How to defend yourself against Chinese economic coercion — Q&A with Bonnie Glaser

Bonnie S. Glaser is the director of the Asia Program at the German Marshall Fund of the United States. She has previously held senior positions at the Center for Strategic and International Studies and other policy organizations, and has also done work for the U.S. Department of Defense and Department of State.

We chatted by video call in early September. This is an abridged, edited transcript of our conversation.

—Jeremy Goldkorn

What exactly does the German Marshall Fund do?

I’ll give you a little bit of history. On June 5, 1972, which was the 25th anniversary of the Marshall Plan, the former German chancellor, Willy Brandt, announced the founding of the German Marshall Fund of the United States. This was a grant by the German government to the United States to create the German Marshall Fund [GMF].

Today, GMF is a nonpartisan policy organization. It is committed to the idea that the United States and Europe are stronger together. GMF champions the principles of democracy, human rights, transatlantic cooperation and international cooperation, which we believe have served as the bedrock of peace and prosperity since the end of World War II.

What does that mean vis-à-vis China? Isn’t there a natural tension there? You are an explicitly pro-Western organization, so doesn’t that put you in opposition to China?

GMF works on issues that are critical to the transatlantic relationship, and the rise of China is certainly one of them. We believe that the United States and Europe should be coordinating with each other, should be exchanging views on the rise of China and how to ensure that we protect our shared interests, protect the rules-based international order, and perhaps even shape some of China’s decisions about how it interacts with the world. We believe that the U.S. and Europe should be coordinating particularly on issues like human rights and technology and innovation. These are really at the core of the interests that we both share. I think China is just naturally on the agenda of GMF. But before Russia’s invasion of Ukraine, I would say it was a bit higher than it is today.

Right now, I think Europe sees Russia as posing the proximate threat and sees China as posing a longer-term threat. But it is still very much on the transatlantic agenda.

I’ve been really enjoying your China Global podcast. I’ve now listened to the entire back catalog.

You’ve got a really great variety of voices on there who know about all kinds of different parts of the world and different concerns with China. All these people that you talk to, what do you think the biggest global concerns with China are right now, both in the developing world and the developed world?

Virtually all developed countries are concerned about what they perceive to be China’s challenges to the international order, including the norms that underpin them and the threat to U.S. alliances. They’re very concerned about China stealing intellectual property and its ambitions to dominate strategic technologies. Some developed countries, especially in Europe, are extremely concerned about China’s human rights practices in places like Xinjiang, but not all developed countries prioritize human rights when it comes to China. So, there is variation among them.

A growing number of developed countries, I think, are also concerned about China’s military, diplomatic, and economic pressure on Taiwan. That is a relatively new development. As recently as five years ago, there was less focus on Taiwan, with the exception, of course, of the United States, which has long standing close ties with Taiwan. More and more countries in the Indo-Pacific and Europe recognize that they have a stake in the preservation of peace and stability in the Taiwan Strait.

The developing world is concerned about escalating U.S.-China rivalry because that rivalry narrows their space to maneuver. We see this, for example, in Southeast Asia where countries really do not want to choose between the United States and China. They want to hedge, they want to benefit from China’s loans, its economic largess, and they want to avoid becoming a target of China’s punitive measures such as the economic coercion that it has used against countries such as South Korea and Australia. Again, there is variation, of course, from country to country, but I think those would be the broad outlines of how I see the differences between developed and developing countries.

A lot of countries really wish they weren’t forced to make a choice, but perhaps this is different in Europe?

Well, particularly in the aftermath of Speaker Nancy Pelosi’s visit to Taiwan, but even before that, there have been growing concerns about the acrimonious relationship between the United States and China and how that was spilling over into other issues. People have been talking for several years about the negative impact of a potential U.S.-China decoupling, and our European allies were quite alarmed by that possibility. There are even some companies in Europe who are concerned about growing pressure on them to not sell to China things that the United States considers to be strategically important for preserving our technological edge over China.

