China Power

The Future of China-US Sanctions Diplomacy

Recent Features

China Power | Diplomacy | East Asia

The Future of China-US Sanctions Diplomacy

Sanctions are here to stay in U.S.-China relations. What does that mean for the relationship?

The Future of China-US Sanctions Diplomacy
Credit: Official White House photo by Shealah Craighead

On January 20, 2021 China declared sanctions against 28 U.S. citizens, including former Secretary of State Mike Pompeo and other Trump administration officials.

This retaliatory move from China capped off a year of escalating sanctions from both sides of the Pacific. The United States had previously sanctioned senior Chinese officials under the Uyghur Human Rights Policy Act in July 2020, and the executive order signed by then President Donald Trump in August 2020 on Hong Kong’s political autonomy. Beijing vociferously rebuked American claims, and openly targeted U.S. senators – including Ted Cruz and Marco Rubio – in past sanctions.

The fraught bilateral relations between the two largest economies in the world serve as an exemplar of a new kind of diplomacy – sanctions diplomacy. Sanctions diplomacy should be conceptualized as a distinctive diplomatic tool, employed by countries often in conjunction with vocal, declarative statements and emphatic rhetoric, with the intentions of imposing economic and symbolic costs on their opponents. It differs from the structural deployment of sanctions as part of broader coercive attempts at initiating regime changes (see A. C. Drury’s 2001 article on Coercive Diplomacy), or the incidental usage of sanctions to target particular individuals or figureheads with ignominious histories. Instead, it favors targeted penalties in lieu of more significant economic blockades or military escalation.

Symbolism Over Substance

The recent waves of sanctions from both sides do not work – at least, not according to the orthodox interpretation of sanctions as imposing economic disincentives and deterring particular behaviors that ostensibly transgress international norms. Staunchly anti-China U.S. senators and officials are unlikely to employ Chinese banks, or to visit China in the immediate future. Similarly, members of the Chinese political class could, albeit with comparably greater costs and inconveniences, avoid using U.S. financial services or engaging with commercial activities with U.S. counterparts. There is no substantive, individual impact – save from the severance of already frail ties between parts of the governing elite in Beijing and Washington.

Beyond the short-term frictional costs, the likely implications of the bilateral sanctions are two-fold. First, both countries’ governing elite will turn to alternative, domestic repositories for individual wealth. Second, those who are inevitably most exposed due to their official responsibilities are likely to be individuals with few to no interactions with the other side. Those who prefer insular, anti-globalist, unilateralist politics will benefit, while informal backchannels and consensus-seeking diplomacy, through individuals who can cut through silos, will suffer substantially.

Yet the true point of the recent sanctions has never been about the targeted officials. It is instead the symbolism that matters. For the outgoing Trump administration, sanctions against China offered them a much-needed diversion from domestic turmoil, and a way to validate their political legacy. They also fed into the wider strategy of containment – the Trump administration saw China’s domestic policies as a convenient opening for its reclaiming the moral high ground. This also explains the trenchantly values-laden U.S. rhetoric accompanying the sanctions, which sought, through the stigma of sanctions, to characterize China as a pariah state comparable to Russia, Iran, and other major adversaries to the U.S. world order.

On the other hand, Beijing saw its extensive, scatter-gun sanctions on American politicians as an expedient means of reassuring its domestic population of the regime’s political strength, as well as articulating its commitment to defending the country from “foreign interference” – a political trope that has served as a synecdoche of symbolic evils, ranging from Western neo-colonialism to American imperialism. Such ideologies have been identified and castigated by state rhetoric as antithetical toward the “community of shared future for mankind” – a discourse concocted in November 2012 at the 18th Central Committee and heavily promoted by Chinese officials at home and abroad.

Concurrently, both Washington and Beijing count on sanctions as means of reaffirming their stances on core, normatively contested issues – ranging from Hong Kong and Chinese domestic policies in Xinjiang and Tibet, to the trade and tech wars. Sanctions frame their targets as the “Other,” and exert moral pressures on allies to align, through tacit support or explicit endorsement, with one side of the conflict. By reinforcing the view that the country is under attack by a foreign enemy or threat, the defensive imagery of sanctions enables leaders to deflect criticisms while emphasizing their proactive undertaking in upholding national interests.

As T. Whang noted in a 2011 article, American leaders often resort to sanctions as a means of galvanizing domestic support and shoring up the image of strong political leadership in face of international crises. Such rationale featured particularly prominently in Washington’s calculus in a year when the country suffered significant domestic setbacks under substantial civil strife, a sprawling COVID-19 outbreak, and unprecedented levels of political polarization. Targeting Chinese officials played to the festering public uneasiness concerning an ascendant and predictably unpredictable China – now a rival politico-ideological system that could supplant the United States.

As I have argued elsewhere, Chinese nationalism has increasingly pivoted toward a domestic audience. That shift mirrored how the Trump administration turned toward China for a convenient threat-construct that would provide a tentative basis for now-rare bipartisan consensus. Trump’s sanctions on Chinese officials let off substantial domestic steam concerning his perceived inaction toward Chinese aggression and wider isolationism, while China’s retaliatory sanctions have granted the communist regime more maneuvering room – in face of simmering hyper-nationalist rage amongst the Chinese public – over its foreign policy. The rhetoric accompanying Chinese sanctions has also bolstered the Communist regime’s legitimacy in the eyes of its increasingly politically active and conscious grassroots population.

