For the past several decades, unilateral economic sanctions were the near-exclusive prerogative of the United States. Today, however, they are increasingly becoming a multipolar phenomenon. In 2021, for instance, China adopted a major new legislative framework, whose centerpiece is the Anti-Foreign Sanctions Law. The law, which gives China’s State Council extensive powers to freeze assets, deny visas, and ban commerce with targeted individuals and organizations, closely emulates key aspects of the International Emergency Economic Powers Act and other US sanctions-facilitating legislation.
One ironic effect of China and other powers exerting greater parity vis-à-vis the West is that the latter have begun mobilizing against the idea of “economic coercion.” The very Western states that have historically opposed any effort at legal recognition of economic coercion as a violation of international norms now find this their most readily-accepted charge against China as a supposed global threat. This inversion has had a range of consequences, many of which support the view, recently argued in these pages by Aslı Bâli, that the current conjuncture “may offer a new window to resist sanctions and the forms of coercion that legitimate, legalize, and enforce an unequal and unjust neocolonial global order.”
At the same time, however, there are also new dangers inherent in the transformation of sanctions and related coercive practices into tools of open hegemonic contestation. To briefly sum up some of these possible dangers, a world of multipolar sanctioning could suppress innovations in global governance meant to address entrenched inequality and precarity, make the deployment of economic coercion even more erratic, and favor the proliferation of intensified forms of economic violence, such as secondary sanctions and blockades.
Sino-American Convergence in Economic Statecraft
Some sanctions-related episodes that occurred at the height of the pandemic, as well as their denouements, exemplify ongoing trends. In February 2020, the UN World Food Programme (WFP) released a report estimating that one in three Venezuelans was food insecure, and a quarter severely so. That October, the NGO Cáritas Venezuela indicated that the number of children under five years old experiencing malnutrition had increased 73%. In the meantime, the global pandemic had hit a society whose economy, institutions, and bodies were made far more vulnerable by the effects of five years of escalating sanctions, which affected prices and availability of food, medicine, and shelter.
Meanwhile, despite Venezuela’s referral of the issue to the International Criminal Court, accountability for the humanitarian impacts of sanctions remains deeply unlikely there or elsewhere. While that complaint has languished without any progress (unlike ICC investigations against its own officials for alleged crimes against humanity, including arbitrary detention), the Maduro government has decided to decisively embrace financial relations with Beijing, including via the adoption of RMB-denominated commerce. In doing so, Maduro joins Brazil, Argentina, Iraq, Iran, Russia, Egypt, and various others in steps towards the “yuanization” of global trade flows.
For its part, Beijing has been glad to use dissent from the increasingly weaponized US dollar system to advance its de-dollarization aims. This remains a very long-term agenda: as of mid-2023, the yuan accounted for merely 2.5% of global cross-border payments as compared with 42.6% for the dollar. It is reassuringly unlikely that yuan power could achieve a similar destructive potency to dollar power anytime soon, especially to the extent that the project is pursued by multilateral means such as a BRICS basket currency. Instead, broad swatches of the Global South may simply be better insulated from the harshest forms of dollar power.
Nonetheless, Beijing’s aspiration to be the center of a separate global monetary order does indicate the accumulation of new forms of geoeconomic leverage. Beyond reductionist (or hypocritical) Western allegations of “debt-trap diplomacy,” there are legitimate concerns about the way Beijing’s often opaque and asymmetrical financial arrangements could one day be instrumentalized by future administrations, even if not by the present one. Financial backing also does not translate to support for more radical initiatives. While RMB-denominated trade, for example through the embrace of “petroyuan” arrangements, may help to increase humanitarian resilience in Venezuela and elsewhere, Beijing has shown no interest in supporting Venezuela’s ICC referral or other efforts to impose formal limits on sanctions.
More generally, Beijing’s statist positions tend to foreclose any major effort at jurisprudential creativity in the international legal order – as displayed, for example, in its conservative views on advisory jurisdiction at the ICJ, ITLOS, and other tribunals. And, more generally, despite traditional rhetorical support for the Friendly Relations Declaration and its conception of non-intervention that includes economic coercion, China has now shifted its state practice on sanctions to more explicitly resemble that of the United States.
The upshot is that while China may act as a spoiler to US-style sanctions on a pragmatic, case-by-case basis, it ironically seems to be reinforcing the standard Western position in terms of their future in international law. The main distinction is that where the latter imposes sanctions based on a range of legal grounds, often emphasizing alleged human rights violations, China’s are generally categorized as “countermeasures” to alleged acts of interference. Yet both are justified by contestable local interpretations and prioritizations of very broad norms, those of civil and political rights on the one hand, and of state sovereignty’s prerogatives on the other.
The Generalization of American Sanctions Exceptionalism?
From Empire to Republic to People’s Republic, China has never been a stranger to practices of economic coercion. In its modern history, the state has been a target of extreme forms of interference with respect to its economic autonomy, while also generating its own forms of resistance. For instance, China has long been home to popular nationalist boycotting movements in response to foreign interference. Though the impacts of such campaigns were marginal during the decades of focused, export-oriented growth following Deng Xiaoping’s Reform and Opening-Up policies, they have more recently increased in potency and volume.
