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.