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Bethany Allen-Ebrahimian is a China reporter at Axios, where she writes the Axios China newsletter and covers China’s role in the world from Taipei. Before joining Axios, she served as the lead reporter for the International Consortium of Investigative Journalists’ (ICIJ) China Cables project, a leak of classified Chinese government documents about Xinjiang. She also previously reported and edited for Foreign Policy. This summer, she published Beijing Rules: How China Weaponized Its Economy to Confront the World (2023). In this interview, we discussed her new book and China’s ‘authoritarian economic statecraft’.

Q: The book begins at the outset of Covid-19. Why start there? What about the Chinese response to Covid made it an important inflection point?

A: What I noticed unfolding in real time, starting in late February, early March 2020, was that the Chinese government began using certain levers of influence, and power beyond its borders, that I had been tracking for a long time. But the difference was that Beijing was using them, for the first time, in a way that affected or related to literally everyone on the planet. In the past, Beijing’s forms of covert influence or information control abroad were always directed on issues related to China’s core interests such as China’s territorial integrity, human rights issues, and the South China Sea. But what was clearly happening was that the pandemic, specifically the scientific origins of the pandemic, had become a new core interest of the CCP. And so it began using covert means of power extension to suppress discussion of the origins of the pandemic. 

The central theme of the book is what you call ‘authoritarian economic statecraft’. Could you define that and explain why you saw that it is such an important theme in your reporting on China?

Economic statecraft is the toolkit that the Chinese Communist Party has honed over the past 15 to 20 years. It is a quite innovative and creative way to use the power of its economy: to use access to its economy to shape the decisions and behavior of individual governments, companies and institutions around the world, to bring them more in line with the Chinese Communist Party’s core interests. 

The key word here is authoritarian. Every country has geopolitical interests: It’s normal for countries to pursue their geopolitical interests around the world.But the Chinese government pursues them often in authoritarian ways, and the interests themselves are authoritarian. The definition of economic statecraft, as American political scientist William Morris states, is the use of a country’s economy for geopolitical purposes. What we’re not talking about is the use of economic power for economic purposes, like the Chinese government trying to increase its economic prosperity. 

One of my opening examples is from the early period of the pandemic in April 2020, when then Prime Minister Scott Morrison of Australia called for a scientific and independent inquiry into the origins of the coronavirus. Very shortly thereafter, the Chinese government slapped a bunch of tariffs on Australian exports, including wine, coal and barley, to punish the Australian government for calling for something that was an important public interest for literally everyone in the world. That’s authoritarian because it’s suppressing free debate and crucial fact finding. 

Another example was when Daryl Morey, the manager at the time of the Houston Rockets, in 2019 tweeted support for the Hong Kong pro-democracy protests. Immediately, there were all kinds of economic consequences for the NBA: games were blocked from Chinese streaming services, and Houston Rockets swag was no longer available for sale on ecommerce websites. It’s estimated that the NBA lost around $200 million in revenue because of that one tweet. 

The U.S. has used its sanctions regime, especially in recent years, to pursue its own goals. How is that different from China pursuing its goals through its own economic statecraft?

There’s two different ways to look at this. First of all, let me acknowledge that U.S. sanctions have had pretty drastic and negative consequences on some populations around the world: Iraq would be a good example. But here’s something else that’s true about U.S. sanctions: They are almost exclusively issued to address agreed upon multilateral concerns. U.S. sanctions target terrorist funding, combat money laundering, and try to preserve the integrity of the international financial system. They try to combat nuclear proliferation, they punish perpetrators of human rights violations. All of these are agreed upon multilateral goals. 

There are some exceptions: the Trump administration sanctioned two International Criminal Court investigators who were investigating possible U.S. war crimes in Afghanistan. That was an authoritarian or illiberal use of sanctions, but the Biden administration lifted those sanctions and acknowledged that any dispute with the ICC was to be handled in agreed upon ways, not through the use of sanctions. 

The way that the Chinese government deploys access and denial to its market is mostly de facto and opaque… This kind of politically motivated economic activity erodes a rules-based international order.

