This week, the United States, EU, UK and Canada announced coordinated sanctions against key Chinese officials for human rights violations. This follows U.S. action, as previously reported by Sigma. Notably, for the EU, the move represents the first such action in over three decades against China, which overtook the U.S. as the bloc’s biggest trading partner last month.In return, and as a continuation of its newly launched sanctions scheme, China immediately retaliated with “punitive measures against the EU that [according to Reuters] appeared broader, including European lawmakers, diplomats, institutes and families, and banning their businesses from trading with China.” Following the coordinated move, and in his first visit to NATO, U.S Secretary of State Blinken suggested that China was a “threat to the West but that the US [would] not force anyone to choose sides between Washington and Beijing.” According to media reports, the Secretary “also accused Beijing of undermining the international trading order that the United States and its allies built after World War II.”
Yet, as the United States attempts to rally allies against Beijing and alleged violations, China’s growing influence is proving hard to counter given its economic rise and growing interconnectivity across trade and finance.
And this is nothing new. By 2012, China had become the largest trading partner of 124 countries, well exceeding the comparable figure of 76 for the United States. For example, according to Bloomberg, as the United States seeks to “build a coalition to further punish Myanmar’s generals [with recent sanctions announced], it’s not having much success convincing governments in Asia to follow suit.” Notably, Bloomberg highlights that “China and Thailand alone accounted for about half of Myanmar’s trade in 2019, the latest year for which data is available, with the U.S. and Europe comprising roughly 13%.”
As China’s web of influence grows, and as it mulls a digital renminbi, not only will companies need to make decisions on who they work - and how to make payment - within this new paradigm, but so too will countries, no matter how much assurance Secretary Blinken provides.
An issue that was already complicated has suddenly become dangerously so - and on an issue set that the Chinese government is incredibly sensitive to. China’s foreign minister, in response to the allied action, said, “[The sanctions are] based on nothing but lies and disinformation, disregards and distorts facts, grossly interferes with China’s internal affairs, flagrantly breaches international law and basic norms governing international relations, and severely undermines China-EU relations.” The statement goes on to say, “The [EU] must stop lecturing others on human rights and interfering in their internal affairs. Otherwise, China will resolutely make further reactions.”