ABSTRACT
This chapter examines the characteristics of China’s use of economic coercion and assesses its effectiveness with four key indicators: policy changes or other responses to the measures; the trade volume between China and the targeted sector; the total volume of trade between the targeted country and China; the trade volume of the targeted sector between the targeted country with the rest of the world. It finds that the effectiveness of Chinese economic coercion depends on a number of factors: power asymmetry; trade dependence; the elasticity of China’s demand; and the capacity of the targeted sector or country to swiftly diversify export markets. It argues that trade diversification is the first essential step to avoid economic dependence on China and ensuing vulnerability to coercive measures. A collective response by like-minded countries also plays a critical role in helping targeted countries. Joint action can be undertaken to challenge the legality of China’s coercive measures at forums such as the World Trade Organization dispute settlement system. The European Union’s recently adopted countermeasure – the Anti-Coercion Instrument – also serves as a strong example for countries considering legislation to deter China’s economic statecraft.
