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China Revives Economic Coercion to Punish Japan
Sino-Japanese relations are in freefall again after comments by new Japanese Prime Minister Sanae Takaichi on Nov. 7 suggesting that Chinese use of force against Taiwan could lead to Japan deploying its Self Defense Forces. Beijing quickly retaliated by sending Chinese coast guard vessels into waters around disputed islands and military drones near an outlying Japanese island.
The more consequential steps have been economic. China has unearthed its old playbook of informal coercive moves. Unlike clear-cut export controls, these disguised measures are harder to manage and pose escalatory risks. Governments and companies must grapple with how to respond.
Since Nov. 14, China has issued a series of escalating restrictions: cautioning tourists and students against travel to Japan; postponing the release of at least two Japanese films; and reinstating a blanket ban on Japanese seafood imports. That ban, introduced in August 2023, had been relaxed the day before Ms. Takaichi's comments.
Unlike recent Chinese economic restrictions, such as rare earth export controls in October, Beijing denies imposing official sanctions. It instead attributes boycotts to popular sentiment while hiding behind technical bureaucratese—the seafood ban is ostensibly required to protect public health from nuclear contamination (again).
But the economic stakes for Japan are real. Tourism is roughly 7% of gross domestic product and Chinese visitors roughly one-fifth of all arrivals. Travel agencies have stopped offering group tour packages and multiple Chinese airlines have offered flight refunds, with one estimate that half a million tickets have been canceled. Over a third of Japan's international student population is from China, and China is Japan's largest export market for seafood.
These moves show how Beijing continues to coerce with Chinese characteristics, contrary to recent perceptions that China has shifted to more Western-style legalistic measures because it has now developed the underlying bureaucratic architecture. Certainly, the Chinese government has begun to use new sanctioning frameworks—including the Unreliable Entity List, the Anti-Foreign Sanctions Law, and an expanded export-control system—that mirror those used by the United States. The October rare-earth controls drew inspiration from the U.S. foreign direct product rule and semiconductor-export controls, requiring foreign firms to obtain Chinese government approval to export products that incorporate even minimal amounts of Chinese-origin rare earths or rely on Chinese technology.
But informality and ambiguity remain a feature, not a bug, of China's approach to coercive economic bargaining. Some Chinese analysts openly called for restrictions on rare earth exports. Yet Beijing chose to activate mechanisms that mobilize public opinion—indirectly shaping the behavior of businesses and consumers—and afford the government plausible deniability. These are hallmarks of China's playbook.
What advantages do informal sanctions provide for Beijing? First, ambiguous measures exact fewer reputational costs. China has long criticized unilateral sanctions by Western governments, so deniable pressure helps minimize charges of hypocrisy. Ambiguity also reduces the risk of legal or diplomatic complaints that might arise from clear violations of international trade rules.
These advantages are most appealing when China lacks a strong justification for claiming its actions are lawful countermeasures, as with its continuing campaign against Japan. Beijing has preferred to use informal measures, such as arbitrary customs inspections, technical regulatory enforcement and state-fomented consumer boycotts when pressuring countries to acquiesce to its territorial claims and other political demands. It did so against South Korea in 2016 and Australia in 2020.
It is hard for governments and companies to respond to such disguised measures effectively and cohesively. While Japan and its Group of Seven partners have built mechanisms to coordinate against formal coercion, there is no clear focal point for governments to target when Chinese pressure takes the form of patriotic consumer action rather than explicit state restrictions.
But mobilizing patriotic consumerism also carries risks that official sanctions don't. Our research has found that public opinion—unlike precision-guided export controls—can be difficult to modulate once unleashed. The recent wave of airline refunds suggests that at least some travelers are responding to official cues. There have also been early signs of nationalistic Chinese sentiment bubbling to the surface, including an incident in Tokyo involving a person waving a Chinese flag at a busy intersection.
Past China-Japan crises have triggered protests that escalated into property damage and even physical violence, such as 2012 demonstrations over a territorial dispute. Amid heightened anti-Japanese sentiment, a Japanese schoolboy was tragically murdered in Shenzhen last year.
Beijing has demanded that Ms. Takaichi retract the statement that sparked the conflict, but backing down would be politically costly for her in Japan. Public pressure in both countries makes it harder for either side to de-escalate, increasing the risk of a public incident spreading into a broader confrontation.
Even as China hones its formal sanctions toolkit, it still turns to informal methods when legal and political justification is thin. These tools offer Beijing flexibility and deniability while adding volatility that can make crises worse. Governments need to figure out how to coordinate effective responses and bolster resilience against continued Chinese coercion on many fronts.
Mr. Ferguson is an assistant professor of international relations at Hitotsubashi University and a visiting researcher at the University of Tokyo. Ms. Wong is an assistant professor of political science and international relations at the University of Southern California and nonresident senior fellow at the American Enterprise Institute.
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Source: Hindustan Times
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