"According to David Y. Yang, Yvonne P. L. Lui Professor of Economics, trade can be used to wield political power. Yang watched as China imposed trade restrictions on competitor Taiwan following a 2022 visit to the island by U.S. Speaker of the House Nancy Pelosi. A decade earlier, the arrest of a Chinese fishing boat captain in contested waters culminated with Beijing blocking exports to Japan of certain rare earth minerals, critical components for wind turbines and electric vehicles."
"Today, the economists find, China exerts outsized influence over trading partners while the United States has less power than expected relative to the size of its economy "With the arrival of new data sources and empirical tools, this is something we can now study very rigorously," Yang emphasized. "Conducting these objective, data-driven analyses feels all the more urgent in today's global geopolitical climate.""
A framework measures how much geopolitical muscle a country can flex by threatening trade disruptions. Results indicate China exerts outsized influence over trading partners while the United States has less power than expected relative to the size of its economy. China imposed trade restrictions on Taiwan following a 2022 visit by U.S. House Speaker Nancy Pelosi. Earlier, Beijing blocked exports of certain rare earth minerals to Japan after the arrest of a Chinese fishing boat captain. China banned the import of Norwegian salmon for nearly a decade as punishment tied to the Nobel Prize awarded to Liu Xiaobo. The model tests mid-20th-century predictions from Albert O. Hirschman and leverages new data sources and empirical tools for rigorous study of trade-based geopolitical influence.
Read at Harvard Gazette
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