Explaining China's strategy of implicit economic coercion. Best left unsaid?

Abstract

ABSTRACT The recent ‘trade war' between Australia and China has understandably sparked fear amongst Australian policymakers, voters and businesses. China's alleged economic coercion towards Australia has the strange property that Chinese leaders are not making any clear explicit demands of Australia. Moreover, this behaviour follows a pattern in recent Chinese dealings with other Asia-Pacific states. Why would a state initiate economic coercion without making clear demands? In this paper, I offer an explanation, building on the logic of audience costs in wars of attrition. I suggest that China's strategy of economic coercion without explicit demands serves a key strategic purpose. Omitting specific demands makes the outcome of any given dispute less clear and hence makes it easier for either side to claim victory. This negates a key advantage which democratic states have in bargaining with autocratic adversaries—the fact that their audience costs for backing down are usually higher, which makes them less likely to initiate but more likely to win international disputes. Implicit economic coercion should therefore be a strategy which is primarily targeted at China’s democratic trading partners. I examine the record of Chinese uses of economic coercion in the past and find that this pattern finds much support.