Geopolitical competition between the United States and China has led to an increased reliance on economic statecraft. In this context, understanding the conditions that trigger trade, aid, or investment weaponization becomes crucial. This article examines how the United States has employed economic statecraft in response to Latin American countries’ engagement with China. The study revisits the theoretical debate on positive and negative economic statecraft and proposes a mechanism that identifies the conditions under which “carrots” or “sticks” are more likely to be employed. We argue that the US response towards Latin American countries’ engagement with China tends to prioritize economic engagement over economic coercion, particularly when dealing with countries that are politically and economically aligned with Washington policies. To test our argument, we adopt a mixed-methods approach. First, we conduct a case study analysis on the United States-Panama relationship. Second, we perform a statistical analysis to assess the impact of economic engagement with China on the allocation of American foreign assistance in the region.

This paper explores the motives and mechanisms behind data localization implemented by states to protect data, which is essential to emerging technologies such as Artificial Intelligence. Despite the significant negative aspects of data localization for states, the practice has become increasingly prevalent, leading to the unexplored question of why states choose to implement it. This suggests that data localization is a form of economic means derived from digital technologies and employed by states to serve political objectives. Focusing on the data in platforms, the theoretical mechanism of data localization is captured in light of two factors: network perception and security externality. Network perception pertains to a state’s perception of the positive network effect generated by platforms, while security externality refers to a state’s consideration of the security implications in relation to the economic benefits derived from the positive network effect, serving the national interest in domestic and/or international contexts. To substantiate these theoretical propositions, the paper employs a comparative case study approach where Vietnam, Singapore, and Indonesia have been chosen as empirical cases based on the selection strategy. The paper bridges the concept of economic statecraft with digital technologies, fosters interdisciplinary discussions, and offers policy implications.

Faced with a changing geopolitical environment, the European Union has embarked on a legislative program to upgrade its unilateral trade instruments toolbox. By reforming existing instruments—for example, anti-dumping—and by adding new instruments to the European Commission’s toolbox (foreign subsidies instrument, international procurement instrument, anti-coercion instrument, and others), the EU legislature is significantly strengthening the position of the Commission in the governance of unilateral trade policy in the EU. This development raises accountability questions. By means of a comparative analysis of democratic accountability in unilateral trade policy in the United States and the EU, I describe this transformation of executive power in the EU and I argue that a further strengthening of democratic accountability mechanisms is needed to match the Commission’s growing responsibilities in this underexamined corner of EU trade policy.

Chinese cross-border investments are often assumed to be state driven and a tool of Beijing's economic statecraft. However, corresponding evidence remains inconclusive. This article examines mainland Chinese direct investments in Taiwan and finds that they are not particularly effective tools of economic statecraft. Their excessive politicization and the sheer possibility that investments could be used for Beijing's economic statecraft resulted in a considerable pushback by Taiwan's government, bureaucrats and civil society against large and sensitive investments. The agency enjoyed by Taiwan hindered Beijing from deploying cross-Strait direct investments for political purposes, and Beijing has not openly promoted or supported such investments in Taiwan. Moreover, cross-border direct investments are by nature less exploitable for political purposes because they involve company-level commercial and entrepreneurial decisions. This sets them apart from other forms of economic statecraft, such as sanctions or trade restrictions, where the state has greater influence. Mainland Chinese companies have had limited commercial interests in Taiwan, and the investments that have been made there do not appear to have triggered significant political or security externalities. These findings suggest more generally that foreign direct investment might not be particularly effective as a tool of economic statecraft.

This article develops a conceptual framework for explaining variation in the United States’ economic statecraft in the Cold War and the present day, focusing on how US officials perceived the type of geoeconomic capability that its rivals possessed and the type of national security challenge that they posed. This framework specifies four ideal-type strategies on the part of the United States: economic containment, national economic competition, technological containment, and national technological competition. Analyses of U.S. strategy toward the Soviet Union, China, and Japan support the theory. These ideal types explain why, in the rivalry with Japan in the 1980s, the United States openly engaged in competition but did not adopt containment, relying on Voluntary Export Restraints, currency devaluation agreements, and bilateral semiconductor agreements rather than placing Japan on something historically analogous to the Commerce Department's contemporary Entity List or targeting Japan with comprehensive export controls through an institution like CoCom. These ideal types (and the theory behind them) also explain why the United States has implemented containment measures against specific Chinese companies but has not pursued a systematic “decoupling” of the US and Chinese economies.

