Political Backlash of Economic Sanctions: Evidence from Beijing's Restriction on Cross-strait Tourism

33 Pages Posted: 31 May 2023

See all articles by Shengqiao Lin

Shengqiao Lin

University of Texas at Austin

Dongtao Qi

National University of Singapore

Suixin Zhang

Tsinghua University

Date Written: May 30, 2023

Abstract

How do economic sanctions affect the political attitudes of individuals working in targeted industries in the sanctioned countries? More specifically, do economic sanctions reduce or increase their political support of incumbent governments? Despite the importance of these questions for understanding the effectiveness of sanctions, existing evidence remains inconclusive. This article demonstrates a "distributional backlash": the targets of sanctions strengthen their political support of the incumbent because of supportive industrial policies. Empirically, we leverage Beijing's sudden restriction on cross-strait tourism to estimate its political impact on Taiwanese tourism workers based on 20 waves of quarterly surveys from 2017 to 2022 in Taiwan. Difference-in-differences estimation reveals tourism practitioners' increasing support of the incumbent leader after the sanction. Such effects are mainly driven by the opponents instead of supporters of the incumbent. Tourism subsidies significantly contribute to promoting political support. Consistent patterns are found in another sanction by Beijing on Taiwan's agricultural products.

Keywords: Sanction, Cross-strait Relationship, Political Backlash, China

Suggested Citation

Lin, Shengqiao and Qi, Dongtao and Zhang, Suixin, Political Backlash of Economic Sanctions: Evidence from Beijing's Restriction on Cross-strait Tourism (May 30, 2023). Available at SSRN: https://ssrn.com/abstract=4463850 or http://dx.doi.org/10.2139/ssrn.4463850

Shengqiao Lin (Contact Author)

University of Texas at Austin ( email )

Texas
United States

Dongtao Qi

National University of Singapore

Suixin Zhang

Tsinghua University

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