Has China's Xi Jinping been bullying South Korea's President Moon Jae-in?

When North Korea rattles its saber too loudly, like a good ally the United States sends F35 fighters and B1 bombers over the peninsula to reassure South Korea. But when adversaries use economic bullying of American allies they are on their own.

China has used this tactic against South Korea since Seoul agreed to install a THAAD missile defense system a year ago. The Lotte group that provided the land for the missile batteries has since shuttered stores in China after being hit with so-called ‘fire safety’ violations. Lotte recently announced it may sell all its stores in China.

Chinese tour groups have mysteriously stopped coming to South Korea, and Hyundai motors has had ‘trouble’ with its local Chinese partner with sales dropping precipitously. Many other South Korean companies have been hit, along with the South Korean economy.

China would have the world believe this is simply coincidence, or just spontaneous resentment by Chinese consumers. It’s not. It is Beijing’s  modus operandi – using commercial intimidation to get its way on political and security issues.

We’ve seen this before. After the Scarborough Shoal, South China Sea,  dispute with the Philippines in 2012, China halted banana imports from the Philippines owing to sudden ‘health’ concerns.

And in 2010 when the Japanese Coast Guard seized a Chinese fishing boat that rammed a coast guard vessel near the Senkaku islands, China cut off exports of rare-earth minerals to Japan (and the US and EU).

Beijing claimed it didn’t have enough of the materials used in high-tech manufacturing for its own companies. The Chinese government even drummed up riots against Japanese businesses in China. (The World Trade Organization later ruled the rare-earth export bans illegal.)

Australia is routinely threatened with commercial punishment if it sides too closely with the US on South China Sea issues and other regional defense matters.

And the list goes on

Beijing’s measures work by inflicting pain on a identified constituency (local businesses) who might then lobby their government to back off, and scare other companies and even countries into obedience.

Even better, China doesn’t use sanctions but mundane bureaucratic tools that attract no international or US criticism – though they should. The measures can be turned on and off like a light switch.

This Chinese economic assault and battery elicits a puzzling lack of reaction from the United States.

This Chinese economic assault and battery elicits a puzzling lack of reaction from the United States.

To the extent the Americans do nothing to assist friends, it creates friction and even resentment at being left to fend for oneself, despite being a loyal ally.

A US administration needs to finally recognize Chinese economic coercion for what it is. War by another name, and efforts to obtain strategic and tactical military advantage while splitting US alliances.

A response to Chinese commercial intimidation should be planned in advance with allies and measures put in place to make up for the harm done. This might include easier access to US markets for certain products by raising or eliminating important quotas or tariffs, temporarily or permanently.

Also, retaliate against Chinese entities selling in the local and US markets for such overt and politically motivated damage to commercial interests.

Consider asymmetrical responses that are within bureaucratic or administrative purview, such as indefinitely delayed visas for CCP elite, revoked green cards, liens on bank accounts, taking 30 days to clear Chinese ships entering US ports owing to ‘health and safety concerns’ or intellectual property issues.

Governments spend years protesting standards, technical barriers to trade, and other far less explicit cases of discrimination and economic aggression, but do nothing against China’s blatant economic warfare intended to weaken alliances and national defense.

The US needs to get moving

In South Korea’s case, Chinese economic pressure should have been anticipated and a set of trade and economic support measures readied to make up for the damage caused.

Also, the Trump administration might have considered a few high profile activities touting the US-Korea Free Trade Agreement. Or perhaps encouraging a visit by US private investment groups to Seoul to investigate investment opportunities might have reassured South Koreans of American commitment.

Instead, South Korean President Moon Jae-in got a lecture over steel and the US’s unilateral intent to renegotiate its trade agreement with the country. What he needed to hear, instead, were words (or better yet, actions) that spelt out: “we’ve got your back.”

The US needs to look after its friends not just when they are attacked with rockets and bombs. Economic attacks are directed towards the same end without the shock and awe.

America’s current stance is akin to a big-brother promising to defend his younger brother if bullies attack him with clubs, but standing by if they just twist his arm until he hands over his lunch money.

What’s required in both cases is a solid punch in the nose.

Grant Newsham is a Senior Research Fellow at the Japan Forum for Strategic Studies

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