Even in the developed world, there’s some friction on that issue. In the developing world, it seems to me, as I said, that countries see their options as narrowing when the United States and China have a very high level of friction. They feel most comfortable having good economic relations with China, but many countries also want to have close security relations with the United States. This is particularly true of China’s immediate neighbors that want U.S. military presence in the region because they see that as a counterbalance to Chinese hegemony. They don’t want to live under Chinese hegemony, but they also don’t want to have a U.S.-China war in their backyard.

Further away, I imagine in places like Africa and Latin America, which I focus much less on, they are probably less concerned about potential U.S.-China military conflict, but they want to have choices. They want to be able to get benefits from the United States and benefits from China. So, I think there are very few countries in the world that think that they benefit from very intense U.S.-China competition.

One of the things I’ve found quite interesting while listening to your podcast is that it’s quite difficult to figure out where you fall on the spectrum from panda hugger to dragon slayer.

Which makes me curious because I feel as though a lot of American policy academics and former diplomats, and even former spies, all kinds of people from the Washington, D.C. Blob, they seem to have fallen in the last few years into two main categories.

The people in favor of engagement, there are a lot of flavors of it, but it often seems to me that they are stuck in some almost wishful thinking about the China of the 1980s, the 1990s, the early 2000s.

I often feel as though the arguments — particularly over the Pelosi visit to Taiwan — the sense seems to be that the world should just kick the can down the road, and keep the status quo going. That seems to me to deny agency to China. It seems very dreamy, that if we can just not really let Beijing get too upset for another 10 years, maybe we can fix it.

Then you have hawks who often seem to think that almost anything the U.S. can say to annoy Beijing is worth doing, because darn those communists, really.

And there seem to be very few people in between those positions. Does that crude stereotype of groupthink in Washington, D.C., make any sense to you?

Well, I think we should not limit the thinking about China to those two groups, but I don’t deny that the two groups that you describe exist.

In my view, there is a spectrum of views rather than two extreme camps. The engagement group, which you call the panda hugger group but I’ll call the engagement group, is quite diverse. Very few people, I think, still believe that China would eventually liberalize its economy and its political system if we just wait long enough. Rather, many of them believe that engagement produced important results in the past, and could still produce benefits for both countries. So, people have not given up on engagement as a means to an end, though they don’t see it as an end in itself. Some people emphasize that global challenges are so pressing, climate change being just one example, that the United States and China have a responsibility to cooperate, even if they have some disagreements.

At the other end of the spectrum are the hawks or the dragon slayers. I think there are some people who think that Beijing is now the enemy and that the United States should disregard Beijing’s responses to what we do, and we should just act in accordance with what is in our interest. So, you have extremists — like former secretary of state Pompeo — going to Taiwan and saying the United States should diplomatically recognize Taiwan as an independent state. Or former secretary of defense under President Trump Mark Esper, who also went to Taiwan and said the United States should consider abandoning its One China policy because it’s essentially outlived its usefulness.

And there are extremists within that group who believe that the problem is the Chinese Communist Party, who advocate a strategy that would lead to the demise of the Chinese Communist Party. And there were some people in the Trump administration who were pushing that…

Because in the U.S. we’re really good at getting good results out of regime change?

Ha!

The Biden administration has abandoned that approach. It has made it quite clear that our goal is not regime change in China. But more importantly, I would emphasize that I think there is a group in the middle of the spectrum that has more nuanced views, that is interested in an evidentiary approach to China, wants to understand China and the decision-making process under Xí Jìnpíng 习近平, and still believes that we might be able to shape China’s policies. For example, there are many people outside China, observers, who think that China has overreached — that some of its policies have been contrary to its own interests. The public opinion polls, and many of the developed countries show that negative opinion towards China has been on the rise. However, I don’t think the Chinese themselves have concluded that their policies have been counterproductive.

But you could ask the question, what kind of policies could the United States and like-minded countries pursue that might lead China to draw that conclusion, and then might revise some of its policies? I think that there’s some thinking along those lines. There really is an entire spectrum of views and quite a lot of debates about what China’s policies will be in Xi Jinping’s third term.

Okay, so it was a crude characterization that I made. You still haven’t revealed much at all about what you yourself think.

So how worried do you think the rest of the world is about a U.S.-China confrontation? And how worried are you about a possible war with China?

