Christina Lai

 

Starting in March, China has suspended the importation of Taiwanese pineapple, claiming they contain “harmful pests” that could threaten its agriculture (Reuters 2021). Even though most of Taiwan’s produce has always had to undergo tougher inspections, Beijing’s unilateral move left no room for negotiation or investigation. Being “ambushed” by this import ban, Taiwan President Tsai Ing-Wen encouraged people to eat more pineapple, and the Ministry of Agriculture allocated USD 36 million in funds for subsidizing the losses faced by Taiwanese farmers (Bloomberg 2021).   

 

Meanwhile, China has also imposed tariffs and restrictions on Australian products such as wine, beef, cotton, and coal, amid rising tensions in their bilateral relations. To be clear, this is not the first time China has used agricultural imports bans or other trade restrictions against its neighbours. Countries in Asia and beyond, such as Japan, the Philippines, and Norway, have suffered from Beijing’s economic sanctions (Lai 2017).

 

China’s growing economic clout and its frequent use of coercive measures have led to the following questions: how effective is China’s economic coercion towards achieving its preferred outcomes and what policy options can Asian countries adopt when falling victim to China’s economic sanctions? These are not only pressing issues to be addressed by policy circles in the Asia Pacific region, but also important questions for scholars of international security and Chinese politics.

 

This article provides a comparison between the strategies employed by Taiwan and Australia in responding to China’s economic sanctions. It highlights the agency of smaller or medium-sized countries in the shadow of a great power. Finally, this piece offers policy implications for countries in the Asia-Pacific region.   

 

The agency of China’s neighbours: Taiwan and Australia

 

Over the last few years, China has executed a series of economic incentives and coercive measures toward Taiwan and Australia. But these measures don’t always achieve Beijing’s desired outcome. To be clear, there is no quick remedy, nor one-size-fits-all strategy in countering China’s economic coercion, as the targeted countries would have to take a long-term approach, such as structural adjustment, sector reforms, and the WTO trade dispute mechanisms, to cover the economic losses to their respective impacted industries. In the long run, securitization and diversification strategies adopted by these countries are the weapons of the weak in countering China’s economic sanctions (Lai 2021).  

 

Securitization strategy

 

Recent heightened political tensions in China-Taiwan and China-Australia relations have increased awareness among policymakers in these countries. Taiwan has long been at the forefront of China’s economic coercion, as Beijing has adopted both economic incentives and intimidation in shaping Taiwan’s preferences for political unification.

 

Taiwan’s securitization strategy can be traced back to the debate over the 2010 Economic Cooperation Framework Agreement (ECFA), which sought to strengthen ties with China. Tsai adopted a pragmatic approach in assessing the long-term effects of deepening economic integration with China. In particular, her framing strategy was raising awareness among the Taiwanese public as to the costs of undermining Taiwan’s sovereignty in exchange for the ECFA (The Taipei Time 2010). Specifically, Tsai stressed that the Taiwanese people need to understand the negative impacts of economic dependence on China, as this would not only make Taiwan more vulnerable politically but also seriously undermine Taiwan's democratic governance (Lai 2019).

 

As a highly open economy, the Australian export industry is drawn to China’s domestic markets with a rapidly growing middle class. However, access to China’s markets could be turned into economic leverage through demanding political compromise. For example, in 2017, Chinese officials threatened to initiate a boycott of Australian products when the Australian government was investigating China’s sharp power influences in its domestic politics (CNAS 2018). Meanwhile, China’s outbound investment might also threaten Australia’s security when Chinese SOEs attempted to take over its critical infrastructure. Therefore, the Australian government adopted a securitization strategy, asking the Foreign Investment Review Board to issue clear criteria in reviewing future foreign investment (Wilson 2021).

 

Diversification strategy

 

As China’s economy continues to grow, it is expanding the criteria and conditions for executing coercive measures against small and medium-sized states. For example, when Tsai Ing-Wen was elected president in 2016, Beijing imposed limits on the number of Chinese tourists allowed to travel to Taiwan. The economic losses suffered by Taiwan’s tourist industry led to street protests, urging President Tsai to mend relations with China. The Tsai administration adopted diversification strategies by attracting visitors from Southeast Asian countries and encouraging domestic travel for supporting local businesses. Although such policy measures could not completely offset the losses from China’s tourist ban, Taiwan’s tourism industry have gradually lessened its dependence on mainland tourists and expanded their clientele to become more diverse.

 

Recent political spats between China and Australia have significantly impacted the Australian economy. Farmers, winemakers, and lobster exporters are exploring new markets for their products, as the future of bilateral relations remains unclear. Cotton growers have found new market access to Southeast Asian countries, and the wine industry has been looking for new customers in other countries in Asia and Africa (ABC News 2021).  

 

In sum, both Taiwan and Australia have fallen victim to China’s economic sanctions in the short term, but Beijing’s coercion has also encouraged them and others to securitize their economic policies and develop alternative markets and trading partners in the long run. The only difference between them lies in the strategic alliance with the United States. When China threatened to halt rare earth metals in 2010, the Quad countries (US, Australia, Japan, India) started to reconfigure the supply chain and production process for these critical materials. However, Taiwan has not been officially incorporated into the Indo-Pacific partnership. More isolated from its Asian counterparts, the Taiwanese government and business community need to expand political and economic networks more quickly than ever.

 

Policy implications for Asia’s politics

 

In the next few months, the Taiwanese can fully support local produce growers by consuming more pineapples, just like Australians supported their wine industry when faced with China’s trade restrictions. Halts on fresh produce and commodities might only be a part of China’s sanction strategies. Beijing is likely to explore more policy measures of economic coercion to advance its interests. In this case, Taiwan and Australia have much to offer the rest of the world regarding how to respond to China’s economic coercion. Strong cooperation among Taiwan, Australia, and Asian countries can also establish the basis for a coordinated strategy in addressing China’s sanctions.

 

 

Author biography

Christina Lai is a junior research fellow in the Institute of Political Science at Academia Sinica, Taiwan. She is also an adjunct lecturer in Global Security Studies at Johns Hopkins University. She is interested in U.S.-China Relations, Chinese Foreign Policy, East Asian politics, and Qualitative Research Methods. Her works have appeared in the Politics, Journal of Contemporary China, Pacific Review, International Relations of the Asia-Pacific, Asian Survey, and Asian Security. Image credit: World Economic Forum/Flickr.

 

Disclaimer: Parts of the argument and case studies in this article have been adapted from a paper presented at the Taiwan Conference hosted by the Hoover Institute, Stanford University, October 2020.