America’s China Strategy Has a Credibility Problem

Emily Kilcrease

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In future crises or conflicts in U.S.-Chinese relations, the economic dimension will be critical. Yet Beijing currently has good reason to doubt the credibility of Washington’s sanctions threats. This is because the United States’s response has been muted in the face of recent Chinese provocations, including Beijing’s efforts to erode democracy in Hong Kong, the dispatching of a spy balloon over the United States, and Chinese aggression in the South China Sea.

Sanctions are a crucial part of the U.S. foreign policy toolkit, and they encompass a broad array of economic restrictions, including financial sanctions, export controls, and trade restrictions. They are intended to coerce entities or individuals into a course of action. The United States has many powerful sanctions at its disposal—including those that could eject major Chinese firms from the global financial system and weaponize the central role of the U.S. dollar in it. But Washington has preferred instead to respond to provocations by imposing controls on a handful of Chinese firms or personal sanctions on Chinese officials. Rather than using more powerful sanctions, the United States has opted for a more limited approach of imposing sanctions related to technology and levying tariffs and trade restrictions to counter China’s economic practices.