The Belt and Road Initiative (BRI), and China's state-led model for economic globalization more generally, have attracted controversy: Are state-led overseas investment and lending driven by strategic motives or market rationale? How have the recipient economies reacted to the influx of Chinese capital? This special issue sheds light on these questions by first outlining the fragmented state system driving the BRI, a system featuring both Beijing's strategic logic at the top and market considerations in policy implementation. The role of the state is unpacked further in China's globalizing coal industry and in the growth of Chinese industry export to BRI countries. Finally, the issue explores the mechanisms behind public backlash and political pushback facing China in Zambia and Australia. As the COVID-19 pandemic continues to shift China's relationship with the world, this special issue contributes to a more nuanced understanding of the modus operandi of Chinese capital going global.

With the globalization of Chinese capital, economic statecraft has become an increasingly prominent component of China's foreign policy. In this article, I examine China's use of economic inducements in developed democracies, a topic of growing concern for policymakers, focusing on the case of Australia. I show how Beijing's attempts to coopt public voices and influence Australia's foreign policy using non-transparent political donations and academic funding generated a strong backlash. At the same time, economic interdependence has provided a buffering effect, with key domestic actors in Australia advocating for cooperative relations, although this effect can in turn be limited by Beijing's coercive economic tactics. My findings underline the reputational costs of certain approaches to economic statecraft, the value of building supportive coalitions, and the challenges faced by China's authoritarian state capitalist model. They also highlight the impacts of globalized Chinese capital in developed democracies, including the resilience and vulnerabilities inherent in democratic political processes.

This article asks how costly targeted trade sanctions imposed by the US government are for domestic firms. I argue that, as a result of sanctions, the firm value of US companies that have supply relationships with sanctioned entities is likely to suffer from lost revenue, reputational damage, and business model uncertainty. I test this expectation by applying an event study to the important case of targeted trade sanctions against Chinese technology companies. I find that sanctions against these companies reduced their US suppliers’ risk-adjusted stock returns by 220 basis points. Firm-level cross-sectional analysis shows that businesses with stronger ties to the sanctioned entities are more negatively affected, which supports the direct connection between sanctions and relevant suppliers. Measuring the domestic economic ramifications of sanctions for the sender country has been elusive. These findings, which are statistically and economically significant, indicate that US companies face notable costs from sanctions against internationally active firms.

Using detailed information on policy interventions by US sub-national governments between 2009 and 2019, the contribution of such public bodies to Sino-US geopolitical rivalry is examined, in particular since President Trump took office in 2017. While US sub-national governments accounted for 28% of all US policy interventions that harmed Chinese commercial interests, awarding firm-specific subsidies in 88% of cases, the timing and sectoral incidence of such intervention suggests that economic statecraft considerations could only be part of the explanation for their actions. Ironically, the interventions of US sub-national governments and their weak commitment to transparency have much in common with their frequently maligned Chinese counterparts.

The paper examines the global and regional implications of China's revitalized state capitalism model through the sectoral lens of the Chinese automotive industry, which stands at the intersection of both traditional and green industrial policy. At the multinational level, China skillfully facilitates local policy implementation that creates excess capacity by propping up local and national champions through convenient compliance with the WTO. At the bilateral level, China closely links purchasing and coercive diplomacy with protections for Chinese players both at home and abroad. Key endeavors like the Belt and Road Initiative open up overseas markets to develop global champions and secure foreign footholds for Chinese champions. Additionally, China's increasing reliance on exclusionary diplomacy provides political justifications to discriminate against foreign competitors within the Chinese market while moving forward with industrial upgrading of domestic players. When linked together, these factors – all byproducts of China's approach to state-led capitalism – combine to explain China's efforts to create a race to the top.

This article introduces a special issue that examines the effects of strategic competition on the future of the global trade regime. We argue that traditional work in economics and the current set-up of global economic regimes ignores economic statecraft as a key element in understanding trade conflict. Specifically, we outline three examples of contemporary economic statecraft – industrial policy, trade restrictions, and new investment rules – that have been used to block foreign direct investment on the basis of national security claims. Based on this analysis, we explore how the WTO and other economic regimes might address the global economic governance of economic statecraft. In concluding, we outline the theoretical and empirical work in the subsequent case studies that examine the use of economic statecraft in the United States, China, India, Japan, and South Korea.

