China’s economic statecraft in the Taiwan Strait

ABSTRACT Economic statecraft is the use of economic tools to achieve political goals. This article assesses China’s economic statecraft toward Taiwan and argues that its efficacy appears limited. I identify from the literature three causal mechanisms by which economic ties can be converted into political influence: leverage creation, interest transformation, and identity formation. I propose an analytical framework that incorporates the three causal mechanisms and conceptualizes the effectiveness of economic statecraft as an outcome of the strategic interactions between the sender’s strategies and the target’s countermeasures. Ultimately, the political impact of economic statecraft depends not just on how the sender deploys carrots and sticks but also on how the target government responds to external influence attempts.