Following Australian calls for an independent inquiry into the early handling of Covid-19, China’s Ambassador to Australia Cheng Jingye warned that Chinese consumers might respond by boycotting Australian exports, mentioning tourism, education, wine and beef.

The government pushed back, with Foreign Minister Marise Payne cautioning China against responding with “economic coercion”.

These latest moves, which have nothing to do with the choices of Chinese consumers, suggest that that caution has been ignored. Rather, the moves follow a familiar playbook, in which the Chinese government relies on technical regulatory measures to restrict exports, while denying any retaliation is taking place.

The political story: Covid-19 and economic coercion

These technical justifications are strikingly similar to past cases of economic sanctions by the Chinese government.

The defining feature of China’s unilateral economic sanctions is their informality. Rather than publicly announcing formal legal sanctions and linking them to a foreign policy dispute, Beijing typically denies that it is imposing economic punishments while explaining disruption to trade by reference to other plausible justifications.

Consider two examples. After the Philippine navy confronted Chinese fishing boats near a disputed area of the South China Sea in 2012, Filipino bananas rotted in Chinese ports after customs officials declared the fruit did not meet Chinese health standards. When Seoul installed a missile defence system over Beijing’s objections in 2016, South Korean conglomerate Lotte saw 74 of its 112 supermarkets inside China closed for alleged fire safety violations.

Go figure.

Informal retaliation provides “plausible deniability” against any charge of violating international trade rules, or accusations of explicit economic bullying. It also allows greater flexibility to deescalate retaliatory measures without appearing to be backing down from a dispute.

Like labelling rules or domestic health and safety regulations, WTO laws also provide avenues for plausibly deniable economic coercion.

While the proposed barley tariffs might appear to be remedies for Australia’s alleged violation of WTO rules, they may instead be legally “dressed up” informal economic sanctions.

As China has become increasingly adept at utilising WTO law, it has used trade rules for many legitimate purposes but also to retaliate against investigations and counter-measures introduced by other actors.

Such retaliatory use of WTO law, particularly against the United States and European Union, has been extensively documented.

WTO rules also appear to have been leveraged by China as an additional means of imposing economic punishments during political disputes.

The complexity and often highly contestable nature of anti-dumping investigations make them particularly conducive to maintaining plausible deniability.