China’s Big Gamble on Economic Coercion Is Failing

September 3, 2021 Updated: September 8, 2021


Beijing’s economic coercion is facing pushback from other countries.

Recently, Lithuania refused to cave under pressure amid growing threats from the Chinese regime, and the Lithuanians’ convictions seem to have strengthened, not weakened. What is remarkable is that this is happening despite the lack of solid support from the United States and European Union in establishing policies to counter Beijing’s economic warfare.

Australia has been in the spotlight as the victim of the Chinese Communist Party’s economic warfare, but it wasn’t the first, and won’t be the last country to face such treatment. Beijing’s assault on multiple fronts against the Australian economy, along with the now-infamous “14 demands,” was and is a wake-up call to the international community.

However, Australia has so far refused to buckle and there is no indication that it is to change soon. In fact, the act of aggression has shored up popular and political support for a harder line on China, and even though its economy has been hurt, the damage has been far less than many predicted. Even Australian companies, although lobbying for appeasement in private, have largely avoided taking a public stance and are working more and more with government support to identify potential new markets instead.

Japan, seeing the prolonged economic crisis and seeing what the future holds, already has incorporated lessening supply chain dependence for its industry into its economic rescue package, realizing that no major economy can continue to rely on an unstable and ever more paranoid China for its industry.

In Canada, as in most countries, economic dependency on China is a fraction of that of Australia’s. The failure of Xi Jinping’s policy of tougher economic sanctions has proven that political will and longer-term economic planning would allow even the most exposed countries to stand up to Beijing. It has also stimulated a discussion on just how dependent we are on China, economically, which is very damaging to China, because one of its major strengths is how people, media, and politicians believe that Chinese economic reliance and dominance is far greater than it actually is. This change in discussion is a needed correction.

Most recently, Lithuania is drawing China’s wrath, and state-run media is falling over itself to proclaim the horror that is to come to Lithuania for its undermining of Chinese attempts to divide the EU and offer a modicum of legitimacy to Taiwan as a country. So far, it’s an abject failure. Lithuania, of course, has little to no economic exchange with China, and without any real policy options, the CCP is left blustering, and frankly, embarrassing itself over a country with less than 3 million people.

So far, Lithuania has refused to budge and the original sin—undermining China’s “17+1” project, which seeks to divide the EU, going from a failure to becoming an embarrassment. Again, it’s not surprising. These Eastern European countries have begun to realize that long-standing promises of investments and export opportunities haven’t come to fruition outside of perhaps Hungary and Greece, and they see less and less value in angering Brussels, a far more important partner, when they get little back from Beijing.

And let’s not forget Norway, an infamous example, where the so-called economic warfare amounted, in reality, to rerouting fish exports via Hong Kong instead of directly to China, and missing out at sipping cocktails at banquets during trade exchange missions.

However, these failures are China’s alone, and not because of a unified and thought-out policy by the United States and the EU. U.S. companies are sweeping up Australia’s lost exports, and the EU has yet to formalize a proper response to China’s declaration of economic war on Lithuania. The real test is thus yet to come. The EU is already fighting for political and economic relevance, and its failure to support Australia, or Norway, is putting greater pressure on it to come up with a coherent set of policy responses, now that one of its own member states is being targeted.

Failure to respond and offer full-hearted political and economic support wouldn’t only be a missed opportunity and encourage China to employ the same method against other member states, but it would leave smaller European countries questioning the value of the EU as a whole.

For the United States, which is trying to build a coalition among democracies to lessen the threat from authoritarian states—China, in particular—is likewise in desperate need to show leadership, especially against the backdrop of ongoing events in Afghanistan.

If this is a match, then China has started off by scoring several own goals; the inherent weakness of its policy has been exposed by Australia and Lithuania, in different ways. But victory can only come from coherent and strong policy responses from the two star players—the United States and the EU.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Peter Dahlin
Peter Dahlin is the founder of the NGO Safeguard Defenders and the co-founder of the Beijing-based Chinese NGO China Action (2007–2016). He is the author of “Trial By Media,” and contributor to “The People’s Republic of the Disappeared.” He lived in Beijing from 2007, until detained and placed in a secret jail in 2016, subsequently deported and banned. Prior to living in China, he worked for the Swedish government with gender equality issues, and now lives in Madrid, Spain.