The Chinese government’s use of its economic statecraft, by contrast, is exclusively to pursue its own unilateral geopolitical interests: to silence criticism of China’s human rights record, to suppress the production of information about the genocide in Xinjiang, to silence pro democracy activists, or silence critics of the Hong Kong National Security Law, to isolate Taiwan on the international stage, to support China’s territorial claims in the South China Sea, which are not supported by international law. None of these are agreed upon multilateral goals. It is not an agreed upon multilateral goal that Taiwan should be isolated on the international stage. It is only Beijing that wants that, and other countries support that purely because they are incentivized to do so, not because they actually think that that makes it a better world. 

Another key difference is that U.S. and multilateral sanctions are issued by governing bodies, in a transparent way and by law. You can find them on a website, you can find the reason that they have been issued. The way that the Chinese government deploys access and denial to its market is mostly de facto and opaque. So when South Korea deployed a U.S.-made THAAD missile defense system, all of a sudden, K-pop stars were no longer able to go to China to perform. There was no transparent mechanism by which these sorts of sanctions were issued. It just kind of happened. That makes them very difficult to talk about and makes them impossible to appeal against, because there’s no clear government actions to appeal. There’s no law that regulates it, because we’re not even totally sure that it is really even happening. This kind of politically motivated economic activity erodes a rules-based international order.

Something that has happened, especially in the past couple of years, is that the Chinese government has decided to emulate the U.S.’s more de jure sanctions regime. There are now some actual mechanisms that the Chinese government has: one of them is the anti-foreign sanctions law. In addition, the Chinese government now also issues U.S.-style sanctions on entities and individuals, they’ll make an announcement and there’s an official list. And again, this is done in an effort to pursue authoritarian goals. Most of those sanctions have targeted people who have been very critical of the Chinese government’s policies of genocide in Xinjiang, they have sanctioned research institutions in the U.S. and Europe, sanctioned lawmakers in the U.S. and Europe for their criticisms of the Chinese government human rights violations. The U.S. does not sanction people for criticizing the U.S. government: we just don’t.

Clearly, the Chinese government can deploy some of these tools because it has such a large economy. What other conditions in the global economy make this possible for China?

One of the big arguments is that there has been U.S., European and, really, global complicity in pursuing a too lightly regulated economic framework. You can call this whatever you want, but I use the word neoliberalism. The U.S. under President Ronald Reagan, adopted the idea that less government involvement in the economy was better. Free markets and deregulation, along with the weakening of unions, created a whole package of removing government involvement from the economy and economic behavior. The problem, that we can see so clearly now, is that this removed democratic guardrails from economic behavior, domestically and internationally. It created a regulatory void, and a void of political values. What the Chinese government has done so effectively is to swoop in and replace that with authoritarian guardrails on economic behavior.

Every single CEO of every single company in the world with business interests in China knows that if they say or do anything that clearly crosses the Chinese Communist Party’s redlines, they will face de facto economic sanctions, and be shut out from the Chinese market. So what we have is a global sanctions regime that extends into every country and every boardroom in the world that has any kind of ties to the Chinese market. What we don’t have is a countervailing democratic framework pushing back against that. It is not illegal, it isn’t against any regulations. It is, in fact, perfectly acceptable for these companies to censor themselves in that way. This is a perfect example of what I’m talking about because there are, in fact, things that the U.S. and other governments could do that would create countervailing incentives against this kind of behavior by corporate actors. 

Instead, we have this knee jerk reaction that says, oh, governments can’t do that. Of course, it is something that governments can do. The U.S. government could, for example, sanction three or four major Chinese companies that have been complicit in constructing the censorship machine inside of China. That would create a halo of deterrence around complying with Chinese government censorship. And it would create a very strong perception that this is no longer something that is acceptable. We could do that, but we don’t. One of the reasons is that business communities around the world cry out ‘No, no, no, no, we couldn’t possibly do that, U.S. companies would suffer’. I think that that’s ridiculous because the Chinese government has already done this, it has already created a globe-spanning sanctions regime on U.S. companies.

There’s been lots of talk recently about the Chinese economy faltering. How does that impact China’s ability to deploy this economic statecraft? 

