The Use of Trade Coercion and China’s Model of ‘Passive-Aggressive Legalism’

ABSTRACT There is a growing view among both governments and commentators, especially in the West, that China engages in acts of trade coercion which violate the law and spirit of the multilateral trading system. And while there is a developing literature discussing this issue, the debate currently lacks clarity about how China’s approach differs from other types of coercion which do not inspire the same backlash. This article advances the literature by suggesting that Chinese trade coercion is particularly threatening to the rules-based system (RBS) as it uses methods that had largely been eradicated under the GATT/WTO system. Chinese trade coercion therefore represents a “new” and important phenomenon in international trade as it uses coercion for strategic purposes, usually as retaliation for perceived affronts in matters unrelated to trade. We label this approach “passive-aggressive legalism” because, rather than relying on open dialogue to resolve diplomatic frictions, China implements informal and “plausibly deniable” retaliatory measures to indirectly make its displeasure known and felt. The article concludes by making broader claims about why China’s approach represents a threat to the WTO system and may even undermine the effectiveness of rules-based constraints in other domains of global regulation.