Last week, the Chinese Embassy in Australia released a list of 14 grievances that amounted to a threat to bludgeon our ally into submission. Declaring that “China is angry,” the diplomats unleashed a torrent of criticisms on issues ranging from Australia’s decision to ban the Chinese telecoms giant, Huawei, from participating in its 5G network, to “unfriendly or antagonistic” reports on China by the media. In other words, China threatened economic reprisals against a free country for behaving like a free country.
Even the number “14” in China’s list of grievances reveals the gravity of the threats. Much as the number 13 is considered unlucky in the United States, any number that includes “four” is considered extremely unlucky in China because the sound for “four” in Mandarin is extremely similar to the sound for “death.” Chinese buildings often do not have any floors ending with a “four,” and Chinese weapons systems often include the number in their names. Fourteen is even worse because the sound for “one” is a homophone for “certain.” Fourteen, then, sounds like “certain death” or “is dead” in Mandarin.
No one thinks China will attack Australia militarily, but economic warfare is very much on our allies’ minds. China buys nearly a third of Australia’s exports. Since exports constitute roughly 20 percent of Australian gross domestic product, that means China’s government can throttle nearly 7 percent of their economy. That understates China’s leverage because the country is also a source of tourists, university students and direct investment that undergirds other economic sectors. If China is truly angry, Australia will be battered by any all-out economic conflict.
China has taken to bullying other close U.S. allies, too. It threatened the safety of Canadian businesses and individuals in Hong Kong after the Canadian government criticized the communist government’s crackdown on democratic liberties in the allegedly autonomous city. New Zealand Prime Minister Jacinda Ardern reiterated her nation’s criticism of China’s policy in Hong Kong after Chinese diplomats threatened to “pluck out the eyes” of the vaunted “Five Eyes” intelligence network, of which the Kiwis are part. New Zealand, however, also has significant economic ties with China, which is the island nation’s second-largest trading partner. Ardern recognized this in her comments, saying that it was crucial “to navigate both” the trade relationship and the overall foreign policy relationship. The more China uses its economy as a lever for overall foreign policy objectives, however, the more this journey will look to our allies like a choice between Scylla and Charybdis.
Nearly all of our allies are vulnerable to Chinese economic coercion, a fact that will make Biden’s sanguine claims that he can build a united allied front against China all the more difficult to achieve. Germany is also economically intertwined with China, its largest trading partner, as is Japan, which conducts 21 percent of its trade with the communist country. It would be difficult for China to wage economic war against a genuinely united Western front, but frantic lobbying from Western firms, frightened at the loss of sales and profits, could wreak political havoc.
Twenty years ago, the typical U.S. response would have been to offer its allies U.S. markets in compensation for lost Chinese markets, but that is no longer a wise option. Americans have been battered by Chinese imports in the past two decades, and encouraging more imports of raw materials and finished goods from our allies would create unacceptable domestic political consequences. Americans are no longer so uniformly prosperous that they would agree to indirectly subsidize our allies’ economies. That means the Biden team will need to think outside its comfort zone to build an effective anti-Chinese alliance.
Encouraging factories to relocate to more friendly countries will only be a partial solution to this problem. Western companies are no longer simply using China as a manufacturing base to export goods back to the West. China’s consumers are now wealthy enough that Western companies market their wares directly to them. All-out global economic warfare would inevitably harm businesses that prosper in this activity, without offering them any short-term relief. It would take decades for demand in other developing countries to make up for what many companies currently sell in China.
A China that feels strong enough to threaten U.S. allies is a different China than the Obama administration ever faced. Coming to grips with this reality is the largest and most complex task Biden’s foreign policy team will face.