For years, there has been this narrative about the immutable success of the Chinese economy, that it’s an ‘absolutely can’t miss’ market. I think that was an exaggeration. Within a period of about two weeks, the story now is that it’s doomed, everything is terrible — that’s also too extreme. Yes, the Chinese economy is facing real headwinds, yes, the real estate sector is in trouble. However, it is really important to note that the Chinese economy is still projected to grow at a minimum 4.5 percent rate, that it is still growing faster than the U.S. economy. Most importantly, the Chinese leadership did not suddenly wake up two weeks ago, and see Western media headlines about how bad the real estate sector was and go, ‘Oh my God, our real estate sector is screwed!’ They have known this for a long time, and have been trying to find new growth models. So I think that the predictions of the Chinese economic doom are really overblown. That also goes for concerns about China’s economic power overall, and the use of its economy for geopolitical purposes — that’s not going away. Look what Commerce Secretary Raimondo is still saying about the Chinese market, that U.S. businesses want to be in the market, but they want to get fair treatment. As long as U.S. businesses still think the Chinese market is important, that’s how long China’s economic power, in this political sense, will continue. 

In some senses, China’s power has been based in some ways on perceptions more than reality. One of the earliest examples is related to Hollywood. In 1997, there were two U.S. movies about Tibet. After that, the Chinese government closed off the Chinese box office to Disney and to Columbia Tristar for years. That was a huge shock to Hollywood: There has not been a single Hollywood movie since that has presented the Chinese Communist Party in a negative light.What’s so extraordinary is that in 1997, the Chinese economy was one-tenth of the size of the U.S. economy, and the Chinese box office was just almost negligible. So it’s not that Disney or Columbia Tristar really lost any money in 1997. The reason that Holywood began censoring itself was purely on the promise of Chinese wealth in the future. It was about, where’s the growth market? 

If the perception grows that there’s less money to be made in the Chinese market, maybe some companies will let go of the myth that these amazing riches await them in the Chinese market. 

What is the ‘dual function strategy’ and how did you see that fitting into this broader frame of the economic statecraft argument?

The ‘dual function strategy’ is the way that I conceptualize the Communist Party’s approach to overseas Chinese communities and community organizations. I’ve done a lot of work on the United Front Work Department’s efforts to target these communities. Chinese communities abroad need organizations to help them host cultural events and to help take care of their elderly, and promote business ties, and organizations for their professionals to get together. This is totally normal, and Chinese communities found those organizations, just like all other communities do. But the United Front Work Department (UFWD) is working to co-opt or suppress these organizations, and in some cases, to go in and create their own. What you get as a result is some organizations — such as the National Association for China’s Peaceful Unification, with more than 30 chapters in the U.S. — that are direct extensions of the UFWD. There are other organizations that put on legitimate cultural events like calligraphy classes or Chinese language schools. These are all real and legitimate activities, but some of them have been co-opted by the party at certain moments. 

Here’s an example: when Chinese leaders have visited the United States, Chinese consulates and embassies will call up friendly organizations and ask them to hold a pro-Beijing demonstration on the streets where the leaders are going to be traveling. The consulate or embassy will send signs and flags, and in some cases send box lunches and provide transportation. Then organizations will show up and say we are here because we want to be here, and it creates an appearance of genuine support for the party, even though the government or the party is organizing it behind the scenes. So what I mean by the dual function strategy is that organizations that have true, real, legitimate activities sometimes also act on behalf of the Chinese state. 

The effect is that it creates huge polarization within the target society. On the one hand, people who are concerned about covert Chinese political interference look at these organizations. Let’s say that one of them is hosting a Lunar New Year celebration: people who are single-mindedly concerned about Chinese influence will say this is a foreign agent and no one should go to that event. This can really head into xenophobic and racist territory. On the other hand, you get people who are very concerned about the rights of immigrants and who are very concerned about preserving political freedoms for Chinese communities in the U.S.. And they will look at this rhetoric, and say ‘this is racist’. The two sides are both looking at the same thing, but seeing different parts of it.

