An alliance to counter China’s aggression
Summary
The U.S. and its allies can isolate Beijing economically by forming a new trade-defense coalition.
China’s operating principle—power and might equals right—is evident in its combative diplomacy, military aggression against its Indo-Pacific neighbors, and economic coercion. These strategies, however, have backfired. China’s attempts to undermine its neighbors’ sovereignty have had the opposite effect. Over the past three years, the U.S. and its allies in the region have strengthened their partnerships and transformed the security landscape, isolating China.
The Biden administration has upgraded its arrangement of individual security partnerships, often called the “hub and spoke" alliance system, with an Indo-Pacific latticework of multilateral security, political and diplomatic partnerships. In the past year alone, two key partnerships have been formed: one between the U.S., Japan and South Korea, and another between the U.S., Japan and the Philippines.
We can further isolate China by confronting Beijing’s economic tactics, the area in which its determination to dominate is most apparent. It uses coercion, mercantilism and debt-trap diplomacy to crush competition and control countries. To punish neighboring nations for adopting stances that go against its wishes, China has boycotted them, imposed regulatory measures and created export restrictions. But China’s economic strategy provides the same opportunity for deterrence that its wolf-warrior diplomacy does on the political front.
Australia offers a valuable lesson in how to counter Beijing. After Canberra called for an independent inquiry into Covid’s origins in 2020, China imposed tariffs and trade restrictions on Australian coal, beef, barley, wine and other goods. By taking advantage of its network of allies, Australia expanded its markets and reduced its dependence on China. Refusing to capitulate, Australia ultimately forced Beijing to back down.
Lithuania rallied similar support from partners in 2021 when China used trade as a weapon against the Baltic state after Taiwan opened a trade office there. The incident prompted the European Union to adopt an Anti-Coercion Instrument, a toolbox of economic countermeasures. Australia’s and Lithuania’s responses provide a blueprint for the way forward.
China’s mercantilist strategy is as pernicious and persistent as its economic coercion. The country’s dumping of subsidized steel has triggered protests from the EU and even from nations friendlier to China like Brazil, Mexico and South Africa. Chile’s largest steelmaker, unable to compete with cheap Chinese imports, closed its plant in September, affecting some 20,000 people directly and indirectly. As China continues to export its domestic economic woes to the world, electric vehicles and critical minerals represent the next major battles.
Beijing also uses debt-trap diplomacy to ensnare countries in its web. According to the Wilson Center, around 80% of Chinese government loans to developing countries have gone to nations in debt distress. Many nations that have borrowed from China to fund infrastructure projects have faced a Hobson’s choice of cutting domestic spending to repay loans or losing control of ports and rail networks. Sri Lanka experienced this in 2017, when it was forced to hand over control of a port to China after being unable to repay loans. The Kenyan president’s chief economic adviser highlighted in a tweet last year the African nation’s dilemma of having to choose between repaying loans and paying government employees: “Salaries or default? Take your pick."
Princeton political scientist Aaron Friedberg argues a trade-defense coalition could reduce its members’ exposure to China. To be effective, such a coalition would need the economic equivalent of the North Atlantic Treaty Organization’s Article 5—an attack on one is an attack on all—at its core. Countries would support allies under economic assault with a unified response.
Countermeasures would be critical. For example, updating the U.S.’s 1977 International Emergency Economic Powers Act for the digital economy and the Chinese challenges would provide a tool for deterring coercion and mercantilism.
Further, individual nations and institutions like the International Monetary Fund need to revamp and streamline their loan programs to assist recipient countries better. We should also proactively educate the public about the true costs of borrowing from China to prevent nations from signing away their sovereignty.
China has provided the free world with an opening. The U.S. must now further integrate economic statecraft into its wider strategic latticework architecture. This is what it did during the Cold War in its successful containment of the Soviet Union. Its “strong resistance" to Soviet expansionism, as U.S. diplomat George F. Kennan advocated in his famous 1946 Long Telegram, was accomplished through integrated political, security and economic policies.
The U.S. has started to turn the tables on China’s regional belligerence by exploiting the inherent weakness of its actions. By employing President Biden’s multilateral approach and adding new economic countermeasures, we can curtail China’s aggression. Most important, we can provide allies and friends in the developing world with the economic leadership necessary for these times.
Mr. Emanuel is U.S. ambassador to Japan.