India's ambition of playing a prominent role in regional and global affairs has been particularly visible since the assumption of office by Prime Minister Narendra Modi in May 2014. The ambition has resulted in India's external engagement, abandoning the posturing of non-alignment for a more proactive multi-alignment strategy. Its efforts to engage with major powers such as the US and China, as well as other global middle powers such as Japan, the UK, and Australia, have been positioned on rapid economic progress, enabled by one of the fastest rates of growth among major economies. Attempts to expand global strategic influence, a natural outcome of robust economic expansion, should have seen India pursuing an aggressive outward-oriented external trade policy for increasing its share in global trade. India, though, has shown a marked resistance to open trade, including being reluctant to engage in regional and bilateral trade negotiations. This paper examines the dichotomy between India's desire to play a prominent global role and its aversion to open trade policies. Attributing the inward-looking approach to lack of competitiveness of Indian industry, absence of domestic pro-trade constituencies, and discomfort in negotiating new-generation trade issues, the paper argues India's quest for greater global strategic influence might be adversely affected by its restrictive trade policies.

This article examines how Japan has adapted economic statecraft to serve changing strategic aims through case studies of trade arrangements, official development assistance, and dual-use technology. After World War II, Japan continuously adapted these economic tools to pursue shifting non-economic goals related to international reintegration, comprehensive security, human security, and traditional security. More recently, in response to escalating US–China strategic competition, Japan has employed economic statecraft to simultaneously reduce international instability and to counter China in targeted ways as part of a broader hedging approach. First, Japan has attempted to bolster multilateral trade arrangements amid a volatile policy environment, while also using them to both engage and counter China. Second, Japan has used official development assistance to stabilize and build defense capacity in Asian countries facing pressure from China. Third, Japan has increasingly militarized its dual-use technologies to enhance its ability to respond to Chinese activity in outer space.

Analysis of the post-COVID world tends to gravitate to one of two poles. For some, the pandemic is a crisis that will reshuffle the decks, producing a fundamental reordering of global politics. For others, the basic principles of the international order are likely to remain much the same, driven largely by the emerging bipolar system between the US and China. We find both narratives dissatisfying, as the former overinterprets the causal role of the pandemic itself, while the latter underappreciates the critical ways in which global politics have been transformed beyond the state-centered system of the Cold War. We argue instead that the pandemic exposes underlying trends already at work and forces scholars to open the aperture on how we study globalization. Most centrally, we contend that globalization needs to be seen not just as a distributional game of winners and losers but rather a more profoundly transformational game that reshapes identities, redefines channels of power and authority, and generates new sites for contentious politics. We draw on emerging work to sketch out a theoretical frame for thinking about the politics of globalization, and assess some of the key policy arenas where COVID-19 is accelerating the transformative effects of globalization. In so doing, we suggest a roadmap to a post-pandemic research agenda for studying global markets that more fully captures these transformations and their implications for world politics.

Since 2005, central Chinese leaders have successfully encouraged local governments and commercial actors to expand their economic interactions with North Korea. However, the resulting expansion in commercial actors and economic interactions has intensified a principal-agent dilemma for Chinese leaders, exacerbating diplomatic tensions, eroding border security, and undermining popular support for Beijing's engagement strategy. In comparison with China's other neighbours, North Korea presents both a difficult case for stimulating economic engagement and a relatively easy case for enforcement. These dynamics are even more likely to emerge across China's 13 other land neighbours.

This article explains how Taiwan's Democratic Progressive Party (DPP) administration was able to restrict cross-Strait fruit trade and resist China's “fruit offensive” in a democratic setting. During 2004–2005, China implemented various preferential policies for the importation of Taiwanese fruit and wooed Taiwanese farmers in the rural south, where political support for the DPP was concentrated. However, trade statistics show that cross-Strait fruit trade only increased slightly, making up just 4 or 5 per cent of Taiwan's total fruit exports during 2005–2008. I argue that focusing solely on regime type ignores the formal and informal policy instruments a democratic state can wield to manage its commercial ties with, and resist economic offensives from, other states. Cross-Strait fruit trade was limited because the DPP used legal as well as corporatist informal policy instruments to resist China's fruit offensive. I conclude that state–society institutional relations explain cross-Strait economic relations and economic statecraft better than regime type alone.