of success and … that’s a very limited criterion.
“These findings are important, but the main purpose of China’s ec[onomic] coercion measures is to ‘kill the chicken to scare the monkey.’ In that regard, it may have achieved some success that isn’t addressed in this study,” Bonnie Glaser, managing director of German Marshall Fund’s Indo-Pacific program, tweeted in response to the report. Her point? While short term punishments might not have an immediate effect on the country they were directly targeted at — they themselves might have to avoid backing down to avoid losing credibility — other countries may observe the process and steer clear of trouble in future. In short, there’s a deterrence effect.
That point had the agreement of other experts. But it itself comes with another issue that stifles discussion quite a lot: It’s really hard to quantify the deterrence effect (as the CSIS report notes.) How do you measure actions that don’t take place?
Thus, as far as this new fair trade investigation goes, we can watch how it plays out until October (or January). And we can judge its success in simple terms — if concessions on market access are offered from Taiwan or not, or if Taiwan cancels any high-profile diplomatic visits before the next election — but the broader strategic success of disciplining other countries probably won’t be unveiled through inspections of Taiwanese textiles. It’ll be unveiled by watching states react, for years and years, and observing broad behavioral trends.