Happier times: Mike Pompeo, who as Secretary of State met with China's State Councillor Yang Jiechi in Beijing in 2018, has been banned from the country.

Happier times: Mike Pompeo, who as Secretary of State met with China's State Councillor Yang Jiechi in Beijing in 2018, has been banned from the country. Daisuke Suzuki /Pool/Getty Images

Beijing’s Warning Shot to Biden

U.S. policymakers must begin treating sanctions by other countries as a serious national security threat.

Last Wednesday, as President Joe Biden was delivering his inaugural address on the steps of the U.S. Capitol, the Chinese government delivered a parting shot to the Trump administration: sanctions against 10 of its former senior officials, including Secretary of State Mike Pompeo and National Security Advisor Robert O’Brien.

Dubbing these officials “anti-China politicians” with “no regard for the Chinese and American people,” Beijing barred them and their families from visiting China, and prohibited companies and organizations associated with them from doing business in China. This is not the first time the Chinese government has imposed sanctions against U.S. officials. But these measures stand out for their ambition, targeting the most senior U.S. national security officials and handing U.S. companies a stark choice: break ties with the sanctioned Americans or jeopardize access to the Chinese market.

The move was not just a parting shot but a warning shot to the incoming Biden administration. The message: Aggressive policies toward China will be met with repercussions.

The Biden administration should take this move seriously. Gone are the days when the U.S. government could levy sanctions indiscriminately and expect no meaningful blowback. This should not deter the Biden team from pursuing a hard-nosed policy toward Beijing. Rather the lessons are that sanctions should be used judiciously and seldom, if ever, unilaterally; and that Washington must harden its defenses against sanctions levied by China and other countries.

China’s recent move did not appear out of thin air. Over the past few years, Beijing has worked hard to build its own legal and regulatory regime to counter U.S. sanctions and other tools of economic statecraft such as export controls. As the United States has honed its use of investment restrictions, export controls, and sanctions against China, Beijing has developed new tools and updated existing regimes to retaliate against U.S. individuals and companies for complying with U.S. regulations—all while implementing new strategies to reduce dependence on Western economies.

In just the last year, Beijing has accelerated this transformation by passing a new Export Control Law, updating its catalogue of prohibited and restricted export technologies, and creating an Unreliable Entity List. Taken together, these overhauls signal the creation of a more robust regulatory regime that Beijing can use to deploy against foreign companies and individuals at any point.

China has also made clear that it is prepared to force foreign entities to choose between doing business with the United States or China. On January 9, the Ministry of Commerce issued its first directive of 2021, which underscored that Beijing will prohibit firms from complying with any foreign rules or regulations that restrict transactions with Chinese firms. This is a shot against U.S. secondary sanctions, which pressure companies in third countries to cease business with sanctioned entities.

The expansion of Beijing’s claims of jurisdiction over foreign firms is not new. Article 32 of its new Export Control Law affirms that any company or individual, in any global jurisdiction, that endangers China’s national security will be held legally liable within China.

The sanctions against the former Trump officials seem severe. But there is still some uncertainty about how these sanctions will be enforced beyond visa restrictions. How Beijing will, or even if, punish companies associated with these individuals and those previously threatened with sanctions remains unclear. Opaque threats with mixed enforcement is keeping in line with China’s previous use of coercive economic measures. Beijing selectively implements its threats through informal processes to scare companies into complying with its requests all the time. However, China has also clearly stepped up the frequency and intensity at which it sanctions foreign countries and companies. For instance, in a dramatic escalation against a U.S. ally, Beijing placed restrictions on Australian imports due to Canberra’s calls for independent inquiries into the origin of COVID-19 and Chinese interference in Australian politics, which are estimated to have cost Australia $3 billion in 2020.

With last week’s sanctions, Beijing is seeking to use its economic might to conscript U.S. businesses into blacklisting American citizens. For many U.S. and foreign corporations that might otherwise recruit former high-level U.S. government officials, the benefits of employing Mike Pompeo won’t be worth the risk of losing access to the Chinese market. Consequently, the measures could make Pompeo and the other nine individuals radioactive, curtailing their future employment prospects.

