Sanctioning China at Scale Would Be 'Massively Complicated,' Expert Says

If U.S. policymakers become tempted to use sanctions to prevent a potential conflict with China, they should expect to face a wide range of challenges in wielding such economic tools, speakers said at a Dec. 15 event hosted by the Center for a New American Security.

However, the U.S. government could increase its chances of sanctions success by developing a strategy well in advance of a conflict, said Emily Kilcrease, a CNAS senior fellow and director of the center's Energy, Economics, and Security Program. The government could also institute a planning process using “economic domain strategy games” to help the government understand the potential consequences of its sanctions and identify areas that need improvement, she said. Kilcrease would include U.S. allies and partners and the private sector in those efforts.

“We need to be prepared,” she said. “When you think about the complexities of trying to sanction China at scale -- if that is something that policymakers decide at some point in the future is warranted -- it will be massively expensive, it will be massively complicated.”

One key challenge policymakers would face is that sanctions can take months or years to have an impact, which could delay their influence on Chinese decision-makers. Another is that China, a major oil and gas importer, could get around energy sanctions by turning to alternative sources, such as Russia.

Other challenges would test the resolve of the U.S. and its allies. While sanctions buy-in from U.S. allies and partners would be crucial to sending a strong signal to Beijing, those countries might find it politically difficult to commit to sanctioning China before a conflict has begun. With China closely integrated into the global trading system, aggressive sanctions could impose a significant cost on the U.S. and world economy.

“We just have to be very careful about what the goals are, how we’re trying to achieve them, and think about whether those impacts are greater on us than they might be on China, for example,” said John Hughes, a partner at Dentons Global Advisors and an adjunct senior fellow at CNAS.

In a pre-recorded message, Rep. Mike Gallagher, R-Wis., chairman of the House Select Committee on China, said sanctions alone won't deter China from invading Taiwan and must be accompanied by “strategic decoupling,” including reduced dependence on China for critical minerals and other key supplies, and by military measures, including revitalization of the U.S. defense industrial base and accelerated arms shipments to Taiwan. “That’s why we need a whole of society effort to prevent war,” he said.

Kilcrease, who recently wrote a report, “No Winners in This Game: Assessing the U.S. Playbook for Sanctioning China,” said the U.S. could expand its use of export controls to curb dual-use technology transfers to China, but such tools likely would take too long to have an impact in a run-up to a conflict. They would also “necessarily cut deeper into some of these commercial ecosystems because we’re already controlling purely military stuff,” she said.

A recent bipartisan report from Gallagher’s committee calls for resetting U.S. economic and technological relations with China amid growing tensions between the two world powers. Specific recommendations include requiring the Biden administration to strengthen export controls against China and giving it new tools to restrict a broader range of inbound and outbound investments (see 2312120050).