It creates really strong polarization and an inability to take productive action. But even more importantly, it alienates the Chinese community. They are the first and last victims of this dynamic, because on the one hand, they are a primary target of surveillance and harassment and repression from the Chinese Communist Party, and then inside the countries in which they live, they become the target of racism. And this is completely unfair to them. 

How do you balance the fact that you don’t want Chinese state influence in the U.S., while also preventing the exacerbation of issues around prejudice against Asian American communities? 

I have a three-tiered approach. It’s focused around the idea of preserving and restoring the political rights and freedoms of Chinese communities and preventing an overreach of the security state in democratic society. What we don’t want to happen is what happened to American Muslims, who became the targets of this extensive security state. But we also want to restore the civil rights and freedoms of Chinese people abroad, because the Chinese government has been pretty successful at carving away their freedom to speak and organize in their own countries. If you try to found a free and independent Chinese language news outlet in the U.S., it’s going to be very difficult for you to get funding, you are likely going to face surveillance, maybe online disinformation campaigns. And if you have any kind of business or family ties to China, then those may be jeopardized as well. On U.S. campuses, it’s very risky to speak freely about anything related to China if you’re Chinese. Many members of the Chinese community here in the U.S. don’t have the freedoms they deserve. 

Here’s how we can restore that: first of all, make our society more aware of this, all the way down to the local level. Second: ask Chinese communities in the United States what they need in order to feel safe and welcome here. It is really important to ask them and listen. Third, give extra attention to especially vulnerable members of the Chinese diaspora: pro-democracy activists, the Taiwanese, Uyghur, Tibetan, and Hong Kong communities.

You end with a ‘to do’ list for democracies. What are the major recommendations you put forward to combat this authoritarian economic statecraft?

I divide them into two basic buckets: actions to support democratic principles and actions to support national security. Sometimes these two things overlap. The Trump and Biden administrations have focused their efforts on the national security side. When we talk about partnering with like minded allies and partners, it’s largely about security, for example, when the Trump administration was trying to get European allies to ban Huawei from their 5G networks. What the U.S., Europe and other regions have done very little on is taking actions that are purely intended to put the democratic guardrails back on economic behavior domestically and internationally. 

I have 14 recommendations for how the U.S. can try to put them back on. Some of the recommendations are getting states to adopt a Foreign Agent Registration Act. We have it at the federal level, which requires public disclosures for anyone who is lobbying or acting on behalf of a foreign entity or government, but they don’t exist at the state level. 

I also think that the U.S. needs campaign finance reform. What does that have to do with China? In a world in which the U.S. political system is weighted heavily in favor of money, there is a clear path by which the business community in the U.S. is lobbying for things that are good for their bottom line, but not necessarily very good for democracy, and certainly are not good for human rights. 

What is precious about the U.S. is our democratic values. Why are we not leading with them? And why in the world are we not actively trying to protect them?

Strengthening labor unions, another one of my recommendations, is very difficult to do in our current political environment. What does that have to do with China? Well, labor unions are essentially an attempt to bring democracy into a company. A key tenet of neoliberalism is that the only job of companies is to make money and abide by the law. There’s no commitment to democracy, there’s no democratic oversight of companies’ decisions, there’s nothing really democratic about it. If you have a labor union, it helps employees push back against decisions that they feel are wrong. When Google was secretly working with China to create a censored search engine called Project Dragonfly, we learned about that because some internal employees leaked it, and planned a walkout. But because Silicon Valley is very under unionized, there were few protections for them. 

It’s not common to see prescriptive policy agendas included in journalists’ books. 

I guess when you write a book, you have a little bit more freedom. I get very deeply frustrated with the way that our society — and especially people who are in foreign policy and national security circles — rarely talk about democratic values. You can go to a roundtable discussion about the challenge of the Chinese Communist Party, just talking about national security and never bringing up democracy or democratic rights. My perspective is, what are we doing here guys? Why do we have national security? What is it for? It’s not for its own sake. It is to preserve our human rights and to preserve democratic principles, and to help other people have democracy. What is precious about the U.S. is our democratic values. Why are we not leading with them? And why in the world are we not actively trying to protect them?

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