China’s Economic Statecraft and the Different Responses of its Targets: A Comparative Analysis of South Korea and Taiwan

• Main Authors: Hyunwook Cheng, 鄭顯旭
• Other Authors: Shih-Jiunn Shi
• Format: Others
• Language: en_US
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/nu65g2

博士 === 國立臺灣大學 === 國家發展研究所 === 107 === This dissertation analyzes why China has deployed vast economic wealth to support its foreign policy goals since the first decade of the 21st century based on the conceptual framework of “economic statecraft.” With this analysis as a background, the research further explores why its two main targets, South Korea and Taiwan, took divergent responses to China’s economic statecraft despite their similar external conditions from the lens of comparative political economy. By elaborating the changing keynotes of China’s foreign policy in the eras of Jiang Zemin, Hu Jintao, and Xi Jinping, this research argued that the Chinese leadership has strategically exercised economic statecraft to protect its core interests, while seeking to rise as a global power. While many countries are asymmetrically dependent on the Chinese market, China is significantly limited in the alliance system. Because this nation is able to control domestic corporations and society, economic statecraft has been frequently wielded as an effort to strengthen its international political influence beyond economic power. This strategy tends to be typified by several characteristic forms such as targeted sanctions on specific enterprises, and tourism. In addition, this dissertation discovered that South Korea and Taiwan exhibited contrasting responses to China’s economic statecraft—both positive economic statecraft (economic inducements) and negative economic statecraft (informal economic sanctions)—focusing on the four case sets: (1) the China-South Korea FTA, (2) the economic retaliation against South Korea’s deployment of the THAAD missile defense system, (3) the Economic Cooperation Framework Agreement between mainland China and Taiwan, and (4) the informal economic sanctions against Taiwan’s DPP election. In response to these issues, the South Korean government tended to lean toward economic pragmatism in a unified manner regardless of regime change, which focused on protecting and maximizing the state’s economic interests while maintaining national security. By contrast, the Taiwanese government displayed a fluctuating tendency in a disunified manner in accordance with the ruling party, and took politically defensive stances rather than short-term economic interests. With regard to the two targets’ different responses to China’s economic statecraft, I argue that their responses were related to their different political-economic attributes from a comparative perspective. The government-business relations and the state’s embedded autonomies, which were shaped during each of their developmental periods, and the motivations and initial impetus for the development of economic relations with China in the early 1990s, influenced the ways the two governments made subsequent policy decisions with the path dependence. Seoul began to promote the development of its relations with China with the initial aim of economic pragmatism and offsetting political risks (hedging) from a top-down approach. The close relationship between the government and business and the state’s embedded autonomy in the business sector also affect the South Korean government’s China policy decision making. These features continued to influence the decision of the South Korean government’s China policy in promoting the China-South Korea FTA from 2004 to 2015, and in taking countermeasures against the economic retaliation due to the THAAD in 2016-2017. By contrast, Taiwan’s private sector led the development of cross-strait relations from a bottom-up approach, and the Taiwanese government mainly attempted to put the brakes on the pace of cross-strait trade growth due to their political consideration, although they at intervals relaxed their constraints on investment in the mainland. Taiwan’s relatively loose relationship between the government and business and weak embedded autonomy of the state also affected Taipei’s policy toward the mainland. These initial mechanisms were also reproduced as a political defense of the government in response to the CSSTA negotiation, one of the follow-up treaties of the ECFA, and China’s informal economic sanctions against the DPP election in a disunified manner. This study has theoretical implications as it conceptualized China’s intentional use of economic means for political objectives, and enlarged the scope of research on China’s economic statecraft through a comparative study. At the same time, the comparative political economic perspective presented in this study could complement the point that a neo-realist view does not explain the target countries’ distinctive responses. This dissertation also may enrich research on developmental states by offering a new perspective, which relates to the foreign policy domain. In addition, it could have policy implications for China’s target countries, who are attempting to prepare countermeasures as a way to understand the background, intentions, and new trends of China’s economic statecraft.