The EU should impose financial sanctions that go “hard, fast and where it hurts” on China if a Taiwan crisis occurs, as “gradual sanctions escalation could be counterproductive,” a European Council on Foreign Relations (ECFR) policy brief published earlier this month said.
The pan-European think tank brief, published on Sept. 19 and written by senior policy fellow Agathe Demarais, aimed to draw insights from Western sanctions on Russia after its invasion of Ukraine and proposed sanctions deterrence against China in cross-strait conflict scenarios.
The EU’s threat of sanctions against China could be “game-changing” as Beijing, like Moscow, would think it improbable for 27 EU member states to unite on sanctions, Demarais wrote.
Photo: Reuters
Although China might threaten to retaliate against EU sanctions, “clear threats from the bloc would signal to Beijing that the costs of an aggression are even higher than those that the Chinese leadership already expects,” and Russia’s experience would prompt China to “think twice before brushing off Europe’s warnings,” she said.
However, traditional financial sanctions might not work as “China has spent years insulating itself from financial sanctions through ‘de-dollarization,’ ‘de-SWIFTing’ and the development of digital currencies,” she said.
By 2028, “threats of measures targeting China’s access to Western financial channels or currencies would be unlikely to alter Beijing’s calculus around Taiwan, as Chinese leaders are making fast progress toward financial self-sufficiency,” Demarais said.
“This means that Europe’s strongest leverage probably lies in trade measures targeting China’s access to the EU market,” she said.
China’s economic growth relies on exports of manufactured goods and that reliance “may well be its Achilles’ heel,” she said.
“Exports account for nearly 20 percent of China’s GDP, with nearly 40 percent of these going to G7-EU economies,” while 100 million jobs in China depend on foreign demand, including at least 45 million from G7-EU economies, she said.
The EU and its G7 partners should institute sanctions targeting imports of noncritical, finished consumer goods, particularly electronics and low-end goods, which accounted for 13 percent and 9 percent respectively of total Chinese exports, she said.
“A drop in the supply of these goods would be manageable for Western consumers, at least for a while. But for China, joint G7-EU measures curbing the shipments of these products would be hugely painful,” Demarais said.
“This means that if deterrence fails and EU policymakers choose to impose sanctions on China, then they should go hard and fast,” she said.
Gradual sanctions escalation would risk “supporting Chinese efforts to build long-term immunity to financial sanctions,” and would make it unlikely that the EU and its allies could “engineer a balance-of-payments crisis in China through a seizure of the country’s central bank reserves,” she said.
“European policymakers need to start discussing potential Taiwan-related triggers for sanctions on Beijing and map out the consequences of a drastic reduction in trade relations with China,” she said.
The EU would have to “think of financial compensation packages for those EU firms that will be most affected by sanctions and seriously beef up its ability to tackle sanctions disinformation,” she added.
Chinese Nationalist Party (KMT) Chairman Eric Chu (朱立倫), spokeswoman Yang Chih-yu (楊智伃) and Legislator Hsieh Lung-chieh (謝龍介) would be summoned by police for questioning for leading an illegal assembly on Thursday evening last week, Minister of the Interior Liu Shyh-fang (劉世芳) said today. The three KMT officials led an assembly outside the Taipei City Prosecutors’ Office, a restricted area where public assembly is not allowed, protesting the questioning of several KMT staff and searches of KMT headquarters and offices in a recall petition forgery case. Chu, Yang and Hsieh are all suspected of contravening the Assembly and Parade Act (集會遊行法) by holding
PRAISE: Japanese visitor Takashi Kubota said the Taiwanese temple architecture images showcased in the AI Art Gallery were the most impressive displays he saw Taiwan does not have an official pavilion at the World Expo in Osaka, Japan, because of its diplomatic predicament, but the government-backed Tech World pavilion is drawing interest with its unique recreations of works by Taiwanese artists. The pavilion features an artificial intelligence (AI)-based art gallery showcasing works of famous Taiwanese artists from the Japanese colonial period using innovative technologies. Among its main simulated displays are Eastern gouache paintings by Chen Chin (陳進), Lin Yu-shan (林玉山) and Kuo Hsueh-hu (郭雪湖), who were the three young Taiwanese painters selected for the East Asian Painting exhibition in 1927. Gouache is a water-based
Taiwan would welcome the return of Honduras as a diplomatic ally if its next president decides to make such a move, Minister of Foreign Affairs Lin Chia-lung (林佳龍) said yesterday. “Of course, we would welcome Honduras if they want to restore diplomatic ties with Taiwan after their elections,” Lin said at a meeting of the legislature’s Foreign Affairs and National Defense Committee, when asked to comment on statements made by two of the three Honduran presidential candidates during the presidential campaign in the Central American country. Taiwan is paying close attention to the region as a whole in the wake of a
OFF-TARGET: More than 30,000 participants were expected to take part in the Games next month, but only 6,550 foreign and 19,400 Taiwanese athletes have registered Taipei city councilors yesterday blasted the organizers of next month’s World Masters Games over sudden timetable and venue changes, which they said have caused thousands of participants to back out of the international sporting event, among other organizational issues. They also cited visa delays and political interference by China as reasons many foreign athletes are requesting refunds for the event, to be held from May 17 to 30. Jointly organized by the Taipei and New Taipei City governments, the games have been rocked by numerous controversies since preparations began in 2020. Taipei City Councilor Lin Yen-feng (林延鳳) said yesterday that new measures by