This article is an excerpt from the preface of my new book "Sanctions and Economic Warfare."
The 21st century is a golden age for the study and practice of sanctions and economic warfare.
Globalization has deepened, forming a complex and asymmetric interdependence among countries, which provides a favorable condition for the application of sanctions and economic warfare.
For sanctions to be effective, there must be significant and asymmetric economic interdependence between the country initiating the sanctions and the target country.
In today's world, apart from a few exceptions like North Korea, the welfare and livelihoods of most countries are closely linked to fluctuations in the world market. The majority of goods and technologies consumed by people are provided by supply chains mainly located in East Asia, North America, and Europe. Most industrial products contain knowledge innovations from researchers in Asia, America, and Europe, the labor of workers in China, Vietnam, Mexico, and Central and Eastern Europe, as well as natural resources from Africa, Asia, and Latin America. This global production network forms a value chain with a clear center-periphery relationship and serious asymmetry: the central countries are not only much wealthier than the peripheral countries, but also far more stable. Without the raw materials provided by a peripheral country, central countries can quickly develop alternatives or just temporarily tolerate limited inflation; while the peripheral countries, with relatively simple economic structures, may rapidly fall into economic depression and high inflation and unemployment caused by currency devaluation once they lose capital, technology, and markets provided by the central countries, thus facing political unrest or government collapse.
Furthermore, due to the network effects brought about by this division of labor system, the sanctioning and economic power of the central countries over the peripheral countries not only comes from the capabilities and resources of the central countries themselves, but also from the capabilities and resources of many countries around the world, including parts of the capabilities and resources of the sanctioned country itself. Therefore, in today's highly developed globalization, the possibility of sanctions and economic warfare has reached an unprecedented level.
During the period when this book was being conceived and written, globalization had already entered a downward phase.
Similar to the previous downward phase between 1914-1945, the characteristics of today's era are decoupling and disconnection rather than further strengthening of specialization, fairness, security, and resilience taking precedence over efficiency, and populist waves and nationalism rising rather than rational, calm, open, and inclusive voices dominating. For this reason, the report of the 20th Party Congress emphasizes the dangers and challenges of the turbulent and changing period.
During the downward phase of globalization, international and domestic conflicts and contradictions are increasing, but the level of mutual dependence among countries remains high. Transforming the mutual dependencies formed during the open integration era into weapons and sources of power has become an important feature of this era. The weaponization of the economy, or the weaponization of mutual dependency relationships, is one of the important characteristics of the post-globalization era. Of course, this is also a temporary phenomenon. The use and abuse of sanctions and counter-sanctions will continue to destroy national mutual dependencies and divisions. Once the enemy countries no longer depend on each other, or their dependency ratio decreases significantly, the space for sanctions and economic warfare will correspondingly shrink. In this international situation, how small and medium-sized countries respond to sanctions and threats from other countries, and avoid becoming collateral damage in the economic warfare of major powers, has increasingly become an important topic that these countries' politics and academia need to study.
For China, research on sanctions and economic warfare also has obvious urgency and strategic importance. China is currently facing suspicion, suppression, and encirclement from the United States and its allies. With the intensification of political, economic, and strategic competition between the United States and China, what is now limited sanctions targeting specific companies, high-tech sectors, and political figures could potentially develop into comprehensive sanctions and economic warfare. How to deal with the escalating sanctions and economic warfare has become an urgent issue in China's foreign economic policy-making.
Moreover, in the process of re-entering the center of the world stage, China has gradually realized its practical needs to safeguard its political, economic, and strategic interests within the global system, and also needs to develop and choose appropriate foreign policy tools. Due to China's commitment to peaceful rise and preference, as well as the relative lack of soft power in its voice on the world stage, in the foreseeable future, China's foreign policy tools will mainly be economic means rather than war or propaganda.
Over the past four decades, Chinese academia has conducted extensive research on cooperative and mutually beneficial foreign economic policies such as trade, investment, and aid. However, research on sanctions and economic warfare has been relatively insufficient. This is not only because of the interdisciplinary nature of knowledge supply, but also because before 2017, the Chinese government and society lacked demand for studying this issue. The U.S. tariff and technology wars against China during Trump's previous term quickly awakened China and created a huge demand for knowledge on sanctions and economic warfare. Renowned strategic historian and former State Council advisor Professor Shi Yinhong mentioned during his retirement banquet that, when discussing sanctions and economic warfare between the U.S. and China, he said seriously to the author of this book: "Empire is learned." Under the U.S. sanctions, the Chinese academic and policy circles finally realized the importance of theoretical research and practical exploration of sanctions and economic warfare, realizing that learning this "governance technique" of empire and "learning the strengths of others to counter them" is actually a necessary course for the Chinese nation to return to the center of the world stage.
Establishing a Chinese model of sanctions and economic warfare theory, or more accurately, the theory system of "Renmin University School" of sanctions and economic warfare that the author of this book tries to build, is feasible, and a very important reason is that the American academic community represented by Gary Clyde Hufbauer's team has a relatively serious defect in the sanctions knowledge system.
