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Countering China's Economic Coercion
For at least four decades, the People’s Republic of China has used economic coercion to compel its trading partners, be they countries or companies, to refrain from activities China that stand counter China’s geopolitical or economic interests.
Defined as a threatened or actual imposition of trade bans and other economic costs by a state on another state or entity, with the intention of controlling the target’s policies or activities, it has become an intrinsic part of the PRC’s foreign policy. “The People’s Republic of China is … a prolific user of economic coercion,” said Under Secretary of State for Economic Growth, Energy, and the Environment Jose Fernandez.
“Xi Jinping’s ambitions are clear. As he stated in 2020: Beijing seeks to manipulate global supply chains, make other nations dependent on the PRC, and use that dependency to exert leverage over them,” he said.
“Across the globe, Beijing exploits economic vulnerabilities of our allies and partners to threaten and coerce them into following its dictates,” said Under Secretary Fernandez. Take, for example, the case of Lithuania, “which faced trade-based retaliation by China for opening a Taiwan representative office.”
“Beijing canceled a $300 million export credit, so we worked with our EXIM [Import-Export] bank colleagues to provide a $600 million export credit alternative,” he said. “We mobilized our embassies to find new markets for Lithuanian exports that were blocked by China. The Defense Department signed a reciprocal defense procurement agreement with Lithuania.”
“Today, Lithuania has survived the PRC’s pressure, and it is thriving,” said Under Secretary Fernandez. “We are not standing idly by. When nations face coercion, the United States is willing and able to help.”
“We … need to provide concrete alternatives to the PRC and its proposed deals,” he said. “Our diplomats in developing nations told me that if we did not put forward real economic alternatives in their countries, we simply wouldn't be in the game.”
Since 2008, 18 Western and Asian countries, and over 120 private companies have been targeted by China, resulting in billions of dollars’ worth of economic damage. Countering China’s efforts is a high priority of the Biden Administration, said Under Secretary Fernandez. “We are relying heavily on two comparative advantages the PRC cannot match: our innovative private sector, and our network of allies and partners.”