Economic Coercion and Export Diversification

This study empirically investigates the impacts of China’s import restrictions on trade in four cases: wine from Australia, sugar apples from Taiwan, goods from Lithuania, and fish from Japan. Although existing studies have focused primarily on the direct effect on trade between countries in conflict, our study examines how this effect changed after the coercive actions ended. Furthermore, we investigate the effect of the coerced and post-coerced periods on export destination diversification. We find a significant adverse effect on exports to China for all four countries during the coerced period. However, in the post-coerced period, all countries except Japan restored their exports to China to their pre-coerced levels. Export diversification results differ by country. Overall, we find no significant export diversification in Australia, either during or after coercive action. By contrast, the other three countries show significant export diversification in both the coerced and post-coerced periods.