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Q&A: Bethany Allen-Ebrahimian Explains How China Weaponized Its Economy
In a new book, Axios' China reporter details how major U.S. companies have been forced to play by Beijing's illiberal rules -- and what the U.S. could do about it.
Bethany Allen-Ebrahimian is the China reporter at Axios based in Taipei, Taiwan. She is the author of the new book, Beijing Rules: How China Weaponized Its Economy to Confront the World. In the book, she reports on how the Chinese Communist Party co-opted capitalism to expand its illiberal influence worldwide.
Before joining Axios in 2019, Allen-Ebrahimian reported for the International Consortium of Investigative Journalists' China Cables project, a major leak of classified Chinese government documents revealing the inner workings of mass internment camps in Xinjiang. She was also a staff editor and contributing reporter for Foreign Policy Magazine. In 2019, the Chinese government denied her a journalist visa to report inside the country. She speaks and reads Chinese fluently and lived in China for four years. Allen-Ebrahimian and I spoke by phone over the weekend; our conversation follows, condensed and edited for clarity.
Luke Johnson: The subtitle of your book is How China Weaponized Its Economy to Confront the World. What do you mean by that?
Bethany Allen-Ebrahimian: The book is about how the Chinese government has come up with innovative tools for selectively controlling and denying access to its economy in order to shape the behavior of individuals, governments, institutions, and companies to bring their behavior more in line with the Chinese Communist Party's illiberal and authoritarian goals.
LJ: Can you give an example?
BA-E: The most obvious one is the NBA example. In 2019, Daryl Morey, the general manager of the Houston Rockets, tweeted in support of the Hong Kong protests. As a result of that tweet, the Chinese media stopped streaming NBA games and Chinese e-commerce sites stopped selling Houston Rockets swag. It's estimated that the NBA lost about $200 million in revenue.
Many different U.S. companies have censored within the Chinese market. For example, starting in 2014, LinkedIn began censoring the profiles that were visible in China. Their operations were insufficiently profitable, and they ended up withdrawing from the China market entirely [in 2021]. The Chinese government forces companies to control not just their speech, but increasingly other kinds of decisions to bring them in line with their core interests.
LJ: Why did you write the book?
BA-E: I was tired of people simply resorting to naming and shaming Western companies for caving to the Chinese Communist Party. The way I see it, companies are just engaging in the behavior that the West has trained them to behave for the past 40 years, which is to maximize profits in line with law. Milton Friedman's message was that the social responsibility of companies is to maximize the profit for their shareholders. It doesn't make any sense to suddenly say to companies, how dare you maximize your profit within the Chinese market?
If we want U.S. companies to bring their behavior more in line with democratic values, then we need to change the way that we have organized our economy and place democratic guardrails on economic behavior, rather than simply relying on companies to act morally when we don't expect them to do that in other realms.
LJ: Part of your book is how Western governments were caught napping on this threat. How good of a job would you say the US government is doing with economic coercion now coming from China?
BA-E: Slightly better. There is now a way to talk about this; five years ago, the term economic coercion wasn't even in the common vocabulary. At the G7 this year, there was a joint statement about economic resilience in the face of China's economic coercion, calling for joint action to help countries become more resilient. While that collective action has not yet been taken, there's a growing awareness that it's necessary.
The U.S. has worked on diversifying supply chains and friendshoring. Now, I think the U.S. has done this more out of national security, but it has the same effect: if a company doesn't view the Chinese market as absolutely vital to its survival, then it gives the Chinese government less leverage over their decisions.
The U.S. government has done very little on directly countering economic coercion. The most effective way to do that is through collective action. There's one particular mechanism that multiple people have called for: an economic Article 5 or an economic NATO, where a group of like-minded democracies come together and agree that if one industry or company faces economic coercion, they would have an agreed upon set of reactions that would immediately occur, to support that country or that industry, and also to punish the Chinese government for those actions.
This [potential] economic coercion would challenge democratic norms, reducing the freedom of democracies to act and speak in a way that's consistent with their values. There isn't any kind of mechanism to support U.S. companies that are facing Chinese coercion. One can imagine emergency aid for a company that is suddenly shut out of the Chinese market because of something they have done that is consistent with democratic values, such as speech or behavior. Facing revenue loss, they could apply to the U.S. government for emergency assistance.
There's a whole domestic set of reforms that would seek to restore democratic values to economic behavior. That's far more difficult to achieve in the U.S., because of our highly polarized political environment.
LJ: Can you give some examples?
BA-E: Several. One would be to get money out of politics by campaign finance reform, overturning Citizens United, creating a public option for campaign finance, or requiring that all campaigns be publicly financed. This seems laughable in the current U.S. political context, but I think it's important that we say these things out loud -- other countries have them -- and that the U.S. could and should adopt.
The reason for getting money out of politics matters is a very simple equation. I'm not saying that Beijing is buying U.S. politics. Rather, if many U.S. companies are dependent for their profits on the Chinese government allowing their access to the Chinese market, if that is a big motivating factor of how U.S. companies relate to politics, and they use that wealth to influence U.S. politics in one direction or another, then they are motivated out of self-interest to ensure that U.S. policies are nicer to China.
I also think that every state in the U.S. should enact a state version of the (federal) Foreign Agents Registration Act (FARA), which requires that any person or entity who is acting on behalf of a foreign government register and file mandatory disclosures. It doesn't prohibit that activity; it simply makes it transparent. As an investigative journalist, I have used FARA a lot. It brings more transparency to lobbying efforts. I have 14 separate recommendations in my book for U.S. domestic reforms.
LJ: How has your thesis about economic coercion been affected by the slowdown in the Chinese economy?
BA-E: People have asked me that question. I think that it goes hand-in-hand with my assessment of China's current economy. The Chinese economy will remain very strong and large for a long time to come. I don't think that China's economic coercion is going to cease as a policy or become less effective than it has been. I think there's some wishful thinking on the part of people in the West that the Chinese economic model is finally showing itself to be mortal like [others], which is true. But it's still three-quarters the size of the U.S. [economy] and growing at least a 4.5 percent rate. I think that the sense that this [slowdown] is going to diminish China's geoeconomic power is overblown, unfortunately.
LJ: China had widespread protests last November over the COVID lockdowns and the government ultimately relented, what do you think is the lasting effect of those protests?
BA-E: I don't know if the protests themselves have had a particularly lasting effect. I think the cause for the protests is what has had a lasting effect. Previously, there had been this very widespread belief in China, that, yes, they didn't have as many freedoms as some people in the world, but they had economic prosperity. They trust the Chinese Communist Party to give them better lives. That sense of trust was totally shattered during the zero COVID policy. While I don't think that is a deathblow to the Chinese regime by any means, I think it will take many years for that trust to be restored, if it can ever be.
LJ: Looking ahead to the U.S. presidential election, what policy changes would you expect to see if Donald Trump were reelected president again.
BA-E: My biggest concern if Trump were re-elected is not so much his specific foreign policy towards China, but that the U.S. would descend into a kind of political warfare that would deeply distract the U.S. from any kind of major foreign policy initiatives. I think that it would give the Chinese government lots of opportunities to continue to press its authoritarian vision on the world and to continue to constrain Taiwan's ability to interact on the international stage.
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