In March, China’s special representative for Eurasian affairs criticized European Union (EU) sanctions against Chinese companies, calling on the bloc to “get back on track» and cancel the measurements. A few months earlier, taking a brusque approach towards American sanctions on Chinese entities, Beijing’s Foreign Ministry spokesperson called the use of sanctions “illegal“. However, in this specific case, the condemnation was accompanied by action, as Beijing decided to adopt an equivalent economic policy tool against US-based defense companies by invoking its recently enacted law. Anti-Foreign Sanctions Law (AFSL). Characterizing Western sanctions as wrong or a violation of China’s rights and interests, but characterizing its own as mere “countermeasures,” Beijing attempted to simultaneously highlight the inappropriateness of Western sanctions while justifying its own.
As a long-term target of sanctions but, more recently, having acquired the economic leverage to be able to impose them on other states, China has a unique perspective on sanctions. Despite campaigning vehemently for decades against the West’s imposition of unilateral sanctions, China has since made a complete about-face in developing its own formal sanctions regime. Since 2018, Beijing has enacted no fewer than nine sanctions laws, giving it significant firepower to use economic warfare tools befitting its status as an emerging superpower.
Yet that doesn’t tell the whole story. Although Beijing’s new official sanctions regime constitutes a momentous development and raises normative questions about the conduct of orderly business in a world where multiple states can exercise economic coercion, there is a broader hinterland of Chinese sanctions. In fact, China has practiced economic policy throughout its modern history, although these measures are largely taken in a manner informal basis for conferring plausible deniability. And yet, by continuing to maintain its anti-sanctions rhetoric, China has been at best reticent and at worst nefarious about its sanctions policy. Given the potential impact of China’s economy on global trade flows, Beijing’s decision to develop a comprehensive sanctions regime deserves closer attention. It is particularly instructive to understand how China presents this formalized approach given its obvious discomfort with sanctions.
When sanctions are considered from the broad angle of coercive diplomacy, as coined by Thomas Schelling, it is clear that Beijing already has a highly developed economic policy toolbox, which it has historically used in an unofficial capacity. A still defining feature of China’s approach to sanctions is informality, with economic measures designed to harm while being flexible and, crucially, credibly disavowed. A well-known example is how China used informal sanctions against South Korea in 2016 to prevent Seoul’s acquisition of a THAAD missile defense system; in the following disputeChina closed Korean retail stores and blocked travel to Korea, but was able to refuse no disruption had taken place and he attributed the economic damage inflicted on South Korea to the spontaneous reaction of the Chinese public.
With a comprehensive legal framework now in place, China is quickly emerging as a major player in a new global sanctions race. Trump’s initiation of the Sino-US trade war in 2018 was primarily the trigger for formalization, although it was part of a broader rationalization of China’s legal and regulatory framework. Beijing’s new sanctions framework is not the product of a single unifying legal instrument, but rather a patchwork of provisions that together form a comprehensive sanctions and retaliation regime. The most important scope is that AFSL, enacted in 2021. Under its terms, Beijing can impose proactive sanctions and retaliation. Thus, the provisions not only authorize measures in response to foreign sanctions, but also permit the adoption of coercive economic measures that could allow Beijing to pursue broader interests. Besides the AFSL, other important legal provisions include the Unreliable Entity List, the Foreign Trade Law, and the Chinese Blocking Law.
Despite now having a suite of sanctions tools almost equivalent to Washington’s, Beijing has been surprisingly cautious in implementing measures. Its main target for formal actions has been foreign entities suspected of sale weapons in Taiwan. Fundamentally, China developed a sanctions regime for the same reasons as other states; it is a relatively low-risk and inexpensive way to prevent unwanted actions – and can also deter unwanted behavior in the first place. China’s existential fears of encirclement and alienation shape its national “core.” interests, namely maintaining the power of the Chinese Communist Party (CCP), upholding sovereignty claims, maintaining territorial integrity, and pursuing economic development. The expansion of Chinese interests in the South China Sea could make the use of sanctions more frequent and aggressive, particularly as the United States works with its partners to contain China. However, Beijing has not yet developed the institutional structures necessary to implement any future sanctions program, so this could still put a damper on it.
A tough sanctions regime not only communicates China’s status and prestige on the global stage, but also helps appease domestic interest groups by signaling that Beijing will not tolerate undue influence from external actors. However, the formalization of China’s sanctions regime after decades of anti-sanctions rhetoric constitutes an explicit policy reversal that requires careful recasting among domestic voters. China stressed that its actions were an appropriate response given the nature of the unilateral sanctions imposed by the United States. According to Beijing, these are measures intended to interfere in China’s internal affairs and attempts to use long-arm jurisdiction – violating international law and even tarnishing China’s “image”. Therefore, retaliatory action is considered an appropriate response.
One of the measures applied by Beijing to appease its citizens and justify its about-face is to distinguish its sanctions from those of the West and to name them differently. In particular, China has referred to them as “counter-sanctions” or “anti-” foreign sanctions. The understanding of the term “meter” is rather vague in the Chinese context. Countermeasures not only involve a direct response to sanctions imposed against Chinese entities, but can also be launched against other states and entities whose policies and actions are detrimental to Beijing’s interests. As such, China’s countermeasures are identical to any unilateral sanctions imposed by Western states, which Beijing has opposed individually or as part of international groups like BRICS. Beijing’s rethinking of the sanctions narrative appears to be catching on with the Chinese public. While in the 1990s his sanction speech underlines Beijing’s ability to “resist sanctions”, the new conversation focused on warning Sanctioning states believe that if they fail to “change course,” Beijing’s response will be “in kind.” The enactment of sanctions laws, at a time when the United States and China remain embroiled in a trade war, has given domestic voters new insights. trust to the CCP, which is useful given the economic slowdown and growing social unrest.
Although China is well aware of the power it is gaining through a formal sanctions regime, the rising superpower is treading cautiously. Amid strategic competition between the United States and China, with particular challenges from the United States in areas such as semiconductors, critical minerals and manufacturing, Beijing cannot allow its economic progress to be blocked by recklessly using sanctions. Sanctions can help China rise peacefully, but most of that is their deterrent value. By using sanctions to secure its core interests rather than costly means like war, China can maintain its economic prosperity while displaying its status and prestige.
In fact, despite the development of a formal legislative framework, Beijing can be expected to pursue mostly informal tactics while taking formal measures only for high-priority national security reasons. Informal sanctions, backed by plausible deniability, can help China maintain its image as an ostensibly pacifist state among its countries. little neighbors, whose support Beijing is seeking in regional projects like the Belt and Road Initiative. For sanctions scholars, China represents a remarkable case study of a rising power using sanctions to project global influence. Also valuable is the way he continues to recalibrate his rhetoric on sanctions. Even if Chinese sanctions could be named differently to distinguish them from their Western equivalents, a sanction with another name would be no less harmful.
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