Sanctions as Strategic Buffer 

Throughout the ongoing U.S.-China tensions, diplomatic goodwill might not have been apparent, if at all present. Yet it was clear that neither party was keen on their tit-for-tat sanctions escalating to a tipping point, where either party would be compelled to resort to hot or semi-hot localized conflict as a means of preserving its perceived upper hand.

Sanctions have traditionally operated as a strategic buffer – they give the imposing party breathing room against pressures from both allies and domestic political opponents, as it assesses its own options and the likely responses from the other party. They buy time as the parties engage in backroom discussions, with the chips of lifting and imposing sanctions as visceral reminders of possible consequences. Yet sanctions also signal to the opposing party that the onus to cease and desist rests predominantly with them. They effectively foreshadow the more severe penalties that could be imposed should non-compliance arise.

Sanctions diplomacy strips away the foreshadowing function and places sanctions at the center of countries’ diplomacy. Such an approach eschews drastic, radical moves in favor of controlled, gradual escalation and de-escalation. Sanctions here are not the appetizer – they are the main course, and countries are compelled to decide, when presented with them, whether to reciprocate (through equivalent sanctions), escalate (switching to alternative, more intense forms of conflicts), negotiate (expanding the common ground), or capitulate (accepting concessions in exchange for lifted sanctions). In the case of the United States and China, it is apparent that a mixture of reciprocation and negotiation have crowded out both escalation and capitulation – this has also been largely expected, given the level of interdependence and rough parity between the two states.

Sanctions diplomacy is underpinned by the consensus that sanctions can be relatively low-cost, as a tool within countries’ international arsenal. Unlike protracted military conflicts – even low-intensity ones – they are inexpensive and easily matchable by equivalent retaliations (e.g. further sanctions). They also differ from tariffs and economic blockades, in requiring far less mobilization of multilateral support and trade diversion in order to mitigate against the worst consequences. Above all, by individualizing their targets, sanctions diplomacy enables the tactful severance of regimes from politicians, structures from individuals – it offers a relatively low-cost climbdown option to both sides, without requiring the compromising of their core interests.

Until recently, China had predominantly targeted U.S. lawmakers (mostly Republican) and non-profit rights groups and activists, leaving high-ranking officials of the administration out of the equation. Equally, for all its fanfare, Washington had been largely restrained with its sanctions – especially when it comes to its selection of targets. While the Trump administration had indeed previously sanctioned a member of the Politburo and vice chairpersons of the National People’s Congress, the White House had stopped well short of sanctioning the most senior, prominent members of the Chinese leadership – leaving room for diplomatic re-engagement should the opening arise.

Beijing’s recent sanctioning of the outgoing officials could be seen as the coda to the rapid deterioration to bilateral relations during Trump’s re-election campaign, as well as – ironically – an essential olive branch to the then-incoming Biden administration. Having emerged from the RCEP and EU-China talks with two significant optical victories, China is keen on turning a new leaf with the United States. By essentially casting Trumpism and Trump’s associates as the boogeyman to which recent years of U.S.-China vitriol can be attributed, Beijing sought to largely wipe the slate clean with the White House handover.

A Farewell to Arms?

Two perennial risks remain, however. First, the assumption underpinning the controllability of sanctions ignores the elite-political dimension of foreign policymaking. Disproportionate responses to sanctions may arise out of practical necessity within domestic factional contests, as a means of one-upping one’s factional enemy, or in bolstering one’s odds in vying for political leadership. These are moments in which the immediate, short-term projected strength of the ruling coalition, could well trump more long-term considerations concerning risk and potential payoff.

Additionally, sanctions can backfire, as sanctioned parties view diplomatic engagement as a lost cause, and the alienation of the sanctioning actors as inevitable. The examples of Venezuela and Iran illustrate this: U.S. sanctions have done little in undermining Maduro’s grip over power. Tehran, meanwhile, has become increasingly aggressive in the region as a means of shoring up domestic support in face of economic decline. China cannot be compared with Iran or Venezuela – U.S. policy towards a country that is projected to overtake the United States economically by the end of the decade must be cognizant of domestic political nuances that have been oft-neglected in favor of flamboyant gestures.

Both Presidents Biden and Xi are likely to place a moratorium on sanctions for now. Beijing is keen to gauge if the new administration is willing to dial down fundamentally antagonistic rhetoric and what the Chinese leadership perceives as fundamental affronts to its national sovereignty – especially on matters such as Hong Kong and Xinjiang. Across the Pacific, Biden is likely to be preoccupied with tackling the ongoing pandemic. Biden’s administration had recently declared that it would pursue a policy of “strategic patience” toward China, which should most plausibly be read as a sign of its pivot toward domestic consolidation and rekindling of ties with traditional allies. It appears that the two countries may be in for a temporary rapprochement – though the extent to which this would last and contribute toward a more structural unthawing of relations remains to be seen. I am unconvinced.

A farewell to arms would be ideal – but unlikely. China’s rise poses a fundamental challenge to American leadership in a world order to which it has long grown accustomed. With Biden’s return to multilateralism, Beijing may well be confronting a more persistent, coherent, and supported rival than Trump’s United States. Similarly, the Chinese leadership of 2021 is vastly different from its counterpart two decades ago – a straightforward “engagement” strategy might be easy to discuss in a vacuum, but it is high time that the United States and China engaged with some introspective soul-searching. What would U.S.-China relations look like in 2040? And how are both sides of the Pacific to adapt to a world order where there may be no clear winner?

As Hemingway’s masterpiece puts it, “There is nothing as bad as war… There are people who are afraid of their officers. It is with them the war is made.” Lest we forget.