The New Era of Economic Statecraft in Asia and Latin America

Session Submission Type: Full Paper Panel

Session Description

The early twenty-first century has seen the erosion of global economic governance norms and cooperation guarded by traditional Western democratic powers. This decline has been accelerated by the rise of isolationism, nationalism as well as populism, and supported by politicians who disparage international organizations and perceive international relations in zero-sum terms. The burning question today is not whether, for example, China and Russia might undermine global liberal internationalism, but instead whether its previous stalwarts such as the United States will continue to view a relatively open global economy as a positive-sum public good worth investing in. In this international environment, it is natural that emerging players, including a rising China but also other emerging and traditional powers, will engage increasingly in classic forms of economic statecraft, in either old or new policy venues.

This panel investigates the rise of economic statecraft outside the traditional Western powers: in the Asia Pacific, South Asia, and South America. Collectively, our four papers examine economic statecraft in multiple policy arenas, including the climate regime, trade, and international investment. What we find is that powerful national governments today manipulate international economic decisions to achieve relative gains vis-à-vis other states. Other states, in turn, believe themselves fully justified in retaliating and competing with similar policy approaches. These outcomes undermine international economic cooperation and governance.

The first paper, by Jessica Liao, explores the ways in which China, Japan, and other East Asian governments have reacted to the Paris Climate Accords of 2016 by sending their most polluting industry, namely, the coal power sector, overseas and subsidizing this expansion abroad. The new element in the story Liao recounts is the degree to which the Japan-China competition to send unwholesome industries abroad is driven not only by private business interests, but also by direct foreign policy competition between these two rivals for geostrategic primacy in East Asia. Meanwhile, the integrity of the global fight against anthropogenic climate change is undermined.

The second paper by Kevin Gallagher and Bo Kong also examines China’s coal industry, focusing on the global and domestic nexus of China’s incentives to invest in coal fired power plants globally. By examining both domestic push factors of excess capacity, product cycles and domestic social costs as well as global pull factors of power generation, the paper draws an ironic conclusion: national commitments to curb carbon emissions often have significantly negative international spillovers and high social costs for the global economy.

Our third paper, by Mingmin Yang, closely investigates a particular tool of international economic statecraft, one which is available only to an authoritarian state with relatively tight control over the media in its home territory. Yang details several instances of trade and/or geopolitical conflict between China and other states, including Japan and South Korea. In each case, the Chinese central government has been able to orchestrate consumer boycott campaigns of imported goods from the foreign target state, using these boycotts as a weapon to pressure the target for concessions. Somewhat remarkably, his research suggests that the state-run media also has been somewhat successful in stopping a boycott, once it has begun, by altering the portrayal of the foreign state or its imports in the media. His paper thus touches on important themes of political communication and non-tariff barriers to trade, as well as on a significant technique of economic statecraft.

Leslie Elliott Armijo’s paper, the panel’s fourth and final, focuses on states who are the recipients of economic statecraft by others, and who seek ways to defend themselves against it. Armijo investigates the experiences of Brazil, Argentina, Pakistan, and India. Her analytical framework begins with an urgent problem shared among most developing and middle-income countries: the need for large sums of long-term (“patient”) capital for investment in physical infrastructure, from roads, to ports, to urban water and sanitation systems. While some capital may be raised domestically, most countries also will need to look abroad. Yet every potential source of patient capital brings its own problems. For example, foreign private capital flows, as in the case of Argentina, tend to be pro-cyclical and, when (the inevitable) repayment difficulties arise, subject to endless private litigation. However foreign public flows to emerging economies, once from Western governments and Western-dominated multilateral lenders but today increasingly from China, Russia, Saudi Arabia and the like, bring the classic problems of resisting political pressure from foreign creditor states, whose motives are both commercial and geostrategic, as Pakistan has been discovering in its borrowing from China.

Sub Unit

• DIVISION 12: Comparative Politics in Developing Countries

Individual Presentations

• Economic Statecraft Competition of Coal Financing in Northeast Asia - Jessica Liao, North Carolina State University

• Development Finance and China’s Global Coal Footprint - Kevin P. Gallagher, Boston University; Bo Kong, University of Oklahoma

• Anti-Foreign Boycotts as a Tool of Economic Coercion: The Case of China - Mingmin Yang, University of Southern California

• Sourcing Patient Capital: Lessons from Brazil, India, Pakistan, and Argentina - Leslie Elliott Armijo, Simon Fraser University

Chair

• Saori N. Katada University of Southern California

Discussant

• Ming Wan George Mason University