President-elect Joe Biden has long known that he would face multiple crises upon taking office. America is dealing with terrible challenges at home, from ending the pandemic to healing a fractured civil society. But even in 2020, Biden may not have expected his first foreign-policy crisis quite so soon. On the campaign trail, Biden and his advisors promised that they would restore the country’s standing in the world, rebuild shattered alliances, and restore international trust in the strength of U.S. diplomacy. Yet just days after Biden’s election, Beijing took concerted action to subvert these aims. This attempt to undermine the American alliance system demands a firm response from Biden as soon as he comes to power.
China’s challenge has come first in Australia. Shocked by Communist Party interference in Australian society and alarmed by the scope of Chinese geopolitical ambitions, two successive Australian governments have worked closely with the United States and other Indo-Pacific partners to build up one of the world’s most robust responses to Beijing’s designs for a new global order. In addition to close cooperation with American military services and intelligence agencies, as well as participation in regional security exercises and military agreements, Canberra has called out Chinese cyberattacks on Australian soil, rejected Chinese claims in the South China Sea, passed a suite of laws aiming to limit the scope of communist infiltration and bribery on Australian shores, and worked to diversify its economy away from dependence on China.
But with a third of Australian exports going to China—the main fuel for the country’s decades of economic growth—that last measure was necessarily limited, and the Australian economy remains dangerously reliant on China. Two days after the American elections, Beijing announced that it was weaponizing this dependence. Australian copper, coal, timber, sugar, wine, and lobster would no long be cleared through Chinese customs. This trade accounts for a little more than $6 billion USD—an estimated 5 percent drop in Australian exports to the People’s Republic.
The following week, the Chinese embassy in Canberra delivered a 14-point list of grievances to Australian media. Some of these grievances were not directed at the government at all, including “unfriendly” reporting in the Australian media and “untrue reports” published by the “anti-China think tank” ASPI. Other complaints included Canberra’s decision to ban Huawei, publicize Chinese cyberattacks, pass counter-foreign interference legislation, openly acknowledge the results of the 2016 South China Sea tribunal, condemn Party concentration camps and crackdowns in Xinjiang and Hong Kong, and “sid[ing] with the United States’ anti-China campaign.” Along with the list came an ultimatum: “China is angry. If you make China the enemy, China will be the enemy.” On the other hand, if the Australian people were to cease these causes of grievance, this “would be conducive to a better atmosphere” and normal trade might continue.
These events have sent chills through foreign ministries across the globe. Any country tied up in Chinese trade knows that the health of their economy is now a hostage to Beijing’s whims. Reduce your dependence on Chinese investment, secure communication platforms from Chinese control, limit the scope of Chinese bribery, intimidation, surveillance, and other forms of interference in your civil society, or condemn Chinese human-rights abuses, and your country will suffer the same fate as Australia. Even briefs from think tanks and reporting of journalists might trigger a Chinese attack on your economy. Get your society in line with our authoritarian vision or pay the consequences. That was the grim warning China just sent out to the world’s democracies.
But Beijing’s actions were also a direct challenge to the American alliance system. The Chinese specifically timed their economic coercion campaign to begin when America was caught up in election dissensions. They aim to savage Australia while the United States, the one world power with the economic heft to fight back against Chinese bullying, is too distracted with internal squabbles to care about communist plots half a world away. They count on a Biden administration being forced to put China problems on the back burner while it handles domestic crises first. The Chinese will then be positioned to remind that world that one of Australia’s errors was to “side with the United States.” The costs of American alliance will be painfully clear, while the benefits of American friendship will be demonstrated to be more a matter of rhetoric than reality.
This clever strategy benefits from a structural disadvantage faced by the world’s democracies when they try to stand up against Chinese aggression. The democracies of Europe, North America, Oceania, and Asia are bound together through shared history and values. The combined economic, technological, and military strength—what the Chinese often call “comprehensive national power”—of these countries far outweighs that of the PRC. However, international relations are usually a bilateral affair. When lined up with China one-to-one, none of these countries save the United States has the “comprehensive national power” needed to go toe-to-toe with Beijing.
China’s communist leadership does not hesitate to use this asymmetry to America’s disadvantage. In response to “provocations,” Beijing will launch a sudden, crippling attacks on national industries key to the economy of a specific American ally. Thus in response to a Chinese dissident being given the Nobel Prize, the Chinese party-state blocked Chinese chains from importing Norwegian salmon. After Japan nationalized its control over the Senkaku islands—a move intended to forestall a more aggressive acquisition by an ultra-nationalist Tokyo mayor—China banned the export of rare-earth minerals to Japan, barred Japanese films from Chinese theaters, and allowed riots to target Japanese businesses. The most egregious example of Chinese economic coercion came in 2016, shortly after the deployment of an American missile defense system in South Korea. Group tours to South Korea ceased, Korean dramas were scrubbed from Chinese streaming video sites, K-pop concerts were canceled, and the South Korean chain Lotte was forced to close 112 outlets.
