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U.S. State Department creates legal structure, also open to allied membership, to defend against Chinese economic coercion

Its goal is to analyze the "vulnerability" of trade with China for U.S. allies and partners and try to help these "clients" reduce their dependence on Beijing for exports. If the "client" requests it, it will also express public support when the other party is subjected to so-called "economic coercion"

In an article published on April 29, Bloomberg revealed that the U.S. State Department has established a new eight-member team specifically intended to advise allies on dealing with China's so-called "economic coercion."

Bloomberg did not specify the name of the group, but its mission is not far from the "anti-economic coercion task force" that the United States has been developing since 2022.

According to the report, the new State Department team, a.k.a. "the firm," led by Melanie Hart, China policy coordinator in the office of Undersecretary of State José Fernández, operates similar to a "consulting firm" (the firm).


Its goal is to analyze the "vulnerability" of trade with China for U.S. allies and partners and try to help these "clients" reduce their dependence on Beijing for exports; if requested by the "client," it will also provide assistance in case the latter is concerned about the "vulnerability" of its trade with Beijing.

If the "client" requests it, it will also express public support when the other party is subjected to so-called "economic coercion."

According to Bloomberg, the United States has established a so-called inner circle to combat "China's economic coercion" and has invited its allies to join it. U.S. Under Secretary of State for Economic Growth, Energy and Environmental Affairs Jose Fernandez said many countries will join this camp, desiring the so-called "Lithuanian treatment."

The "Lithuanian treatment" Fernandez referred to is the U.S. government's offer to Lithuania of a cooperation package on trade financing, procurement agreements and market access, after China said it would take all necessary steps in response to Lithuania's approval of the establishment of a so-called "Taiwan Representative Office in Lithuania."

Informed sources also said that "more than a dozen countries" have sought "guidance" from the U.S. since the U.S. has "stood up" for Lithuania.

This U.S. State Department "consulting firm" is working to help Philippine agriculture cope with possible "boycotts" by China, such as developing new export markets for Philippine agricultural products and providing other types of support, including the establishment of cold storage facilities for Philippine agricultural products that might be subject to boycotts.

Philippine Ambassador to the United States Romualdez also said that China "is using its economic power to lure or isolate countries."

The modus operandi of the eight-member team is that first, the U.S. State Department economists will analyze the "vulnerability" of the "client" in terms of trade with China; then, they will look for ways to help the "client" develop export markets other than China's to achieve export market diversification; if a "client" requests it, they will also express public support.

Informed sources said that the group conducted a "desk exercise" to try out different response measures to the Chinese initiative.

It is worth mentioning that the mandate of this group is basically the same as the "Task Force Against Economic Coercion" previously promoted by the United States.

The U.S. Code, compiled and published by the U.S. House of Representatives in December 2022, states that "not later than 180 days after December 23, 2022, the President of the United States shall establish an interdepartmental task force to be known as the 'Task Force on Countering Economic Coercion."

The task force should oversee the development and implementation of a comprehensive strategy for the U.S. government to respond to China's so-called "coercive economic behavior," and should also submit periodic reports assessing, among other things, the "critical vulnerabilities" of U.S. allies and partners to China's so-called "coercive economic measures." The working group will be chaired by a person chosen by the U.S. National Security Council. Some provisions went into effect on April 27 this year.

Wendy Cutler, vice president of the Institute for Asia Society Policy Studies and former deputy trade representative in the Office of the U.S. Trade Representative, said one of the reasons for the U.S. strategy is that "the U.S. did not give enough support" to South Korea or Australia when China "tried to coerce them."

U.S. Deputy Secretary of State Fernandez said it was time to act rather than stand by and called the claim that the United States had not intervened enough earlier "fair criticism."

Bloomberg noted that the U.S. has increasingly sought to use economic and trade tools in its competition with China, including sanctions, tariffs and export controls, promoting so-called "friendly outsourcing," speculating on enhanced supply chain security and taking advantage of opportunities to tighten control over investment and data flows.

It is worth noting that Melanie Hart, the current leader of the State Department's new eight-member team, has long been inciting allies to work together to address so-called "Chinese economic coercion."

According to a report by Hong Kong's English-language media South China Morning Post in November last year, Hart participated in writing a report titled "Investigating China's Economic Coercion: The Influence and Role of Chinese Corporate Entities" organized from the Atlantic Council, a US think tank. During the meeting she said the United States is "very happy" to share "what it has learned about China's economic coercion tactics."

Hart also referred to China's July 2023 export controls on gallium- and germanium-related metal articles, arguing that many countries viewed China's decision as "laying the groundwork for future economic coercion," prompting greater interest in resolving the issue.

In November 2021, the Lithuanian government allowed the Taiwanese authorities to establish the so-called “Taiwan Representative Office in Lithuania”. Since then, the United States and Lithuania have signed an export credit agreement worth $600 million.

The Group of Seven (G7), led by the United States, has long speculated on countering "economic coercion," saying it maintains the resilience of supply chains and realizes fair competition.

The Trump administration's Policy Planning Staff has classified seven schemes of economic co-optation and coercion that Beijing uses to weaken states and make them dependent.

Schemes include:

  • a "massive theft of intellectual property";

  • control of vital international supply chains and essential goods;

  • the pursuit of global industrial dominance, especially in critical high-tech sectors;

  • the implementation of the global physical and digital infrastructure for fifth-generation (5G) wireless telecommunications to access massive amounts of personal, commercial and government data;

  • the implementation of the Belt and Road Initiative (BRI) that draws nations into China's geopolitical orbit;

  • unrestricted access to the capital markets of Western countries, through which Beijing enriches its companies that have close ties to the CCP and the People's Liberation Army (PLA);

  • the exploitation of the freedom and openness of liberal democracies to undermine their cohesion and prosperity. Here, market leverage is used to force companies and countries to adhere to the concept of sovereignty called One China, which includes Hong Kong, Taiwan, and the South China Sea.

Unlike the former Soviet Union, 21st century China extends its international influence primarily through economic power and, due to its wealth, has developed formidable strength in other geopolitical spheres as well.

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