China knows how to punish countries that offend it

China has conducted doghouse diplomacy for two decades, long enough to draw conclusions about its efficacy.

China’s diplomatic anger obeys a law of conservation: the total quantity remains constant, but the targets change. Some countries, notably Canada and South Korea, have recently emerged from China’s doghouse. Instead, as of last month, Japan again finds itself in the kennel, following comments by Takaichi Sanae, Japan’s prime minister, that her country could deploy its armed forces if China ever attacks Taiwan. For China, that crossed a red line. It was an interference in what China perceives as its internal affairs, all the more egregious given Japan’s history as a brutal occupier during the second world war.

Chinese President Xi Jinping.(AP)

China’s harsh words often come with material consequences. This time, it has imposed import bans on Japanese seafood, warned Chinese citizens against travelling to Japan and cancelled Japanese concerts and film releases. What does China achieve in using such blunt economic weapons in bilateral spats? It is tempting to dismiss these as acts of petulance or even self-harm. Rarely do countries meekly back down in the face of China’s punishment. Ms Takaichi is not about to retract her comments, especially as China’s angry response has bolstered her standing at home.

But there is more to it. China has conducted doghouse diplomacy for two decades, long enough to draw conclusions about its efficacy. Distressingly, although many outside China find its tactics heavy-handed and unbecoming of a great power, there is a brutal logic to them. They are, over time, quite effective at shaping the behaviour of other countries. As one senior diplomat in Beijing observes, it is the mere existence of the doghouse, rather than its specific focus, that matters. It makes foreign governments tread carefully around China’s declared interests.

Some of the earliest examples of countries landing in trade trouble with China arose when their leaders had the gall to meet the Dalai Lama, the spiritual leader of Tibet, who is seen in Beijing as a dangerous separatist. Over time China started to mete out economic punishments for a broader array of offences, such as the Norwegian Nobel Committee’s decision in 2010 to award its peace prize to a Chinese human-rights activist, skirmishes in the South China Sea with the Philippines in 2012 and South Korea’s installation of an American missile-defence system in 2016. A database maintained by academics in Australia documents nearly 100 instances globally of “weaponised trade” since 2008. China has been the aggressor in roughly 40% of them.

China tends not to announce its trade measures as explicit punishments, an obfuscation that gives it plausible deniability when countries complain. Yet the timing and focus of its sanctions leave little doubt about their intent. In 2021, when Lithuania allowed Taiwan to use the word “Taiwan” in its representative-office name—breaking from other governments’ practice of using only “Taipei”—Lithuanian exporters found that their country had simply vanished from China’s customs system, making it impossible to send their products there. After Canada detained an executive from Huawei, a Chinese telecoms company, to serve an American extradition request in 2018, China choked off Canadian exports of canola, supposedly for safety reasons.

Looked at narrowly, China’s economic tactics seem to have a dubious record of success. South Korea went ahead with installing its American missile-defence system and, over time, China’s extreme pressure has dissipated. Even as little Lithuania has persisted with its Taiwanese office, its exports to China have gradually recovered. Japan is a repeat offender in China’s books.

But a wider aperture shows why China does what it does. Take the origin of China’s doghouse diplomacy. After the flurry of meetings with the Dalai Lama in the early 2000s foreign governments became much more circumspect, mostly allowing lower-ranking officials, if any, to see him. Other countries have steered clear of Lithuania’s predicament, keeping the name “Taiwan” off their representative offices. Australia, another target of Chinese import blockades in recent years, has softened its criticism of Xi Jinping’s government.

The direct cost to China is minimal. For all the headlines generated by China’s economic tactics, its targets are often limited and at least partially substitutable. China has cut back on bananas from the Philippines but increased imports from Vietnam. Cancelling group visits simply redirects Chinese tourist spending elsewhere. Meanwhile, the loss to targeted countries—and specifically to their targeted companies—is often substantial, given the size of the Chinese market. Unlike Donald Trump, China is skilful in the dark arts of economic leverage: the basic objective is to cause minimal self-harm and to have a clear blast radius abroad.

The bark’s echo

What about the damage to China’s reputation? When countries get whacked by China, their publics tend to sour on it for extended periods. China’s favourability ratings in South Korea fell sharply in the wake of the missile-defence dispute and remain deeply negative. Even with much to fear from Mr Trump, Canadians and Australians still generally do not trust China. Such low opinions have a real impact, constraining how far foreign governments can go in repairing relations with the country.

China’s implicit calculation is that being known as an occasional bully is a price worth paying. It scares off some potential tourists and investors, but it helps to keep foreign governments in line. In its current dispute with Japan, diplomats in Beijing report that China has made a point of calling meetings to explain its side of the story. They say it is pushing its view that the international community after the second world war gave mainland China sovereignty over Taiwan, and that any hint of support for Taiwanese independence will face the most serious of repercussions. China is putting Japan in the doghouse not just to punish the offender but to paint its red lines big and bold. Other countries will cross them at their peril.