China’s economic threats haunt the global community

Risks posed by Beijing’s nationalistic foreign policy have forced the United States and its allies to act

Form an orderly queue. The Netherlands has joined a growing number of major democracies by branding China an “economic threat.”

European Union states and other leading nations around the world have been lining up to address the risks posed by Beijing’s nationalistic foreign policy.

Stretched supply lines, digital spying and President Xi Jinping’s military ambitions in the South China Sea have signaled a clear and present danger

“Chinese companies and knowledge institutions sometimes are valued partners for Dutch institutions,” the Netherlands’ General Intelligence and Security Service, known only as AIVD, said. 

“At the same time, the country forms the greatest threat to Dutch economic security,” it added in an in-depth report released earlier this week.

The spying game:

  • A prime Dutch target is the semiconductor equipment manufacturer ASML.
  • It leads the world in producing lithography machines.
  • They are used to make computer chips. 
  • China is the third-largest market for ASML technology.

Great power competition [elevates] the issue of economic coercion.

Shiro Armstrong, of the Australian National University

Between the lines: “China uses both legitimate investments and academic cooperation, as well as illegal [digital] espionage [and] covert investments,” AIVD said.

Delve deeper: “Dutch companies, knowledge institutions and scientists are regularly victims of this,” the intelligence service pointed out.

Big picture: The United States and its allies, including The Netherlands, have restricted exports of advanced chip technology to combat China’s rising military bullying in the region and its coercive economic policy. 

State of play: “Great power strategic competition between [Beijing and Washington] and the rise of an assertive China has elevated the issue of economic coercion on the G7 agenda,” economist Shiro Armstrong, of the Australian National University, said ahead of the Group of Seven advanced nations summit in Hiroshima next month.

Power play: “China has tried to use its economic power to extract political concessions from Japan and other countries, including South Korea, the Philippines, and most recently Australia,” he wrote in the East Asia Forum newsletter this week.

Alternative view: Naturally, Xi’s Communist Party regime offered a different perspective. “While Japan is strengthening the G7’s China containment functions, it is also stuffing the group with its own selfish interests,” state-run Global Times reported today. 

China Factor comment: The economic battle lines have been drawn between autocracy and democracy. It now stretches from the South China Sea to The Atlantic Ocean.