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TradeChina

Is China secretly imposing unilateral sanctions?

Alena Zhabina
March 6, 2023

In recent years, China has rigorously criticized unilateral sanctions as a foreign policy mechanism. At the same time, there are multiple examples of China doing the very same thing.

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Containers stacked up in Yangshan Deep Water Port, Shanghai
Despite openly criticizing unilateral sanctions, China is using its trade power to throw around its weightImage: Aly Song/REUTERS

China is particularly vocal in its opposition to unilateral sanctions, even when they concern other countries. Just recently, it released a 12-point document on the war in Ukraine with a whole paragraph dedicated to the criticism of unilateral sanctions.

China stands firmly on the position that such measures are illegal because they should only be authorized by the UN Security Council.

But Beijing has been intensifying the use of economic sanctions in the last five years. "Ten or 20 years ago, China did not have strong economic links with countries. So sanctioning by cutting off trade and foreign investment was not possible," Yukon Huang, a senior fellow in the Carnegie Asia Program, told DW.

However, China is now the world's second-largest economy and its largest trading nation. There is a concern that as China's economic power grows, the government will be more tempted to resort to sanctions to protect its interests.

Sanctions in the pursuit of Chinese interests

China's unilateral sanctions usually have a common feature. Most of the time they are related to territories with a historically contested status such as Taiwan, Hong Kong, Xinjiang, Tibet and disputed areas in the South China Sea. They comprise what Chinese officials call China's core interests.

For the Chinese government, all the issues related to these territories are domestic matters. Thus, any threat to China's interests or foreign sanctions addressing the situation there is interpreted as interference in China's internal affairs and provokes a response.

"The United States would find it very unusual if China sanctioned American officials because of such issues as abortion rights, inequalities and police violence because, as they would say, these are the US domestic concerns. In China's view, the issues that trigger sanctions from China are Chinese issues. Why would a foreign government get involved in a domestic issue?" Huang said.

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The informal mechanisms of China's sanctions

Gathering information on China's sanctions is difficult because quite often they are not announced publicly. "If you ask a Chinese diplomat, they won't normally admit to using sanctions except in narrow circumstances," Darren Lim, a senior lecturer at the ANU College of Asia and the Pacific, commented to DW.

China imposes formal sanctions when it is on the defensive, for example, in response to former US President Donald Trump's trade war or high-level American officials visiting Taiwan. When Nancy Pelosi, the then-US house speaker, visited Taiwan in 2022, China Customs Administration suspended imports of more than 2,000 food products from the island as well as exports of natural sand essential for Taiwan.

In other cases, China resorts to informal mechanisms. "Many of the other Chinese sanctions take the form of administrative decisions, for example, not renewing an export license or rejecting an export shipment for labeling or phytosanitary issues," Lim explained.

Thus, researchers often have to rely on information from individual entrepreneurs involved in business with China to determine which sanctions have been lifted and which are still in force.

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Another mechanism of China's sanctions is public boycotts. In 2020, the fashion brand H&M expressed concerns about reports of forced labor in Xinjiang, which produces about a fifth of the world's cotton, and stopped buying cotton from the region.

"These companies will say something about human rights issues and then that will lead to boycotts from the Chinese public. And the Chinese government is involved in that it is helping foment that boycott. They are just enabling the public to punish these companies," Lim told DW.

H&M and several other Western fashion brands became targets of public boycotts and then disappeared from China's most popular e-commerce platforms, Tmall and JD.com.

The effect of sanctions

Nevertheless, there are very few examples of sanctions that changed the policy of another country in a meaningful way. One of them is sanctions against South Korea in 2016-2017 when the country agreed to deploy the US THAAD missile defense systems (MDS).

Although China denied imposing sanctions, large Korean corporations such as Hyundai, Samsung and Lotte Group have been targeted by Chinese regulators. The reasons were alleged poor quality and noncompliance with regulations in China. As a result, South Korea's GDP declined by 0.4 % in 2017.

Sanctions forced the South Korean government to provide China with a number of important political commitments such as the nondeployment of new American MDSs and not joining the global US MDS network.

However, usually, sanctions fail to bring the desired effects because countries manage to find alternative buyers for their goods. Chinese sanctions did not stop Pelosi from visiting Taiwan in 2022 and failed to coerce the Australian government into dropping its criticism when China blocked investigations of the origins of COVID-19 in 2020. There are many signs that these sanctions are slowly being lifted.

Why impose sanctions if they are inefficient?

"One possible purpose of the sanctions, and I think this is probably an effective purpose, is not to change the behavior of the target government: The audience is actually third parties. It's other governments and other countries who see what happens if you disrespect Chinese interests," Darren Lim explained to DW. "In the future, they will be reluctant to take actions that they know will upset Beijing. So, it has this third-party deterrent impact."

Although sanctions are inefficient in immediately changing the behavior of another country, they have acquired a new role as a signaling mechanism. "Sanctions are likely to be the major vehicle to express displeasure because this is the only power China has short of military pressure," Huang commented.

At the same time, Huang dispelled concerns that China's economic power will turn unilateral sanctions into a handy coercion mechanism. "China will never use these sanctions to the extreme. And the reason is very simple: It's counterproductive," Huang explained.

"Sanctions, from a Chinese viewpoint, are not costless. They impose costs on Chinese companies and consumers. And that's why sanctions are usually of limited duration. So China may be a great economic power, it might use sanctions, but it realizes that practically all sanctions are a zero-sum game. Both sides lose," Huang told DW.

Edited by: Alex Berry