Weaponization during Power Transitions

• In Event: The Causes and Effects of China’s Economic Statecraft

Abstract

The weaponization of supply chains has become an essential method of statecraft and economic coercion, especially during power transitions between rising and declining powers. Conventional wisdom assumes that businesses will comply with the state’s agenda during these periods. We challenge such a state-centric approach and investigate how the structural dynamics associated with power transitions shape state-business alignment within the dominating and rising economies. We find that power transitions intensify competition in the international system and increase the possibility of economic coercion, which shapes state-business alignment. Power transitions weaken state-business alignment in the dominant power and strengthen it in the rising power. Due to the higher and lower positions that firms occupy on global value chains, firms’ interest in maximizing absolute gains diverges from or converges with the states’ interest in maximizing relative gains. We illustrate our theory through two case studies: Britain’s blockade on Germany in the early twentieth century, and the “tech war” between the U.S. and China in the contemporary period. By advancing a structural theory of state-business alignment, we integrate research on power transition theory with scholarship on economic statecraft and global value chains.

Authors

• Ling Chen, Johns Hopkins University

• Miles Evers, University of Connecticut