First, this defect is reflected in the misunderstanding of the "effectiveness" of economic sanctions. The mainstream of the American academic community has fallen into the mystique of scientism, especially statistical methods, and is obsessed with using counting and division to discuss the effectiveness of sanctions. The author of this book believes that evaluating the effectiveness of sanctions should include implemented sanctions, public threats to implement but not implemented sanctions, and private threats in formal and informal diplomatic settings. If a sanction is implemented but does not change the behavior of the target country, can we call this sanction a failure? Probably not, because it may have deterred the target country from further actions, or deterred similar actions by third parties, and may have made the sanctioning party's future threats more effective and credible.
Secondly, in terms of disciplinary perspectives, the American academic community is generally constrained by a purely economic perspective, focusing mainly on economic welfare, but the policymakers of sanctioning policies are political animals, who mainly consider political interests rather than economic welfare. Although the implementation of sanctions may damage part of their own economic interests, if the diplomatic goals are ultimately achieved, the gains in power are huge.
Therefore, the author of this book advocates that political power is the goal; sanctions are a political game played on the economic board. It should mainly be discussed from the political logic; economic and trade investment and financial capital flows are means. Using indicators such as GDP, trade volume, and number of patents to compare which country is stronger, or calculating the gains and losses that sanctions can bring, is not only not reflecting the essence of understanding sanctions and economic warfare, but may even be misleading.
Sanctions and economic warfare as an interdisciplinary discipline lie between science and art, with both objective and subjective characteristics. On the one hand, it has objectivity and interdisciplinary characteristics, requiring an understanding and grasp of general laws in political science, economics, and strategy; but on the other hand, it is a game and struggle between people, and as participants, real people are constantly learning, thinking, and reflecting. The cognition of the research object and the dissemination of knowledge itself can change the research object, a characteristic that repeatedly appears in scenarios of human interaction and competition, such as in wars and financial markets. The famous investor and political donor George Soros has continuously defeated the global financial market by understanding the "reflexivity" mechanism of human society, thereby gaining huge wealth. In the field of social sciences, knowledge and behavior constantly shape and negate each other, and continuously evolve, which is the difference between social sciences and natural sciences, as well as their unique charm.
In the historical and real-world case studies, a large portion of the content is concentrated on showcasing several classic cases of sanctions and economic warfare from ancient and modern times, both at home and abroad, and using these cases to test the theoretical hypotheses derived from previous thought experiments and logical deductions. Cases cover the economic strategies of the Han, Song, and Ming dynasties towards local regimes, the Continental Blockade system during the Napoleonic Wars, sanctions and economic warfare during the two World Wars, the economic warfare of the United States against the Soviet Union during the Cold War, the sanctions against several Middle Eastern countries by the United States, and the role of sanctions and economic warfare in the Ukraine-Russia conflict. At the same time, this book will also discuss several important issues in the field of modern sanctions and economic warfare, such as cases involving chips and the SWIFT system.
Finally, based on the rejection and inheritance of Western sanctions and economic warfare theories, we need to build a Chinese model of sanctions and economic warfare theory system according to China's current practical experience. Since the 2008 international financial crisis, the anti-globalization trend has led to the rise of trade protectionism and the intensification of trade disputes, and China has been passively involved in the storm center, thus accumulating rich experience in sanctions and economic warfare.
Although we subjectively believe in the vision of global development based on mutual benefit and reciprocity, objectively, China has already deeply participated in the intense economic games in the current "age of great competition."
On one hand, the global capitalist market system dominated by the West is splitting, and regionalization or hemisphericization has become a new feature of the world economy. Comprehensive containment of China's rise has become a consensus between the two parties in the United States, and economic sanctions are seen by the U.S. elite as the main weapon to pressure China. Our competition with Europe and Japan and South Korea in industry is becoming increasingly fierce, and their key industries such as automobiles and semiconductors are being replaced by Chinese products of better quality and lower prices. The era when the Western market equaled the world market has long passed, and the historical process of the remaining more than 5 billion people outside China and the West moving toward modernization will create an unparalleled massive market. In the future, the two market systems centered on China and the United States will develop in parallel, while also colliding and friction, leading to intense competition.
On the other hand, the geopolitical disputes, starting with the Ukraine-Russia conflict, have triggered increasingly frequent and intense sanctions and economic warfare. China can learn from the sanctions measures and countermeasures taken by both the U.S. and Europe and Russia, summarize experiences, and enhance the ability to ensure economic security. The Ukraine-Russia conflict has significant implications for the study of sanctions and economic warfare, serving as a valuable window to observe modern great power economic warfare, helping us dispel outdated misconceptions. For example, after the U.S. and Europe seized and froze Russian government and civilian overseas assets, we should think about whether China's vast amount of U.S. Treasury bonds are a weapon to defeat the enemy or a vulnerability threatening economic security.
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