Chapter 7 briefly recaps the cost-balancing theory and arguments, extends the theory to other issue areas in Chinese foreign policy and the behavior of other states, and finally discusses the implications of this book for the study of international relations and Chinese foreign policy. Building upon existing research on coercion, reputation and credibility, and economic interdependence, this book proposed the cost-balancing theory to explain China’s coercion calculus. The book has implications for understanding China’s grand strategy and predicting China’s future trajectories. Furthermore, this book adds to the burgeoning literature that looks beyond purely military coercive instruments by analyzing how a rising China utilizes nonmilitarized coercion and what drives its decision to choose between military and nonmilitary tools. This book, therefore, contributes to theorizing coercion in an era of global economic interdependence. It sheds new light on policy implications for understanding China’s grand strategy, managing China’s rise, and avoiding great power conflicts, while pointing out potential pathways where the cost-balancing theory can be applied to non-China cases.

The media and US foreign policy elites paint a pessimistic picture of China’s behavior and the likelihood of major conflicts. However, they fail to capture the curious variation in China’s coercive behavior, which is much more nuanced than simplistic predictions that war is imminent. For one, despite the countless forecasts of major wars involving China over the past decade, China has not fought a war since the 1988 Sino-Vietnamese maritime skirmish. Instead, China utilizes a full spectrum of coercive tools, ranging from diplomatic and economic sanctions to gray-zone measures and military coercion. This book examines when, why, and how China attempts to coerce states over threats to its national security. I propose a new cost-balancing theory to explain China’s coercion decisions, while discussing the broader implications for international relations in the concluding chapter. I show that instead of coercing all states and prioritizing military coercion, China is a cautious actor that balances the benefits and costs of coercion. The book identifies the centrality of reputation for resolve and economic cost in driving whether China coerces or not.

Chapter 5 looks at Chinese coercion regarding Taiwan, involving foreign arms sales to Taiwan and the Taiwan Strait Crisis of 1995 and 1996. China used moderate coercion measures toward the United States over arms sales to Taiwan until 2008. The cost-balancing theory does not perfectly explain the 1992 case of US weapons sales to Taiwan, which instead highlighted economic concerns. As for the 1995–1996 Taiwan Strait Crisis, China escalated to militarized coercion, the magnitude of which was the greatest among all cases of Chinese coercion concerning territorial disputes, Taiwan, and Tibet in the post-Cold War era, because Taiwan is a “core interest.” This chapter demonstrates the significance of the issue importance variable in issues involving Taiwan and shows that the cost-balancing theory travels beyond territorial disputes. This suggests that because Taiwan continues to be one of China’s core interests, it is highly likely China will resort to military coercion again in the future. In particular, if Taiwan decides to pursue judiciary independence, then it is highly likely that China will resort to military coercion, or even the use of force.