Chapter 7 briefly recaps the cost-balancing theory and arguments, extends the theory to other issue areas in Chinese foreign policy and the behavior of other states, and finally discusses the implications of this book for the study of international relations and Chinese foreign policy. Building upon existing research on coercion, reputation and credibility, and economic interdependence, this book proposed the cost-balancing theory to explain China’s coercion calculus. The book has implications for understanding China’s grand strategy and predicting China’s future trajectories. Furthermore, this book adds to the burgeoning literature that looks beyond purely military coercive instruments by analyzing how a rising China utilizes nonmilitarized coercion and what drives its decision to choose between military and nonmilitary tools. This book, therefore, contributes to theorizing coercion in an era of global economic interdependence. It sheds new light on policy implications for understanding China’s grand strategy, managing China’s rise, and avoiding great power conflicts, while pointing out potential pathways where the cost-balancing theory can be applied to non-China cases.

Chapter 4 focuses on Chinese coercion in the East China Sea, where China has maritime territorial and jurisdictional disputes with Japan. I explain the trend of Chinese coercion in the East China Sea while conducting two in-depth case studies: the Sino-Japan boat clash incident of 2010 and the incident of Senkaku nationalization in 2012. As the cost-balancing theory argues, the costs and benefits of coercion explain when and how China coerces. In the pre-2005 period, the need to establish resolve was generally low, whereas the economic cost was high. China, therefore, refrained from coercion. The need to establish resolve was briefly higher in 1996 and 1997, but China did not utilize coercion in these cases because of its equally high need for resolve and high economic costs. Because the East China Sea is not China’s core interest, its issue importance is not sufficiently high to justify the use of coercion. When the need to establish a reputation for resolve is high and the economic cost low, China used coercion, as seen in the post-2005 trend and, in particular, the 2010 and 2012 cases. It refrained using from military coercion for fear of potential geopolitical backlash.

The media and US foreign policy elites paint a pessimistic picture of China’s behavior and the likelihood of major conflicts. However, they fail to capture the curious variation in China’s coercive behavior, which is much more nuanced than simplistic predictions that war is imminent. For one, despite the countless forecasts of major wars involving China over the past decade, China has not fought a war since the 1988 Sino-Vietnamese maritime skirmish. Instead, China utilizes a full spectrum of coercive tools, ranging from diplomatic and economic sanctions to gray-zone measures and military coercion. This book examines when, why, and how China attempts to coerce states over threats to its national security. I propose a new cost-balancing theory to explain China’s coercion decisions, while discussing the broader implications for international relations in the concluding chapter. I show that instead of coercing all states and prioritizing military coercion, China is a cautious actor that balances the benefits and costs of coercion. The book identifies the centrality of reputation for resolve and economic cost in driving whether China coerces or not.

Chapter 6 turns to Chinese coercion regarding foreign leaders’ reception of the Dalai Lama, the Tibetan spiritual leader. China did not use coercion against European states over the Dalai Lama visits in the pre-2002 period, despite a high need to establish a reputation for resolve in the 1996–2002 period. The cost-balancing theory would have predicted China would use coercion in this period because Tibet is a core-interest issue. This slight deviance from the theory suggests that China’s economic costs with respect to the United States and Europe, in general, trumped other factors in China’s coercion calculus prior to 2002. Except for during the 1996–2002 period, the patterns of Chinese coercion are in line with the theory’s predictions. Furthermore, China did not coerce all the states that receive the Dalai Lama in the post-2006 period. Instead, it focused on major European countries because the need to establish a reputation for resolve was high in major European countries, whereas the economic cost had lowered. This chapter indicates that the cost-balancing theory does not apply only to security issues but can also generalize to political issues, such as visits with the Dalai Lama.

Chapter 5 looks at Chinese coercion regarding Taiwan, involving foreign arms sales to Taiwan and the Taiwan Strait Crisis of 1995 and 1996. China used moderate coercion measures toward the United States over arms sales to Taiwan until 2008. The cost-balancing theory does not perfectly explain the 1992 case of US weapons sales to Taiwan, which instead highlighted economic concerns. As for the 1995–1996 Taiwan Strait Crisis, China escalated to militarized coercion, the magnitude of which was the greatest among all cases of Chinese coercion concerning territorial disputes, Taiwan, and Tibet in the post-Cold War era, because Taiwan is a “core interest.” This chapter demonstrates the significance of the issue importance variable in issues involving Taiwan and shows that the cost-balancing theory travels beyond territorial disputes. This suggests that because Taiwan continues to be one of China’s core interests, it is highly likely China will resort to military coercion again in the future. In particular, if Taiwan decides to pursue judiciary independence, then it is highly likely that China will resort to military coercion, or even the use of force.

Chapter 2 discusses the literature, the cost-balancing theory, observable implications, alternative explanations, measurement, and research design. Coercion is the use or threats of negative means to demand a change in the behavior of a target state. The underlying assumption of this book is that in an era of global economic interdependence through the intricate global supply chains and global financial network, coercion decisions are a result of balancing security and economic factors. China coerces when the need to establish a reputation for resolve is high and the economic cost is low. China will refrain from coercion when the economic cost is high and the need to establish resolve is low. In circumstances when both the need to establish resolve and economic costs are high, China will only use coercion when the importance of the issue at hand is high. As for the choices of coercion, all else being equal, nonmilitary coercion should generate lower geopolitical backlash. China is much more likely to choose nonmilitary coercive tools like diplomatic sanctions, economic sanctions, and gray-zone coercion when the geopolitical backlash is high.

Chapter 3 examines Chinese coercion in the South China Sea. My previous work examines the overall trends of Chinese coercion in the South China Sea. I find that China used coercion in the 1990s because of the high need to establish a reputation for resolve and low economic cost. China used militarized coercion because the US withdrawal from the Subic Bay in Southeast Asia and the focus on Europe reduced China’s geopolitical backlash cost of using coercion. China then refrained from coercion from 2000 to 2006 because of the high economic cost and low need to establish a reputation for resolve. It began to use coercion again after 2007, but because of the increasing geopolitical backlash cost since the post-2000 period, Chinese coercion remains nonmilitarized, which includes economic sanctions and gray-zone coercion. This chapter also examines three case studies – the cross-national comparison of China’s coercion against the Philippines, Vietnam, and Malaysia, the Sino-Philippine Mischief Reef incident in 1995, and the Sino-Philippine Scarborough Shoal incident in 2012. These case studies demonstrate that the mechanisms of the cost-balancing theory are present in them.