The United States has for years criticized Chinese economic coercion.Footnote ¹ In a series of statements made jointly with other states and the European Union earlier this year, the United States escalated its disapproval of Chinese actions (albeit indirectly) and announced cooperative measures to combat them. At the G7 Summit in Hiroshima in May,Footnote ² the leaders noted the “disturbing rise in incidents of economic coercion that seek to exploit economic vulnerabilities and dependencies,” “express[ed] serious concern” regarding such coercion, and “call[ed] on all countries to refrain from its use.”Footnote ³ Shortly thereafter, the EU-U.S. Trade and Technology Council expressed the “concern” of the European Union and the United States “with the continued use of economic coercion.”Footnote ⁴ In early June, the governments of Australia, Canada, Japan, New Zealand, the United Kingdom, and the United States endorsed a Joint Declaration Against Trade-Related Economic Coercion and Non-Market Policies and Practices that “express[ed] . . . shared concern [regarding economic coercion] and affirm[ed] [a] commitment to enhance international cooperation in order to effectively deter and address” it.Footnote ⁵ A couple of weeks later, the European Commission and the EU High Representative for Foreign Affairs identified “weaponisation of economic dependencies or economic coercion” (a phrase also employed by the G7) as one of four “categories of risks to economic security” in the European Economic Security Strategy.Footnote ⁶ The EU is soon expected to adopt a regulation—an “Anti-Coercion Instrument” (ACI)—on “the protection of the Union and its Member States from economic coercion by third countries.”Footnote ⁷ These statements were all carefully worded to omit direct accusations against China (indeed, China went unnamed), to avoid assertions of legality and illegality, to implicitly delineate Chinese actions (improper) from those of the United States (permissible), and to obscure differences between the European Union's broad understanding of economic coercion and the United States’ narrower construction.Footnote ⁸

China leverages its economic power in various ways to express displeasure with, and alter the polices of, other states.Footnote ⁹ China restricted the export of rare-earth metals to Japan in a dispute over the East China Sea,Footnote ¹⁰ and it restricted imports of Philippine bananas over a contested shoal in the South China Sea.Footnote ¹¹ China targeted South Korean retailer Lotte Group when the company leased one of its golf courses for the site the Terminal High Altitude Area Defense system (THAAD).Footnote ¹² It issued tariffs on Australian barley, coal, and wine in response to the Australian prime minister's call for an investigation into COVID's origins.Footnote ¹³ China blocked Lithuanian imports when Taiwan was permitted to open a representative office there as “Taiwan” instead of “Taipei.”Footnote ¹⁴ China stopped buying Canadian canola oil after authorities arrested a Huawei Technologies executive.Footnote ¹⁵ It took actions this year against American companies—a cybersecurity review of Micron;Footnote ¹⁶ questioning Bain's staff in Shanghai;Footnote ¹⁷ raiding the Beijing offices of the due-diligence firm Mintz Group and detaining its staff membersFootnote ¹⁸—in apparent response to U.S. restrictions on high-tech exports to China.

As it expressed serious concern with economic coercion, the G7 statement on “Economic Resilience and Economic Security” did not define the term. It described economic coercion's consequences, stating that that it “undermines the functioning of and trust in the multilateral trading system” and “infringes upon the international order centered on respect for sovereignty and the rule of law, and ultimately undermines global security and stability.”Footnote ¹⁹ The statement then focused on measures to fight economic coercion. Domestically, the statement declared, G7 members “will use [their] existing tools, review their effectiveness and develop new ones as needed to deter and counter the use of coercive economic measures.”Footnote ²⁰ Together, the leaders promised, their countries will launch the Coordination Platform on Economic Coercion “to increase [their] collective assessment, preparedness, deterrence and response.”Footnote ²¹ This new mechanism, they explained, “will [allow the G7 to] use early warning and rapid information sharing, regularly consult each other, collaboratively assess situations, explore coordinated responses, deter and, where appropriate, counter economic coercion, in accordance with our respective legal systems.”Footnote ²² In addition, the G7 members indicated that they will “support targeted states, economies and entities as a demonstration of solidarity and resolve to uphold the rule of law.”Footnote ²³

The absence of a definition of “economic coercion” from the G7 statement is explicable in light of the positions taken in the EU-U.S. Joint Statement and six-party Joint Declaration that followed. Those texts revealed a divide between the G7's EU members and non-EU members. The Joint Declaration—signed by the G7's four non-EU members and Australia and New Zealand—defined economic coercion narrowly as a combination of two elements: improper means (focusing on rule of law criteria) and improper goals (interfering with a government's decision-making authority). Thus, the Declaration's signatories stated that they “oppose[d] . . . trade-related economic coercion that uses, or uses the threat of, measures affecting trade and investment in an abusive, arbitrary, or pretextual manner to pressure, induce or influence a foreign government into taking, or not taking, a decision or action in order to achieve a strategic political or policy objective, or prevent or interfere with the foreign government's exercise of its legitimate sovereign rights or choices.”Footnote ²⁴ Trade-related coercion, the declaration explained, focusing on improper means, “is frequently disguised as a legitimate government regulatory or public policy measure unrelated to the strategic objective that it is intended to advance” and can “occur indirectly through government entrustment or direction given to state-owned, state-controlled, or private enterprises.”Footnote ²⁵ The Declaration contrasted such improper means with government acts that, “in light of relevant international rules and norms[,] . . . are adopted and maintained in a transparent manner, in good faith, and for the purpose of a legitimate public policy objective.”Footnote ²⁶ These appropriate measures, impliedly referring to U.S. economic actions, include “health and safety regulations, environmental regulations, trade remedies, national security measures and sanctions, and measures to protect the integrity and stability of financial systems and financial institutions from abuse.”Footnote ²⁷ Accordingly, a United States Trade Representative official reportedly rejected any comparison between the China measures and those undertaken by the United States. “US sanctions,” the official said, “occurred in accordance with US laws and procedures, and in light of relevant rules and norms.”Footnote ²⁸