I’m worried about what is clearly an increasingly mistrustful relationship between the United States and China. I’m worried about the absence of a productive bilateral dialogue — a dialogue that’s aimed at managing or addressing problems in the relationship. I don’t think we have a productive dialogue today. We do not have the kinds of frank and direct high-level conversations between our militaries about avoiding crises that I think we need to have. I am concerned about rising tensions in the Taiwan Strait. And there is, I think, a growing possibility of an accident or an incident, at this point primarily between military assets from Taiwan and China, naval ships and fighter aircraft. In the aftermath of Nancy Pelosi’s visit, they are operating in closer proximity.

China seems to be determined to erase the median line and is operating closer to Taiwan and seeking to limit its control over maritime and airspace in the Strait.

But a war between the United States and China, I think, is unlikely. Neither country seeks or would benefit from a large-scale military conflict. I personally do not think that there is a high risk of China seeking to take Taiwan by force in the next few years, but I don’t rule that out in the more distant future.

One of your recent podcasts was an enlightening interview with Ambassador Mickevičienė of Lithuania, on the tensions between Vilnius and Beijing. She still serves as the Lithuanian ambassador to China, operating in exile from Vilnius after a spat with Beijing when her country allowed Taiwan to open a representative office that had “Taiwan” in its name.

A lot of people in the West find it quite admirable the way Lithuania has stood up to China. People love to see the little, the mouse that roared, the tiny country standing up to those nasty bullies in Beijing, but the fallout has not been pleasant for Lithuania.

What would your advice be to small nations about how they should handle China right now?

The first lesson is that even a country with very limited economic dependence on China can be targeted by China’s punitive measures. Lithuania’s exports to China are quite small. Prior to the current spat, less than 1% of Lithuania’s exports went to China. Therefore, simply boycotting the importation of Lithuanian goods would not have had much impact. So, China had to be more creative and it decided to pressure other countries’ companies, especially German automobile companies, not to source components from Lithuania. The lesson is that even if a country is not economically dependent on China and has a very small percentage of its exports go to China, it can still become a target of China’s economic coercion. Secondly, Lithuania, of course, may be a small country, but it is backed by the European Union. It is a member of the European Union. And the EU is one market.

As a result of the coercion against Lithuania, but also, frankly, as a result of the tariffs that were imposed on steel and aluminum by the Trump administration, the European Union has been developing an anti-coercion tool. Today, they are thinking about it much more in terms of protecting themselves against China rather than against the United States. But, of course, it could be used to protect themselves against pressure from any country.

Up till now, the targets of Chinese coercion have received very little support from other countries except rhetorical support. This is an important lesson to learn that small countries need to align themselves with other countries. And even medium-sized or large-sized countries need to obtain support from other countries.

South Korea, when targeted with economic coercion, was very much alone when it deployed the THAAD missile defense battery and the Chinese took a broad range of political and economic measures against it. According to my sources, at the time Seoul feared that U.S. intervention would make the situation worse. And even Australia, when the Chinese decided to boycott about two dozen Australian products after Australia advocated an independent investigation into the origin of COVID-19, Australia was pretty much left [to fend for itself] alone too. It got rhetorical support, absolutely. But nothing like the anti-coercion tool that’s being considered by the EU.

And so, that’s something that other countries could consider. My advice is basically that countries band together to protect their interests. Countries that are potential targets of Chinese economic cooperation should coordinate to protect their collective economic security.

For example, they could agree that if China sanctioned any one country that is a member of this informal collective, it would elicit a collective response from the group. A range of responses could be developed in advance, but decisions on a specific response would depend on the circumstances. Options could include imposing tariffs and limiting sales to China of items that China has a high degree of dependence on foreign supply sources.

It isn’t all one way. It isn’t that the world is only dependent on China for many of its products. China is also extremely dependent on the rest of the world. And we see this, for example, in the case of Australia, the Chinese did not try to boycott iron ore because they couldn’t find an alternative supplier. And in the case of Taiwan, China has imposed sanctions on agricultural goods, and on fish from southern provinces in Taiwan, southern municipalities. But they did not try to boycott the export of semiconductors to China because the Chinese are highly dependent on Taiwan for semiconductors.