The Group of Seven—France, Germany, Italy, Japan, the United States, the United Kingdom, and Canada—on Saturday adopted a joint mechanism to counter economic coercion, a measure aimed largely at perceived hostile actions by China. The group’s communiqué announced the creation of an initiative, dubbed Coordination Platform on Economic Coercion, to “increase our collective assessment, preparedness, deterrence and response to economic coercion.”
US officials described the move as a deliberate effort to show unity among the allies and a nod to Europe for coming around to facing the shared challenges posed by China.
“We want a free and fair international order,” European Commission President Ursula von der Leyen said. “But we have to be aware of the risk of weaponization of interdependencies. That’s why our common response is de-risking not decoupling. We should stay coordinated, as fragmentation is costly and we need predictability for our businesses.”
From Bloomberg: “China responded to the Group of Seven nations’ new joint mechanism to counter economic coercion, accusing them of manipulation and interference in its internal affairs. China has serious concerns over the G-7 campaign unveiled this week, according to a statement released Saturday on the official WeChat account of its embassy in the UK. The G-7 has interfered in China’s internal affairs on issues related to Taiwan, Hong Kong, Xinjiang and Tibet and has stirred up tensions in the East and South China Seas in recent years, a spokesperson for the embassy said in the statement.”
In a testimony before the Congressional-Executive Commission on China in 2021, Bonnie S. Glaser, Director of Asia Program German Marshall Fund of the United States, said economic coercion—defined as a threatened or actual imposition of economic costs by a state on a target with the objective of extracting a policy concession—is an increasingly prominent instrument of Chinese foreign policy.
Glaser said China uses economic coercion to silence critics and achieve its political aims globally. “Unlike traditional economic sanctions, Beijing’s economic coercion usually relies on informal measures that provide plausible deniability and enable China to ratchet pressure up or down as needed. Whereas there are many instances of Chinese officials and state media threatening to take punitive economic actions against countries and foreign firms, there are very few cases where the Chinese government has publicly acknowledged implementing coercive acts,” she said.
Glaser cited, for example, what happened to Australia when it called for an independent investigation into the origins of the coronavirus. China’s ambassador to Australia warned that ordinary Chinese would say, “Why should we drink Australian wine? Eat Australian beef?” “Beijing subsequently cited violations of phytosanitary requirements as the reason for holding up imports of Australian beef, timber, and lobster. China also falsely alleged that Australia was dumping barley and wine and subsidizing the producers of those products. After months of vague import restrictions on Australian coal, the Chinese government formalized the ban by granting approval to Chinese power companies to source coal from a list of countries that did not include Australia,” Glaser said.
From an NBC report: Identifying instances of China’s coercive use of economic power isn’t always easy. “These things are very specific and almost idiosyncratic—case by case—and often difficult to prove,” Thomas Cynkin of the Atlantic Council said in a news briefing, citing an example of banana exports from the Philippines being left to rot on a dock in China and asking whether it was because Beijing was retaliating for some perceived slight or whether it was a simple mistake. Still, experts have been chronicling cases of what they describe as an abuse of China’s outsized influence as the world’s second largest economy.
The NBC report cited a report in March by the Center for Strategic and International Studies that pointed to a Taiwanese government office that opened in Lithuania two years ago. “The backlash was fierce. After the opening was announced, China rejected permits for Lithuanian food imports, and firms in the eastern European country had difficulty getting Chinese contracts approved,” the report said.
“There was never a communiqué before that ever mentioned coercion,” said US ambassador to Japan Rahm Emanuel. The G-7 adopted a coordinated strategy given the frequency that China deploys economic coercion to increase its leverage on issues such as territorial and maritime disputes, or to retaliate for being criticized for its human rights violations. It would do well for the leaders of the Chinese Communist Party to remember that China became one of the world’s fastest-growing economies after they implemented free-market reforms in 1979, and opened up to foreign trade and investment. Economic coercion can undo a lot of the good things that the Chinese people currently enjoy.