Defense Secretary Mark Esper accused China of using its economic power as political leverage with smaller nations.
The problem is particularly prevalent in the Asia-Pacific, Esper told the audience Wednesday at the Air Force Association’s Air, Space & Cyber Conference in Maryland’s Oxon Hill.
“I was just there a few weeks ago, and you talk to countries, they’ll tell you behind closed doors, ‘Look, if we do this, they’ve already threatened to limit this innovation or they won’t provide us this loan or grant,'” Esper said.
“And so they are using that economic power as a strategic tool to coerce, influence others into a position of subordination, if you will, to what China wants, and that’s a big challenge for us.”
While some have compared the great power competition between the United States and China to the Cold War with the Soviet Union, Esper noted that the economic factor complicates matters when it comes to countering China.
“I think it’s one of the reasons why China is such a long-term, strategic competitor, because it has that potential that the Soviet Union did not have,” Esper said. “We had the advantages of economy, culture, values, you name it, technology, and the Chinese bring to bear a lot of those same things: a very strong economy, 1.4 billion people, great economic potential.”
The Chinese Communist Party has used its economic power for strategic purposes since it opened up economically in the 1970s. At that time, China was largely impoverished, so its power to coerce countries economically was limited. Now, however, China has the world’s second-largest economy and boasts the largest middle class in the world.
“China has punished countries that undermine its territorial claims and foreign policy goals with measures such as restricting trade, encouraging popular boycotts, and cutting off tourism,” researchers from the Center for a New American Security wrote last year. “These actions have caused significant economic damage to U.S. partners such as Japan and South Korea. The measures may also have long-term effects in deterring and shaping countries’ foreign policy interests that go well beyond the short-term economic costs.”
Esper pointed to China’s Belt and Road Initiative as a main driver of its economic leverage. The program provides investment and infrastructure development to more than 150 countries in what Chinese leaders call “a bid to enhance regional connectivity and embrace a brighter future.” Esper and other national security officials are skeptical.
“Take Sri Lanka, for example. Struggling to repay its debt to Chinese firms, Sri Lanka handed over rights to a strategic port to China for 99 years,” Esper said. “This long-term strategic access is precisely what Beijing desires, and it’s coming at the expense of other nations’ sovereignty.”
Esper said China’s economic leverage is “what concerns me the most” about the future, especially as China continues to become more integrated in the world economy.