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Mock Trial: What to do with China?

In case you haven’t seen this story in the South China Morning Post…

The big question is, if sanctions aren’t going to be effective (and this round undoubtedly will not be), what will?

Would like to hear your thoughts here… I will share some of mine for starters:

  • You can’t use leverage if the other party has its own – and will be painful if they use it
  • To that end, major economies other than China need to agree to
    • Developing their rare earth metals resources (needed for many high tech devices) to counter China’s overwhelming market share
    • Require the moving of their companies’ supply chains out of China, and living with the added costs – by a date certain not too many years out (3-5 perhaps?)
    • Managing the financing of international debt to replace any reduced intervention by China (if they are not ultimately barred from such purchases)
  • In the short term, the group of allied countries could also agree to:
    • Require technical approvals (by the group of allied countries) of any hardware, firmware or software coming from China or its allies, including for each release of such products
    • Require non-disclosure of any user or usage information that is not related to use by Chinese citizens within China or its Special Administrative Regions to any Chinese governmental body, official or other party affiliated with China without explicit approval by the group of allied countries
    • Promote the use of trusted financial hubs other than Hong Kong in Asia, such as Singapore, and impose reporting requirements on any correspondent relationships provided for Chinese or Hong Kong banks
    • Strip any remaining most favored nation status or similar preferences in trade from China and Hong Kong
  • And to underscore the seriousness of recent Chinese moves in Xinjiang and Hong Kong:
    • Recall all diplomatic staff and expel all Chinese diplomatic staff
    • Expel all persons associated with Chinese state media
  • And, if that does not get China’s attention, introduce a United Nations resolution granting membership to Taiwan

To be effective, this group must include Canada, Australia, New Zealand, individual members of the E.U. (preferably more than just a handful), India, Japan and other major economies in Asia, such as Vietnam, Malaysia, Indonesia, South Korea, Singapore, etc. (I am sure I am leaving some important nations out.. forgive me). And, to be 100% clear, if there is no broad-based coalition, very little of this will be effecitve, if at all – it would end less well than the US Cuba and Iran programs are faring.

I do want to note here that I am not, by nature, a “China hawk.” Yes, I am appalled by recent events, but my interest in this post is trying to get past viewing everything as a nail that requires sanctions as the only available tool in the box.

Perhaps I will do something similar with regards to Russia at some point in the future – it certainly presents a similar (albeit less complex, to my mind) problem.

So, what do you think? What would you do, if you held the levers of influence and power of your government?

Categories: Commentary Hong Kong-related sanctions


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