Economic coercion of this sort is not usually aimed at changing the behavior of the government targeted—at least, not immediately. Like economic sanctions, punitive boycotts, and trade embargos are perceived as an attack on the honor and strength of both the targeted government and their people. Leaders targeted by economic coercion do not want to appear weak in the face of foreign aggression. They do not back down in the face of Chinese pressure. Thus the Nobel committee did not withdraw their award, the Japanese did not denationalize their islands, and the South Koreans did not send the THAAD batteries packing. But Beijing did not expect them to. Attacks like these are were never intended to change “offensive” policies in Oslo, Tokyo, or Seoul. They were intended to prevent future offenses. Future threats carry greater weight when backed by a history of punishments delivered.
The PRC carefully targets which industries to coerce. All are marked by what Darren Lim and Victor Ferguson have called asymmetric interdependence. Both the South Korean tourist industry and Lotte, for example, had an asymmetric relationship with Chinese consumers. Travel agents barred from setting up group packages to Korea can put together new packages at low cost; there is nothing Lotte shoppers in China could not buy at another supermarket. In contrast, it was not possible for the South Korean tourist industry to suddenly replace the 4.5 million Chinese tourists expected in 2017, and the $9 billion Lotte had invested in China were unrecoverable sunk costs. The Chinese economy suffered a little; specific sectors of South Korean economy suffered a lot. Because of the broader economic asymmetry between the two countries, Seoul had little room for retaliation in other spheres.
Washington’s response to the crisis only deepened Seoul’s problems. After allowing the press secretaries and spokespeople for various federal departments to condemn Beijing’s moves, outgoing President Donald Trump proclaimed that unless Seoul paid the full $1 billion cost of installing and operating the THADD battery, he would move to scrap the U.S.-Korea free-trade agreement. The free-trade agreement, which was signed in 2012, and the American commitment to partially subsidize the battery operations of the missile defense system China objected to, which was agreed on before the battery was deployed, had been negotiated before Trump came to office. By taking his “America First” wrecking ball to these agreements just after Beijing began its attack on the Korean economy, Trump confirmed the message Beijing was hoping their attack would convey: Your alliance with the Americans will force us to hurt you, and when we do, your American “allies” will be nowhere to be seen.
The Australians will be dealing with not a Trump, but a Biden administration. They do not have to worry about this new administration levying new tariffs or cancelling trade agreements at the same time China puts their economy in a vice. But they are right to be worry that they will be left to tackle the Chinese on their own. Thus far every country that has been targeted by Chinese economic coercion has faced it alone. No mechanisms exist for a collective response to Chinese exploitation, and America has been all too happy to let the Chinese abuse our allies on the side in search of broader bilateral gains with the Chinese elsewhere. If the American system of alliances is to persist in an age of growing Chinese economic power, this must end.
This was the fundamental insight behind the founding of the Inter-Parliamentary Alliance on China (IPAC), a transnational group of legislators from a dozen countries, including both Democrat and Republican senators in its ranks. IPAC “has been created to promote a coordinated response between democratic states to challenges posed by the present conduct and future ambitions of the People’s Republic of China,” these legislators declare, noting that:
“When countries have stood up to Beijing, they have done so alone. Rather than mounting a common defense of shared principles, countries have instead been mindful of their own national interests, which are increasingly dependent on the People’s Republic of China for crucial minerals, components, and products.
“No country should have to bear the burden of standing up for fundamental liberties and the integrity of the international order by itself.”
The members of IPAC understand that any sustainable response to Chinese economic coercion must be a transnational affair. Only when picking on a small state means confronting all of the liberal states will the Chinese be deterred.
But foreign policy, especially in the American system, is not centered on legislative committee. Responsibility for diplomacy lies with the executive and his foreign-policy bureaucracy. If a united front against Chinese economic coercion is to be built, it will be built not by American senators in IPAC, but through the efforts of the new president.
In the short term, America should work with its allies in Europe and the Pacific to identify key industries marked by “asymmetric interdependence.” They should focus on those that they, as a collective, have economic escalation dominance over vis a vis Beijing. This coalition should then impose restrictions on the target Chinese industries until Beijing eases its own attack on Australia. Building such a coalition will be difficult. It will require intense diplomacy. It cannot be done without regaining lost trust with American allies. But regaining this trust is exactly what Biden promised he would do on the campaign. This is the sort of foreign policy the American people just elected.
The Biden foreign policy team has often expressed its admiration and respect for the system of military alliances built up at the end of the Second World War. Those alliances were created by “the wise men” who had guided America through the war, and who realized only through collective solidarity would the smaller democracies of the West be able to withstand military coercion from the Soviet bloc. Today the prime weapons in great power competition are not nuclear warheads or tank divisions, but tariffs, boycotts, other tools of economic warfare. Perhaps to face this threat, the United States will one day have an economic defense treaty that acts as the commercial counterpart to NATO. Creating such an agreement is a legacy worth chasing.
However, the crisis forced upon the United States by China’s actions last month require more immediate solutions. A coalition must be built. Australia must be bolstered. The Chinese are testing this new administration’s commitment to its allies on its very first month in office. The United States must show the world that Biden means what he says: The American people are willing to stand with their friends when it matters.
