The EU’s anti-coercion instrument needs a powerful decision-making procedure, effective and credible countermeasures and a broader, comprehensive resilience architecture behind it to be a successful deterrent against China’s economic coercion.
First, member states may want more say on which countermeasures to impose, but China will use economic coercion in divisive ways. There is a danger that the ACI might not allow for the swift imposition of tough countermeasures if many member states have to approve them first. In this scenario, the ACI would not be an effective deterrent.
Second, the EU may have credibility to impose certain countermeasures like counter-tariffs, but Donald Trump’s policies against China showed that tariffs may not be effective in changing Chinese behavior. More effective could be highly targeted export controls and divestment in areas in which China still wants European investment. But EU action is less credible in these areas because the related competencies are not centralized in Brussels. The ACI has to navigate these trade-offs and therefore needs a range of measures so that the EU can choose the ones that promise the greatest effectiveness and are possible to impose in a given situation.
Third, the ACI is not enough. The EU needs a Resilience Office, a strategic unit that links the policy areas of the different Directorates-General (DGs) at a high level in the Commission. It should strategically analyze the kind of grey-zone area activities that China is known for to better understand how it pressures companies, to better establish evidence, and to identify long-term patterns and costs. A fully reformed EU Blocking Statute, introduced to protect EU companies against extraterritorial sanctions adopted by third countries, could tackle the problem of secondary sanctions, as adopted by China against Lithuania.