In contrast to the Joint Declaration, the EU-U.S. Joint Statement's definition focused almost entirely on economic coercion's improper goals and not on its improper means. According to the Statement, economic coercion “attempts to undermine other governments’ legitimate policy decisions through the use, or threat of use, of targeting of foreign firms and individuals to prevent or interfere with the foreign government's exercise of its legitimate sovereign right or choices, such as through opaque regulatory and cybersecurity reviews.”Footnote ²⁹ This focus on goals instead of means follows the approach to economic coercion taken by the draft EU Anti-Coercion Instrument.Footnote ³⁰ That document defines economic coercion broadly as: “where a third country interferes in the legitimate sovereign choices of the Union or a Member State by seeking to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a Member State by applying or threatening to apply measures affecting trade or investment.”Footnote ³¹ The United States, it seems, was willing to accede to the EU's position on economic coercion within the particular framework of the EU-U.S. Trade and Technology Council statement but not in the G7 Leaders’ Statement. As a state that employs economic measures, the United States maintains a narrow definition of economic coercion that permits its actions, whereas the European Union, more often the victim of coercion, takes a broader view.

The signatories to the Joint Statement and the Joint Declaration agreed on the importance of taking measures to counter economic coercion. The Joint Declaration's parties committed to “identify, prevent, deter, and address trade-related economic coercion and non-market policies and practices, including through multilateral institutions, such as the WTO” and to share “information, data and analysis concerning these policies and practices as well as exploring the development of new diplomatic and economic tools that support and reinforce the rules-based multilateral trading system in responding to these challenges.”Footnote ³² The Joint Statement's signatories undertook to use the “G7 Coordination Platform on Economic Coercion, and to strengthen coordination with each other and other likeminded partners to improve our preparedness, resilience, deterrence, assessment and responses to economic coercion.”Footnote ³³ “For that purpose,” the statement continued, “we intend to make full use of our respective tools to counter economic coercion. We will coordinate, as appropriate, to support targeted states, economies and entities as a demonstration of solidarity and resolve to uphold the rule of law.”Footnote ³⁴

China contends that the United States and its co-signers are hypocrites because the United States itself actively engages in economic coercion (or what China calls “coercive diplomacy”).Footnote ³⁵ Following the G7 summit, a Chinese Foreign Ministry spokesperson commented: “[a]s for ‘economic coercion,’ the massive unilateral sanctions and acts of ‘decoupling’ and disrupting industrial and supply chains make the U.S. the real coercer that politicizes and weaponizes economic and trade relations. We urge the G7 not to become an accomplice in economic coercion.”Footnote ³⁶ Responding to the Joint Declaration, Wang Wenbin, deputy director of information at the Foreign Ministry, said: “The statement is made by the US together with its Five Eyes allies and Japan, but every sentence in it reads like a description of the US itself.”Footnote ³⁷ “As the US attempts to project its deplorable image onto others,” he continued, “the world gets a chance to see clearly what the US really is—a country that tramples on market economy principles and international trade rules.”Footnote ³⁸ “We suggest,” he concluded, “the UK and the other countries use this statement as a checklist and call on the US to correct its economic coercion, unilateral sanctions, long-arm jurisdiction, and other non-market practices.”Footnote ³⁹ “When national sovereignty and dignity [are] under coercion or violation,” Foreign Ministry Spokesperson Zhao Lijian said in response to statements made regarding Chinese economic coercion by Secretary of State Antony Blinken, “China responds with reasonable and lawful countermeasures to defend its legitimate rights and interests and uphold international equity and justice.”Footnote ⁴⁰ He continued: “China never threatens other countries with force. We never form military coalition or export ideology. We never make provocations at others’ doorstep or reach our hands into others’ homes. We never wage trade wars or groundlessly hobble foreign companies. And we never bully, sanction or carry out long-arm jurisdiction.”Footnote ⁴¹

Legislation pending in the United States and the European Union reflect the different approaches of each to economic coercion. The EU's Anti-Coercion Instrument, slated for enactment this year following a compromise between the Council and Parliament over the allocation of decision making between the Commission and the Council, focuses on the improper goal of interference in member state or EU decision making.Footnote ⁴² The ACI is intended to deter coercion, but it allows for the adoption of retaliatory measures, including: the imposition of customs duties; restrictions on the import and export of goods and services, intellectual property rights, and foreign direct investment; and limits on participation in public procurement.Footnote ⁴³ In Congress, matching bipartisan bills introduced in the House and the Senate—the Countering Economic Coercion Act of 2023—focus on both means and goals, defining economic coercion as “actions, practices, or threats undertaken by a foreign adversary to unreasonably restrain, obstruct, or manipulate trade, foreign aid, investment, or commerce in an arbitrary, capricious, or non-transparent manner with the intention to cause economic harm to achieve strategic political objectives or influence sovereign political actions.”Footnote ⁴⁴ The bills would “provide the president with specific tools to offer rapid economic support to foreign partners targeted by economic coercion and to punish perpetrators of economic coercion.”Footnote ⁴⁵ “Countries like China and Russia are increasingly abusing their economic power to bully smaller countries and punish sovereign political decisions,” said Senator Chris Coons.Footnote ⁴⁶ “This economic coercion,” he continued, “hurts these nations, threatens U.S. economic security, and undermines the democratic, rules-based international system that has underpinned decades of global growth.”Footnote ⁴⁷ Both bills are currently in committee.