Not everyone will shed a tear for these erstwhile Trump administration officials. But in wielding these new sanctions against members of the outgoing cabinet, Beijing is demonstrating that they can be used against any American individual or organization that infringes upon its interests. It calls to mind the Chinese government’s actions against the National Basketball Association in October 2019, after then-Houston Rockets General Manager Daryl Morey tweeted an image supporting pro-democracy protestors in Hong Kong. Following the tweet, China’s state-run television station stopped broadcasting NBA games, and Chinese companies cut ties with the league. All said, Beijing’s actions cost the NBA hundreds of millions of dollars.

These episodes demonstrate that U.S. policymakers must begin treating sanctions by other countries as a serious national security threat. Historically, U.S. officials have viewed the use of sanctions as virtually costless. The size and reach of the U.S. economy—and the strength of U.S. legal regimes—gave Washington so much asymmetric leverage that it rarely worried about what countries targeted by sanctions might do in retaliation. For instance, when the United States and the European Union imposed sanctions against Russia following its 2014 invasion of Ukraine, Moscow responded by slapping a ban on Western agricultural products. European farm producers quickly adapted and found alternative markets. Russian consumers, meanwhile, suffered as they were forced to consume “Russky Parmesan” and pay premium prices for genuine European foodstuffs re-exported via third countries. Along with more recent Russian actions, including barring certain EU officials from traveling to Russia in response to a fresh round of sanctions related to the poisoning of Alexei Navalny, the Kremlin’s countersanctions have done more to underscore Russia’s weakness than impose serious costs on their targets.

During the Trump administration, Washington did not shy away from hammering China with economic sanctions. Nevertheless, Beijing’s response was restrained. Previous sanctions threats were limited to U.S. companies that sell arms to Taiwan. These threats, however, have largely been seen as empty as the majority of the companies in question already limit their business with China and there was no follow-through from Beijing. Even as Beijing’s U.S. targets have become more high profile—including the sanctions placed on multiple U.S. senators and Congressional committees last summer over Hong Kong sanctions—the only clear implementation of these measures were visa restrictions against the members of Congress and their staff.

But the Inauguration Day sanctions may signal the dawn of a new era for U.S. sanctions policymakers. With Beijing’s new economic arsenal and increasingly aggressive foreign policy, U.S. sanctions policymakers will need to take potential retaliatory measures from China more seriously when deciding to impose new sanctions on Chinese entities and officials. Within this changing calculus, sanctions policymakers will not only have to think carefully about offensive policies but also how to defend against potential vulnerabilities inherent in intertwined supply chains.

In taking action in the minutes after Biden was sworn in as president, Beijing clearly meant to send a message. It may have even intended to intimidate the incoming team, underscoring that hawkish policies will not come cheap. To be sure, the Biden administration should maintain its resolve, and pursue the smart and tough approach toward Beijing highlighted by Secretary of State nominee Tony Blinken in his recent confirmation hearing.

At the same time, the Biden administration should view Beijing’s actions as a lesson that U.S. sanctions are not cost-free—and therefore, they should be used thoughtfully. Reports that the Biden administration intends to conduct a top-to-bottom review of U.S. sanctions programs bode well on this front. The same goes for plans to work in concert with allies on China policy.

But the Biden administration should go a step further, too. It should bolster American defenses against other countries’ sanctions. That means increasing intelligence collection on foreign sanctions policy and proactively identifying vulnerabilities in the U.S. economy that could become the target of sanctions. And it should rally U.S. companies to forge a united front against China’s economic aggression. Such a public-private network would share concerns about Chinese strongarm tactics and activate to respond collectively when necessary.

It may be difficult for any one company to stand up to the Chinese government. But if the Biden administration can bring firms together to speak with one voice, it is much likelier to register in Beijing.

Edward Fishman is a former member of the U.S. Secretary of State’s Policy Planning Staff. He is a nonresident senior fellow at the Atlantic Council and an adjunct fellow at the Center for a New American Security. Follow him on Twitter @edwardfishman

Ashley Feng is an independent analyst focused on U.S.-China economic statecraft. She previously was a research associate at the Center for a New American Security.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.