Deny, Deflect, Deter: Countering China's Economic Coercion

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This report was unveiled at the “Countering China’s Coercion – Report Launch” event on March 22, with keynote remarks by U.S. Senator Todd Young and U.S. Ambassador to Japan Rahm Emanuel.

As China has grown economically, so too has its propensity to engage in acts of economic coercion against both its neighbors and more distant countries. This report analyzes eight cases of Chinese economic coercion since 2010—against Japan, Norway, the Philippines, Mongolia, South Korea, Australia, Canada, and Lithuania—and reveals that the most salient characteristic of China’s economic coercion is that it simply is not very effective. While problematic, China’s economic coercion should be viewed with a sense of perspective; indeed, Beijing’s behavior provides an opportunity to advance U.S. interests in multiple ways.

This report proposes a counterstrategy based on the logic of deterrence by denial that has two mutually reinforcing components: preemptive “denial” policies that aim to harden vulnerable economies against Chinese economic coercion, and reactive “deflection” policies that aim to negate China’s coercion by providing targeted relief to accelerate market adjustments, minimizing the political and economic pressure China can impose on the target. The counterstrategy proposed here aims to deter Beijing from its disruptive behavior over time, while preserving the moral high ground for the United States.

This report is made possible through the generous support of the Smith Richardson Foundation. The crisis simulation was made possible by the generous support of the Australian government. 

Matthew P. Goodman

Matthew P. Goodman

Former Senior Vice President for Economics