Economic leverage has become an increasingly important tool of statecraft for great powers in the 21st century. China is no exception. In recent years, Beijing has significantly expanded the ways it exerts economic pressure against other countries in foreign policy disputes. Where China once relied primarily on informal measures – such as discouraging tourism through safety warnings, reducing imports by tightening quarantine inspections, or indirectly encouraging consumer boycotts through nationalist sentiment – its approach has gradually evolved into a more institutionalized and complex set of tools.
Since 2019, Beijing has moved toward greater openness and formality in its economic statecraft. It has introduced a series of domestic sanctions-related regulations and laws and tightened export controls on strategic resources and advanced technologies crucial for clean energy, defense, and other high-tech industries. These new institutional developments mark a significant change in China’s use of economic measures, reshaping its foreign policy and complicating global markets and supply chains.
In a co-authored paper published in The China Review, we showed how both international pressure from the United States – during Trump’s first administration and continuing under the Biden administration – and China’s domestic imperatives – including strengthening political legitimacy, protecting commercial interests, promoting rule of law, and Chinese President Xi’s thoughts on international competition – drove this transformation in China’s sanctions policy.
It has now been six years since Beijing began to modernize its economic statecraft and increase the use of these newly developed instruments in its foreign policy. This raises two important questions: what patterns have emerged in China’s post-2018 sanctions behavior, and what do these patterns reveal about the rationale of its economic statecraft? In a recent paper published in the Chinese Political Science Review, I constructed a unique dataset comprising 67 cases of China’s sanctions from January 2019 to December 2024 and employed a quantitative research method to analyze China’s post-2018 sanctions pattern. The findings reveal that China has adopted a two-tiered sanctions policy: an explicit countersanctions regime targeting the United States and its allies, alongside the continued use of traditional informal measures toward other economies.
More specifically, China is inclined to employ formal sanctions when the U.S. and its allies challenge its core interests in Hong Kong, Xinjiang, and Taiwan. These actions are targeted at specific individuals or entities and are limited in intensity. While economic ties and geopolitical risks discourage Beijing from enacting large-scale sanctions on the U.S., the imperative to demonstrate resolve and send clear signals has encouraged it to formalize targeted penalties against those challenging its core interests.
By contrast, China tends to rely on more traditional measures, such as opaque trade barriers and covert commercial pressures, when facing challenges from economies other than the U.S. Such practices enable Beijing to impose tangible costs and express its displeasure, but they also expose it to potential legal disputes under WTO rules. Moreover, given its longstanding opposition to unilateral sanctions and its efforts to project a benign international image, executing them through formal channels would heighten reputational costs. China thus prefers to keep these practices informal.
However, sanctions and countersanctions alone are insufficient for Beijing to address the enduring economic and technological pressures from the United States. Export controls have therefore emerged as a critical complement to China’s economic statecraft, demonstrating the capacity to impose substantial costs on targeted actors while influencing global markets and supply chains. The earlier perception that China’s economic restrictions on the U.S. were largely symbolic – given its limited or indirect commercial ties with many of the sanctioned firms – has been challenged as Beijing tightens export controls and weaponizes its dominance in key strategic resources and high-tech sectors, disrupting global supply chains amid the intensifying China-U.S. rivalry.
China’s export restrictions on drones, gallium, germanium, and other critical resources have begun to ripple through global markets and supply chains. The introduction of more stringent export controls on rare earths in April and EV-related battery technologies in July – sectors in which China maintains market dominance – sends a clear signal of Beijing’s willingness and ability to leverage economic interdependence for strategic purposes. These policy developments and their recent applications suggest that China’s economic retaliation against the U.S. has evolved beyond symbolism and is increasingly capable of generating material disruptions across critical global industries.
Yet executing these measures is not without risks and uncertainties. Tit-for-tat sanctions may deter businesses that are wary of unpredictable compliance obligations and the prospect of being caught between two major powers. Excessive reliance on export restrictions could accelerate supply chain diversification among China’s trading partners and weaken China’s leverage as a bargaining chip.
China’s post-2018 economic statecraft marks a new chapter in its foreign policy with far-reaching implications for the international political economy. It reflects neither a wholesale embrace of the Western-style approach nor a simple continuation of its earlier informal method. Instead, it embodies a distinctive two-tiered strategy that enables China to calibrate its responses toward different actors while balancing economic, geopolitical, and reputational costs. This evolution in China’s economic statecraft is no longer merely an ad hoc or policy-driven reaction to individual disputes but rather part of a broader strategic preparation for great power competition. Understanding this trajectory is therefore essential for identifying its policy implications and for enabling policymakers to anticipate China’s future behavior and craft appropriate responses in an era of intensifying great power rivalry.