US Can’t Rely Solely on Sanctions to Weaken China, Incoming Biden Official Says

The U.S. needs a more measured and analytics-driven approach to sanctions, export controls and other economic statecraft tools, said Daleep Singh, President Joe Biden’s incoming deputy national security adviser for international economics. He warned about the risks of relying too heavily on new, large-scale sanctions against China and called on the U.S. to create a formal doctrine to guide its use of trade restrictions.

Singh, who left the administration in 2022 but is expected to rejoin the White House soon, said sanctions, trade restrictions, investment screening measures, price caps and other similar tools should focus less on inflicting economic pain and instead try to “positively induce and attract countries via the prospect of mutual gain,” including in the context of China.

He said relying only on “coercive tools of economic statecraft to blunt or weaken China’s geostrategic position is not a winning strategy.” Although U.S. officials have said their sanctions against Russia have helped to slow the country’s military amid its war in Ukraine, Singh said a similar approach to China wouldn’t be as effective.

“China’s defensive buffers are far more formidable than Russia’s, against which the sanctions coalition found numerous areas of asymmetric advantage where the United States and its allies produce or supply something Russia needs and can’t easily replace,” he wrote in a commentary this month for the Atlantic Council. He said Beijing has a better “capacity to go on the economic offensive” than Russia, including by exploiting choke points in critical supply chains.

But that doesn’t mean there aren’t “pressure points” the U.S. could target in a sanctions campaign against China, Singh said. “No country is too big to sanction,” he said. “But there isn’t an obvious knock-out blow that coercive statecraft could deliver by itself without incurring severe collateral damage in a full-fledged confrontation with China.”

Still, there are “major geostrategic opportunities” for the U.S. and its allies to bring in other “nonaligned countries” through “positive inducements, and in doing so to gradually isolate China before any conflict unfolds.” That may include debt relief, concessional lending, infrastructure finance, supply chain partnerships and technology alliances, he said.

Singh, who pushed for the creation of an economic statecraft doctrine after leaving the administration in 2022 (see 2304250052), again said the U.S. needs a doctrine to make those tools more effective. He said trade measures should be used sparingly and avoid “unnecessary spillovers” on civilians; they should be collaborated on with allies while also being flexible and sustainable; and they should be easily reversed “when we’re mistaken.” The doctrine also should outline “rules of engagement to govern why, when, what, how, and against whom restrictive measures are deployed,” Singh said.

He also called on the U.S. to upgrade its “analytical infrastructure” to better assess the effectiveness of its sanctions, export controls and similar measures. It can do this by taking “regular inventory” of those measures, studying how effective they’ve been in the past, assessing the "historical efficacy" of these tools, predicting how effective they may be, better anticipating how and where evasion is likely to occur, and more.

The U.S. will need more resources to carry out this analysis, Singh said, suggesting the government hire a “multidisciplinary SWAT team of specialists” with expertise in macroeconomics, critical supply chains, financial markets, capital flows, trade finance and more. That team should be subject to congressional oversight and should coordinate with U.S. trade partners.

"Having been on the front lines of designing and deploying economic statecraft over the past decade, I’m convinced that we need a modern doctrine to institutionalize how, when, where, and why the United States" uses those tools, Singh said. The U.S. and its allies "need to apply the same creativity and urgency toward developing a positive vision for economic statecraft as they have in designing sanctions and other restrictive measures in the recent past."