Beijing’s Evolving Use of Leverage Against Western CorporatesDownload PDF
US-China relations are at their lowest in 25 years. Washington has used financial sanctions, export controls and more to mitigate perceived security risks and deter hostile acts from Beijing (e.g., Taiwan).
Beijing has often been predictable in the leverage and tools it uses to pursue its interests, often targeting industries where the costs to China are low and when its relations with a country are poor. This has made it easier to discern which industries would likely be targeted with coercive measures.
It has so far not enacted large-scale countermeasures against the US or US corporate interests in reaction to geopolitical pressure. It targets foreign firms who draw Beijing’s attention by crossing its ‘red- line areas’ (e.g., Xinjiang or Taiwan), but this is often limited to the company itself.
Beijing may change its pattern of behaviour given growing friction with the US, rising self-sufficiency in key sectors and other factors.
By altering its toolkit and focus, new industries may become vulnerable to Chinese actions.
Although operating in China has always carried risk, the nature of this risk is changing as national security increasingly trumps economic priorities. Previous assessments of acceptable risk may no longer be viable. Corporates may need to rethink their exposure given the shifting geopolitical landscape.
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