Countering Western Sanctions: Building a CES Network by Ye Yan
"After the formation of a CES network, the US will in a sense be ‘digging its own grave’ by [imposing] unilateral economic sanctions.”
Dear Everyone,
Last week, Sinification looked at a recent speech by Yang Ping (杨平), head and editor-in-chief of the influential Beijing Cultural Review (文化纵横). During his address, Yang advocated building a new international system led by countries in the Global South, including China, in response to the divide that increasingly characterises China’s political relations with the West. For those of you who may have missed it, I would suggest simply reading through the first few introductory paragraphs from this post, which should help provide some context to this week’s piece:
Today’s article is entitled “Economic sanctions and international cooperation to counter them” and was published last month in “Foreign Affairs Review” (外交评论), a well-known academic publication run by China Foreign Affairs University. It has since seen been crossposted by a couple of notable outlets including Yang’s Beijing Cultural Review. Its author, Ye Yan (叶研) is a senior economist at the international R&D arm of China National Petroleum Corporation (CNPC) and an adjunct professor at China’s Southwest University of Political Science & Law. The following is a summary of Ye’s arguments:
Summary
· The increasing use of economic sanctions (both primary and secondary) and export controls by the US and its allies pose a threat to China’s economic development.
· The internationalisation of the RMB and boosting the development of China’s tech industry are effective countermeasures that need to be pursued, but they will not protect China in the short-to-medium term.
· Acknowledging that a power gap still exists between China and the US, Beijing should avoid adopting tit-for-tat responses to US sanctions when it can, otherwise it risks harming itself.
· Ye’s solution: Building an international alliance of businesses (hereafter, CES network) that could help neutralise the impact of Western sanctions.
Members: Companies that have already been sanctioned as well as those businesses that are after a “risk premium” and that are not afraid of being sanctioned.
Dynamics: The more the West uses economic sanctions, export controls and other coercive measures, the more businesses from across the world will be encouraged to join such a network and thus the more powerful this network would become.
Advantages:
The CES network would be an inter-business, not an inter-country, alliance. This would help avoid tedious intergovernmental negotiations and the risk of diplomatic clashes.
The network would help shore up supply chains, reduce the isolation felt by sanctioned businesses and provide new opportunities for Chinese businesses to develop and prosper through trading with sanctioned entities both within China and across the world.
It would help enhance China’s global economic and political influence.
The constitution of a CES network could become a “bargaining chip” when negotiating with the US and other Western countries.
In the short term, the establishment of such a network could help prevent a complete decoupling of the US and Chinese economies.
The success of the CES network would blunt Washington’s sanctions weapon and could even lead to the collapse of the US’s global political and economic hegemony.
Disadvantages:
It would take time to develop and would initially require the strong support of governments from across the world.
Its emergence could precipitate the formation of two opposing camps. However, this would be the direct consequence of the US’s own actions (sanctions, protectionism etc.), not China’s.
Additionally: China's non-sanctioned multinational companies should be encouraged to comply with US sanctions, provided that by doing so they are not harming China's core national interests.
A special thank you to Chris R. Lanzit and Dr. Graeme Ford for translating today’s excerpts. Short bios are included at the end of this post.
“The international community today is in the midst of its biggest change in a century. The US and Western countries are engaged in unilateralism. Through the abuse of unilateral economic sanctions and long-arm jurisdiction, they are isolating China and countries friendly to it economically. This affects China's economic development negatively.”
“US sanctions against Xinjiang and other regions have caused significant losses to China's photovoltaic and cotton industries. At the same time, severe US sanctions against countries friendly to China, such as Iran, Russia and Venezuela, have hampered economic exchanges between China and those countries.”
“In response to these challenges, General Secretary Xi Jinping pointed out in his report to the 20th Party Congress that we should improve our national security system and establish mechanisms to counter sanctions, interference and ‘long-arm jurisdiction’ [‘长臂管辖’] on the one hand, while promoting a high level of openness to the outside world and building a new ‘dual-circulation’ economic development structure on the other.”