Such bluffs can be effective, as selecting a prominent target may work to deter other governments and companies from unwanted actions. Empty threats are another common form of coercion, accounting for about a fifth of all cases (21 percent).When responding to the actions of foreign governments, China adopted restrictions on trade and tourism in 41 percent and 20 percent of cases, respectively. Beijing resorted to popular boycotts in 56 percent of cases when companies crossed a perceived red line. The forms of coercion employed by China include a range of measures.China’s red lines have expanded beyond traditional issues of sovereignty and national security to include China’s international image and the treatment of Chinese firms abroad. Since 2018, China has increased its use of economic coercion, and the triggers have become more diverse.

Fearful of becoming a target, companies might avoid making public statements on sensitive issues or deem it safer to align themselves with the positions and objectives of China’s government. MERICS identified 123 such cases between February 2010 and March 2022. By pressuring prominent companies or sectors, it tries to deter others from crossing certain lines. Beijing uses economic coercion for signaling and deterrence.A sober assessment of companies’ vulnerabilities is necessary to adjust to this new reality. This has increased the risks associated with economic pressure. Over the past years, political relations between the EU and China have deteriorated.

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