Irritant or Deterrent? Understanding Chinese Sanctions

The United States and the People’s Republic of China are engaged in a trade war, the likes of which have not been seen since the collapse of the Soviet Union. Many in the USA, often nationalists, ‘freedom fighters’, and opponents of communism (namely Chinese communism) openly and loudly advocate for further sanctions on China. Despite the already long list of sanctions, these economic punishers request harsher and more restrictive sanctions be placed on anything related to China. Although a significant amount of sanction warfare is actively deployed, China still wields enormous political and economic power in Asia and other parts of the globe. Have the USA’s sanctions against China failed? If so, why?

First, what are sanctions and why has the USA and, more broadly, members of the global community placed sanctions on the People’s Republic of China? Sanctions are economic restrictions placed on businesses, goods, groups, and individuals designed to create pressure to exert change in the nation’s behavior or are to create a symbolic representation of disapproval against a nation’s activities. In the USA’s case, sanctions have been made to both economically punish China and show solidarity with partner nations in sanctioning China. There is a vast array of reasons why the USA, and notably, the European Union (EU), have sanctioned China in various ways and economic sectors. Because of the list of offenses the sanctioning nations have provided, these reasons are omitted and can be found in a simple Google search on China.

The trade war against China has been directed towards Chinese businesses and goods, ultimately aiming to harm China’s economy and demonstrating retaliation for unfair trade practices. From the beginning, the USA targeted sectors related to technology information, communications, aerospace, and manufacturing machinery. These were industries that the USA allegedly claimed were ‘stealing trade secrets’ and forcing American companies to sacrifice their products for the benefit of the state. This approach has evolved to target nearly every international industry in China as well as individuals resulting in complete bans of entities by the USA deemed dangerous to national security, like Tiktok and Huawei. This has continued more recently with the Trump administration’s policies on Huawei and Tiktok, a subsidiary of Chinese-owned ByteDance. Further sanctions were placed on individuals, including high-level Chinese Communist Party (CCP) members and business leaders as well as political leaders in the Special Administrative Region (SAR) of Hong Kong. While Chinese officials have widely detested and spoken out against these ‘brutal’ measures, a question remains: are they working?

Political scientists have had a great deal of difficulty evaluating the effectiveness of sanctions, particularly caused by their complicated nature and the variable conditions in which sanctions are applied and considered. With little ability to predict their impact on a targeted nation, sanctions are more accurately evaluated over long periods. Furthermore, the concept of sanctions is highly politicized with a wide range of cases showing their effectiveness or failure. Instances of success versus failure are limited in scope and can only be applied in specificity.

To evaluate the probable effectiveness of Chinese sanctions, one needs to examine two key factors. First, the pre-trade war volume between the USA and China was enormous even by global standards. Sanctions have cut down on this volume drastically, mainly because the trade deficit between China and the USA was primarily related to technology, which has been heavily targeted by the USA to the point of introducing a banned entities list. The reduction of trade volume is confirmed by the most recent Plenum of the CCP in which party leadership announced goals of morphing their economy into a more domestically based one, rather than one based on international exports, suggesting that the damage wrought to their trade volumes has irreparably damaged their export relations. Secondly, in examining the actions building up to the current trade war the threat of sanctions by President Trump created a more favorable change in trade practices than the trade war. This is evident through his ability to bring Chinese officials to the negotiation tables, using credible threats of increased tariffs to pressure China to purchase more raw American materials and agricultural products. Regardless of the efficient threats, a technological ban still exists to protect communication infrastructure. There is still a large deficit between tariffs resulting in over 500 billion dollars in tariffs against China compared to Chinese tariffs numbering less than 200 billion dollars. Between the massive shift in trade practices and the current standing in tariffs, China has clearly been forced to make a radical change in the economy while still bowing to American trade interests.

The trade war has also spread amongst other American partner nations, with the USA pressuring the EU and other Association of South East Asian Nations (ASEAN) to create a somewhat unified trade front. While there are sizable gaps in their offensive, even large raw material trading partners like Australia have recently joined the war. The loose unification of partners demonstrates that the trade war has served as a unifying purpose in allying traditional and non-traditional nations to partner with American interests. There are far more factors that can be utilized to evaluate the effectiveness of the trade war, but the final tell-tale sign will be if the GDP of China meets the Plenum’s projected goal of a 5% increase in their Five-Year Plan. If economic output falters, morale will decrease and perhaps the Chinese leadership will be forced to renegotiate many of their trade deals and reevaluate their responses.

Thus far, the trade-war hostilities against China have worked to an extent. Chinese targets have been carefully selected, and the USA’s ability to control the negotiation table has proved fruitful. Despite any interference caused by President Trump’s actions in non-related international political matters, many western nations have begun banding together to create a more unified approach in handling Chinese business practices. However, if the trade war does not meet its goals of reestablishing fair-trade practices with China, the USA, and the world, will need to find alternative ways to demonstrate strength while reinforcing their principles.

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