On their own, few countries are powerful enough to stand up to bullying by China, and the existing security alliances upon which the world’s major democracies depend weren’t built to address the economic threats now emanating from Beijing. This spring, shortly after Australia called for an international investigation into the origins of COVID-19, the Chinese ambassador to that country threatened an economic boycott, declaring that the Chinese public could go without Australian wine and beef, among other products. Since China is Australia’s largest export market, this was no small threat. Subsequently, China blocked imports from major Australian meat producers and placed tariffs on Australian barley. More and more, China is using its massive economic weight to threaten countries that challenge its actions, criticize its leaders, or express sympathy for people whom it considers dissidents or separatists.
In April, Chinese officials threatened the European Union with unnamed repercussions if an official EU report described a Chinese “global disinformation campaign” related to COVID-19. (The EU toned down the report.) Beijing has threatened economic harm to German automakers if Germany attempts to exclude equipment made by the Chinese telecom giant Huawei from its 5G networks. Last year, China also threatened to impose trade restrictions on Sweden after a Chinese Swedish author was awarded a prize for persecuted writers by the Swedish chapter of the group PEN International. These moves represent a kind of economic imperialism. The Chinese Communist Party, which suppresses dissent at home, is trying to force other countries to abide by its authoritarian norms and use its preferred company to build their own essential communications networks.
In the United States, suspicion of the Chinese government is a bipartisan matter, but no consensus exists about just what to do. The Trump administration has implemented a variety of hawkish policies, including restricting semiconductor sales in China and stopping a U.S. government retirement fund from investing in stocks there, and the president himself vowed Friday to ban TikTok, a popular app owned by a Chinese company. Secretary of State Mike Pompeo called in a recent speech for “a new alliance of democracies” to counter the emerging superpower, although few details were offered. The draft of the 2020 Democratic Party platform broadly vows to “rally friends and allies across the world to push back against China or any other country’s attempts to undermine international norms.”
The problem is that the United States and its allies currently lack the ability to respond to the type of geo-economic threats that China is making. Specifically, they need a means of taking collective action when Beijing attempts to use economic power as a tool of political coercion. No country should face such threats alone.
Many of America’s most important Cold War–era institutions, especially NATO, were designed to deter a primarily military threat from the Soviet Union. But back then, Moscow—unlike Beijing now—had limited economic leverage against the West. Global economic institutions such as the World Trade Organization were narrowly focused on trade agreements and rule-making to ensure fair economic competition, but did not consider the possibility of economic warfare or the danger of economic threats to force political concessions. Indeed, none of these alliances or institutions has been any help in addressing the Chinese economic threats against Australia, Germany, Sweden, or other nations.
Those threats also harm the United States. If China forces U.S. allies to use Huawei’s technology in their information networks, American communications that go through those networks could be exposed to the Chinese Communist Party’s infiltration. And China’s rulers have sought to enforce the party line on Americans. Last year, Beijing punished the NBA’s Houston Rockets when the team’s general manager offered support for Hong Kong’s prodemocracy protesters on Twitter, a platform blocked in China. The regime will likely grow bolder as China’s economic might grows.
New threats demand new responses. During the Cold War, the U.S. created not just NATO but also the CIA and the Air Force to respond to Soviet threats. The period brought about a wholly new form of intelligence competition between the West and the Soviet Union. This led the U.S., Britain, Canada, Australia, and New Zealand to enter into the alliance commonly known as Five Eyes, which allowed unprecedented intelligence sharing among nations in peacetime. This approach would have been unimaginable before the Soviet geopolitical threat.
Similarly, a new kind of alliance—like NATO, but for economic rather than military threats—is needed to respond to the kind of statecraft that China is practicing. Under such a system, participating nations would provide mutual support when China threatens one or more members with economic repercussions for political actions. That assistance could involve the imposition of tariffs on Chinese goods by all member nations; the creation of a pool of capital to help a targeted nation withstand Beijing’s pressure; the release of strategic reserves of essential materials, such as rare-earth metals, that China produces and could withhold; and other forms of collective economic defense.
When China targets Australian barley and beef to mute criticism of Beijing’s handling of COVID-19, members of the economic alliance could all impose tariffs or other forms of economic weapons to force China to back off. If China continued to threaten German automobile exports to force concessions on 5G, alliance members might ease the pain by reducing their own tariffs on Volkswagens and BMWs.
This alliance would be open to any nation that wanted to maintain free markets and political autonomy. Use of its tools would have to be narrow: It should act only in cases where economic warfare is used as a means of political coercion. It would not replace NATO or other military alliances. Nor would it replace the WTO. In fact, it would be complementary, and provide a means of safeguarding the WTO’s goal of free trade, by countering attempts to turn trade into a geopolitical bargaining chip.
The United States needs to develop policies toward China that are largely consistent from one administration to the next. A NATO-like economic-security alliance could support a bipartisan consensus on China policy. It is compatible with the nationalist approach championed by the Trump administration—but also with the more traditional policy objectives of Democrats, including Joe Biden, who believe in building global alliances and protecting the human and political rights of smaller nations.
Up to this point, the United States and other democracies have tightly integrated their economies with China’s without fully planning for the problems that the arrangement presents. China has used this economic integration for geopolitical gain. Just as the U.S. needed alliances to deter military threats after World War II, it needs alliances that deter economic threats from Beijing now.
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