China steps up ‘coercive diplomacy’ in past decade, new report reveals

Companies are cautioned to take into account the “higher risk” of doing business with China, as a new report finds New Zealand and Australia high on China’s international agenda.

A new report from Australia’s Institute for Strategic Policy released Monday sheds light on the Chinese Communist Party’s “coercive diplomacy” over the past decade and comes as the Asian superpower launches its second research on Australian wine in the past fortnight.

Experts say there has been a “sharp escalation” of tactics that threaten action or use a limited number since 2018.

These include economic measures such as trade sanctions, investment restrictions, tourism bans, and popular boycotts.

Non-economic measures include arbitrary detentions, restrictions on official travel, and threats issued by the state.

“These efforts seek to punish unwanted behavior and focus on issues including securing territorial claims, deploying Huawei’s 5G technology, cracking down on minorities in Xinjiang, blocking the reception of the Dalai Lama and obscuring the handling of the Covid-19 pandemic.” says the report.

Europe, North America, Australia, New Zealand and East Asia have received the most cases of coercive diplomacy.

The report’s authors urge Five Eyes governments and companies to join forces in the fight against persuasion, saying this will make them “much more likely to be successful in rolling back.”

It also recommends that the government develop protocols with the business community on how to best respond to the coercive economic methods used by the CCP.

“In cases of coordinated action against companies, the dispute must be raised to a discussion at the state level to prevent individual companies from being fired and forced to capitulate,” the report said.

“As the CCP uses economic coercion more frequently and more openly, foreign companies doing business in China must take into account the increasing risk to trade flows, supply chains, and market share.

“That risk is significant enough to warrant the board’s attention and will no doubt be an ongoing topic on audit committees because of its impact on bottom line results.

“This requires the involvement of the board to protect shareholder value and is also likely to require companies to work more closely with their local government legislators.”

The report also calls on the government to use forums such as the G7, the G10 and the European Union to build a coalition of countries affected by the same coercive methods.

“Those coalitions could be used to publicly denounce examples of coercion in the same way that it is currently used to attribute cyberattacks, and follow up with countermeasures.”

Meanwhile, the Chinese Ministry of Commerce has opened its second investigation into Australian wine that will investigate any subsidies.

It comes after an anti-dumping investigation was launched on Australian bottles of less than 2 liters imported into China.

Australian Grape & Wine said Monday it will work with winemakers and the Federal Government to ensure that “we cooperate fully throughout the investigation process.”

“China is an important market for Australian wine and our wine is in demand from Chinese consumers,” he said in a statement.

– Additional reports, NZ Herald