China uses economic coercion as blackmail. US and EU must fight back


For decades, Taiwan followed a fine line that broadly suited everyone: not to be part of mainland China, nor to officially declare independence. The People’s Republic of China could maintain its claims on it. Yet Taiwan was free to develop as a vibrant liberal democracy and a modern economy. And the democratic world was able to develop ties with both, as long as they avoided the question of sovereignty and adhered to the so-called “one-China” policy.

But that has changed. Through its actions and the rhetoric of its Secretary General Xi, China has shown that it is no longer prepared to accept this status quo. Likewise, the free world needs to rethink its approach.

During Secretary General Xi’s tenure, Beijing stepped up hybrid attacks against Taiwan. He targets Taiwanese democracy with disinformation. It throws its diplomatic weight on the world stage to force multilateral organizations and institutions to put Taiwan aside. And he launched increasingly aggressive and dangerous military forays into Taiwan’s airspace.

China is actively threatening democratic Taiwan. To this day, many in the free world have turned a blind eye to this. They feared threats and economic coercion from Beijing, and they were ready to join China’s unilateral efforts to redefine and corrupt what Beijing now calls the “one China principle.” Beijing wants this to mean that no other country can have economic or political relations with Taipei.

We cannot allow that to happen.

FILE: Chinese President Xi Jinping attends a welcome banquet at the Great Hall of the People in Beijing, China on April 26, 2019. At a year-end press conference on December 29, 2021, the business office of China’s Taiwan said he anticipates more intense fighting with Taiwan and the United States in 2022.
NICOLAS ASFOURI / AFP via Getty Images

The Taiwanese status quo coexists with an American policy best described as a strategic ambiguity. In short, one can imply that the United States would support Taiwan if China attacks, but the exact scale and scope of any response has been deliberately left undefined.

On several occasions, President Biden has been much less ambiguous in his views. China and Taiwan are an area of ​​foreign policy that unites both sides of the aisle in Washington.

The doctrine of strategic ambiguity may have worked well in the past. But Xi Jinping’s China is not the China of the past. Greater strategic clarity is needed. This is not to say that the United States should give Taiwan a security guarantee similar to NATO’s Article 5 mutual defense clause. But the United States could become less secret about its support for Taipei.

For the United States, there is a personal interest in defending Taiwan. If Taiwan were to fall, the change in the balance of power across the Indo-Pacific would be devastating for the cause of freedom and democracy around the world. In this regard, neither can Europe sit on the sidelines, criticizing America for its more robust approach to China, allowing America to do all the heavy lifting in the Indo-Pacific, all by trying to maintain a mercantilist status quo with Beijing. .

We are seeing some good warning signs. Recently, the European Parliament overwhelmingly supported a resolution calling for closer ties between the EU and Taiwan, including a new investment deal. The new German government, with a green foreign minister, has shifted more towards a values-based foreign policy. And Lithuania left a Chinese economic grouping in central Europe known as 17 + 1 and opened economic relations with Taiwan. These actions are very much in line with the “One China Policy” as they make no assertion about Taiwan’s sovereignty.

But China is fighting against the sovereign rights of European states to develop relations with Taipei. In response to Lithuania’s decision, China unleashed a volley of economic coercion against the small European state, limiting its exports and immobilizing more than a thousand containers of goods that Lithuanian companies had already paid for in Chinese ports, creating supply chain and cash flow crises. across Lithuania and beyond.

China is intimidating a NATO ally and an EU member to affect its sovereign economic and political decisions. It is a test for the free world. If we let Lithuania fend for itself against Beijing, this super weapon of economic coercion will be directed against others to force democracies to submit to Beijing’s will.

In the short term, we should offer loans to Lithuania to cushion the effects of economic disruptions; the EU should signal that China’s actions distort the entire EU single market and respond with countermeasures.

The EU is working on the creation of an anti-coercion instrument that would give it the tools to tackle exactly this kind of behavior. But the real challenge for the EU is not whether it has the right legal instruments; it is a question of whether it has enough political will to defend Lithuania’s right to make its own choices.

Longer term, the free world could create an “economic article 5” to blunt China’s abuses of strategic investment and economic coercion for geopolitical purposes. NATO’s famous Article 5 states that an attack on an ally is an attack on all. Likewise, an “economic Article 5” would prevent a response from like-minded democracies – not just NATO allies, but a larger Global Alliance – to support a state or business facing economic coercion from a nation. autocracy.

Beijing uses its economic might to blackmail countries and businesses for being efficient. It has worked in cases of fast fashion brands being boycotted after blaming Australian wine makers for human rights violations who faced sky-high prices after relations deteriorated. government. Russia is also using economic levers to achieve geopolitical goals, including militarizing its gas supplies. We must neutralize the effects of these tactics of authoritarian states.

Europe and the United States also share a common interest in the Indo-Pacific: to keep it free, open and as democratic as possible. Europe’s role in this regard may not be to send an aircraft carrier fleet (although it does participate in freedom of navigation missions). But it can also improve its political and economic relations with Taiwan, for example, by unblocking a bilateral investment deal that was put on hold while the EU sought a deal with China. Upgrading economic ties is in our interests as well as Taiwan’s, given Taiwan’s considerable strengths in high-tech fields such as semiconductors.

Europe and the United States should collectively seek a new approach to China, which the Biden administration offered to the EU even before its inauguration. Our relationship with Taiwan should not be reduced to mere military support or a specific investment agreement; it comes down to the question of whether we are ready to defend the pillar of freedom and democracy in a region where both are under increasing pressure from autocracy and dictatorship.

Anders Fogh Rasmussen was NATO Secretary General (2009-2014) and Danish Prime Minister (2001-2009). Today, he is CEO of consultancy firm Rasmussen Global and founder of the Alliance of Democracies Foundation.

The opinions expressed in this article are those of the author.

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