Curbing China’s Resilience to US Coercive Economic Statecraft

Abstract

It has been a year since Russia’s invasion of Ukraine and the West’s subsequent response with coordinated financial and economic sanctions. It was not only Moscow, however, that was caught off-guard by Washington’s unprecedented speed at leveraging not only its own sanctions regime, but also coordinating with its partners and allies. Beijing, too, was equally unnerved by how quickly and how extensively the sanctions regime against Russia unfolded. What lessons, then, might China take away from US-led sanctions against Russia? Can China feasibly fortify its financial and economic system against the potential for a largescale, coordinated sanctions effort? For its part, Beijing is keenly aware that its financial system and major sectors of its economy remain vulnerable to US sanctions—either directly or through secondary sanctions. Partially to mitigate against US sanctions, China has embarked on an ambitious long-term strategy to further internationalize its currency—the renminbi, or “RMB”—as well as to implement legal and regulatory reforms that could threaten or even undermine Washington’s ability to impose sanctions at a future point, such as if China invades Taiwan. How, then, can Washington skirt China’s efforts to “sanctions-proof” its economy? To be sure, one of the most consequential actions is to maintain a strong US dollar. While US monetary policy is outside the scope of this article, it is important to recognize the reality that a strong preference for the