The Xi era since 2012 has witnessed a particularly marked increase in the use of semi-official boycott actions targeting foreign states or corporations for perceived slights against China (or its territorial claims). These boycotts have also been paired with other forms of coercion, which often involve punishing regional neighbors or smaller states elsewhere for embracing “pro-US” security policy choices. For instance, in response to South Korea’s decision to host a US missile defense system, China imposed a mix of semi-official commercial bans and boycotts. More recently, the retaliations imposed by Beijing against Australia over its stance on investigating the origins Covid-19, as well as its cooperation with the US on matters of international security, included the blocking of iron, wine, beef, barley, and other imports. These punitive moves occurred primarily via shifting tariff quotas, denied licenses, or regulations issued by the National Development and Reform Commission or other domestic agencies of the State Council, rather than as explicit sanctions.
Only with the new legislation is there now a fully open and explicit toolset to carry out sanctions policy, operating by means of designations and orders “issued by the Ministry of Foreign Affairs or any other relevant department of the State Council.” These powers include, among others, deportation, denial of entry, or refusing or canceling visas; freezing property within China; and banning transactions or other activities by specific individuals or organizations within China. Acceptable targets of such sanctions are also defined to include family members or organizations linked to individuals placed on countermeasures lists.
So far, at least, many uses of the new law have been more expressive than practical. The Ronald Reagan Presidential Library, for example, was hit with sanctions for hosting a meeting between Taiwan’s Tsai Ing-wen and former US House Speaker Kevin McCarthy. In such cases, financial links with or assets within China have been effectively non-existent. With other targets, such as Raytheon and Lockheed Martin, the UK law firm Essex Court Chambers, or MERICS (Europe’s largest China-focused think-tank), the potential impacts are more apparent. Travel bans, lost business connections, effects on family members, and other such costs could be felt even by targets firmly ensconced in the financial strongholds of the West. This expansive scope of targets and justifications also renders less convincing Beijing’s occasional efforts to characterize its moves as “countermeasures” under international law.
Meanwhile, though Beijing has so far been careful not to target developing states with its official sanctions, this benevolence might not last forever. Another major question for weaker and poorer partners is whether Beijing might eventually further emulate the US by pursuing secondary sanctions against those who transact with targeted states, organizations, or individuals. Also in question are total embargos like those leveled by the US against Cuba or North Korea, which are neither contemplated nor explicitly ruled out by the Anti-Foreign Sanctions Law. One indication of this possibility appeared during the Summer 2022 Sino-American stand-off over Taiwan, in which PRC naval forces engaged in a “mock blockade” of the latter and simulated cutting off the island’s trade and communications routes.
Also rather like the Washington of recent decades, Beijing has managed to combine routine practices of economic coercion with an overall commitment to neoliberal trade structures – indeed, now portraying itself as the leading champion of the embattled WTO system. Today’s multiplication of hegemonic contenders combining free(ish) trade agendas with unilateral prerogatives may, then, be simply one more twist in what David Singh Grewal has described as a “‘dialectic of globalization,’ in which newly empowered transnational activity across states generates pressure for supranational [non-democratic] governance above them.”
A Chance to Redistribute Risks?
Writing in 1961, the New Haven School international lawyers Myres McDougal and Florentino Feliciano described economic coercion, like the measures then being unrolled by the Kennedy Administration against Cuba, as “inescapable in the ordinary relations of states.” Those who asserted otherwise, they suggested, were at best misguided idealists. Today, an increasingly similar approach to the issue seems to be taking hold in Beijing.
For the global LPE community, it should be a cause for concern that Beijing, and potentially other emerging powers, are more openly embracing Washington-style economic weaponization rather than pursuing efforts to legally constrain it. It is also worrisome that they do so alongside a general rise of centralized Executive rule, aided by nationalist justifications co-opting legitimate dissatisfactions over decades of destructive policy prescriptions imposed by Washington Consensus fiat. These new trends raise the specter of an essentially Schmittian dynamic of arbitrary coercion being applied on an administrative basis, from a set of unchecked Executives with broad delegated powers to a wide range of global targets susceptible to their “transnational legal processes.”
In short, China’s accretion of economic coercive power is probably best viewed not through the lens of a “relative rise of the periphery” – e.g., the G77 asserting autonomy vis-à-vis the G7 – but rather as the (re)fragmentation of global political economy into multiple centers, with their own shifting peripheries. The relative decline of dollar power over time may blunt the edge of some of today’s sanctions, but it is also possible that cruder forms of pressure, such as secondary sanctions or even Gaza-style blockades, could see a resurgence, especially within the “great spaces” claimed by regional hegemons seeking to exclude rival influences. By analogy, at the domestic level, there are already indications that mutual exclusion efforts in the US and China have led to a deterioration of legal norms and procedural safeguards.
Still, to the extent that Western policymakers find themselves writing reports and engaging in multilateral coordination to oppose “China’s economic coercion,” it may well be the case that scholars, practitioners, and activists can push for some meaningful policy improvements. For example, one way that Washington (or, indeed, Brussels or Beijing) could compete to obtain additional diplomatic buy-in for its sanctions initiatives would be to explicitly frame them in terms of proportionality principles derived from international humanitarian law. Another agenda that policymakers and their legal advisors might consider is to more actively promote the (re)inclusion of economic coercion as a form of relevant conduct that currently remains absent in leading definitions of crimes against humanity or the crime of aggression.
If Washington’s newest policy catchword for US-China relations, “derisking,” were taken seriously as a concept applicable outside of parochial interests – i.e., as something like a genuine shared good, especially relevant for the world’s most vulnerable populations – then the above, and other pathways to economic disarmament, should no longer be marginalized.