How Not to Win Allies and Influence Geopolitics

China’s Self-Defeating Economic Statecraft

By Audrye Wong
01 May 2021

China, it is often said, has mastered the art of economic statecraft. Observers routinely worry that by throwing around its ever-growing economic weight, the country is managing to buy goodwill and influence. During the COVID-19 pandemic, Beijing has exploited its dominance of manufacturing supply chains to win favor by donating masks and now vaccines to foreign countries. And it has long used unfair state subsidies to tilt the playing field in favor of Chinese companies.

Beijing has also weaponized its expanding trade relations. China overtook the United States as the top global trader in 2013, and it is now the leading source of imports for about 35 countries and the top destination of exports for about 25 countries. The Chinese government has not hesitated to leverage access to its consumer market to pressure foreign governments and firms to obey its wishes. In 2019, for example, it canceled the visit of a trade delegation to Sweden after a Swedish literary association awarded a prize to a detained Chinese-born bookseller. The following year, China retaliated against Australia’s calls for an independent inquiry into the origins of the COVID-19 pandemic by imposing tariffs on a range of Australian products. Many fear that such gambits are only a taste of what is to come as China goes to greater lengths to use its economic influence to bully other countries.

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