What have we learned about how China deals with partnerships during the Ukraine crisis?
Themes: how can China navigate a rapidly changing geo-political topography; the war’s impact on Sino-Russian relations; how China’s neutral position compares internationally.
Published: May 2022
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Response 1 of 3
Prof. Alessandro Arduino, Principal Research Fellow at the Middle East Institute, National University of Singapore
On February 24th Putin crossed the proverbial Rubicon, and there is no turning back. Since the Russian invasion of Ukraine, China is walking a tightrope in balancing its core principle of territorial integrity while pursuing the newly minted ChinaRussia era of international relations.
More than a month has passed since the beginning of the conflict. It doesn’t look likely that Putin will be in Kyiv saluting his soldiers during a military victory parade in Maidan Nezalezhnosti.
The impact of the Ukrainian crisis is affecting Beijing on multiple fronts, at a time when the Chinese Communist Party (CPC) is fighting a domestic battle against Omicron and 26 million citizens in Shanghai are experiencing a severe lockdown. While the Chinese economy survived the first two years of the pandemic’s adverse impact on the global economy, the negative ripple effects from the domestic lockdown are going to be severe. Reaching 5.5% GDP growth at the end of the year is not going to be as straightforward as expected.
The war in Ukraine is adding fuel to the fire: It is a stress-test for the already tenuous relations with US and EU. It is sending energy and food prices higher and taking a toll on the Belt and Road, President Xi Jinping’s flagship foreign affairs initiative. China’s core interest, the need for stability to support economic diplomacy, is currently under severe stress.
Despite the West’s request to denounce Russia’s act of war, Chinese diplomats and academicians are not shy in stating where China stands. In an opinion piece published in The Washington Post headlined “Where we Stand on Ukraine”, China Ambassador to the US, Qin Gang, reiterated the statement from Foreign Minister Wang Yi’ that “one country’s security should not be achieved at the expense of others, and that regional security should not be based on strengthening blocs”.
On the surface, the deliberately vague Chinese position is shared by other countries, notably India, Israel, United Arab Emirates, and Saudi Arabia. However, these countries have different interests in mind in adopting this stance. Russia is a long-time partner of India, and its major weapons supplier. India faces problems of its own with China; it cannot afford to antagonise Moscow. Israel faces dangers next door and will need Russian help to manage its operations in Syria.
Similarly, Saudi Arabia and the UAE have stated several times that the Ukraine crisis is not their problem, especially when the Biden administration has given the cold shoulder to the de-facto Saudi ruler, Crown Prince Mohammed bin Salman Al Saud.
Both monarchies are showing their frustration with the recent American opening towards Iran and Washington’s perceived security abandonment of the region. This just accelerates China’s inroads into the Middle East and not only for energy security reasons. While, Saudi Arabia and UAE rebuffed US requests to help reduce energy prices and join sanctions, they welcomed new defence contracts for Chinese military equipment.
As the Russian army gets bogged down in grinding urban warfare and economic sanctions against Russia gain traction, Beijing is learning important lessons and not just from the battlefield. While the performance of short-range antitank portable missiles and nimble combat drones provide new data for the ongoing modernisation of China’s People’s Liberation Army, it is the unprecedented scale of economic sanctions that is really keeping Chinese strategists up at night.
At the political level China is promising financial support. But Chinese financial institutions are very wary of being subject to secondary sanctions and are already starting to fall in line. According to Bloomberg, Chinese diplomats in the US are asking for granular details on the sanctions. Even if no sanction red lines are crossed by Chinese banks, the ripple effects on the global trade will affect Beijing’s plans for stable economic growth.
Given its dependence on energy imports, the massive spike in energy prices is bad news for Beijing. But it is in Europe and not in China that it will hurt the most. It is not by chance that the annual carbon emission target was placed on hold during China’s recent Two Sessions meetings, allowing Beijing the flexibility to counter further energy price spikes. And China’s short-term gains from a preferential food trade policy with Russia will be offset by the looming global food crisis generated by soaring fertilizer prices and the inability of many farmers to afford soil nutrients.
While Russia has now surpassed Iran as the most sanctioned country in the world, Moscow seems confident that China will shield the country from the incoming financial tsunami
The reality is different, as China’s own international payment system is not a solution: Beijing still depends on the Society for Worldwide Interbank Financial Telecommunication (SWIFT), from which many Russian institutions are excluded.
China’s international payment system is also not liquid enough to provide an alternative to Russian banks. Regarding credit cards, the China UnionPay system was initially able to soften the blow by supporting the Russian Mir system, after the block imposed by Visa and MasterCard. Though subsequently UnionPay has been reported to have suspended negotiations with Russian banks to issue new bank cards for their customers, due to potential concerns over secondary sanctions from the US. Although Moscow is offering rupeerouble and renminbi-rouble payment options to Indian and Chinese oil buyers and Saudi Arabia is in talks to price some of its crude in yuan, renminbi payments for oil do not look a viable long term solution. At least in the short term the renminbi is not a serious challenger to the dollar’s dominance. It also seems unlikely that China will create a special purposebank to deal exclusively with Russia, in the way it did for Iran.
The Covid-19 pandemic has already had a negative impact on China’s Belt and Road initiative (BRI). Now, the war in Ukraine has dealt a several blow to the land connectivity that links China with Central Asia and the European Union. However, China’s renewed friendship with Russia will not affect its standing with its nonEuropean BRI partners. An economically weaker MENA region will give a wholehearted welcome to any expansion of the BRI. The further worsening of relations with the US means that even the rich Gulf monarchies will have fewer qualms in accepting China’s BRI and Digital Silk Road. Nevertheless, it will take time for this broader impact on BRI to become clear given some much uncertainty on how the Ukraine war will develop.
In the case of a stalemate, with Russia controlling a corridor from the new oblast in Donbass to Crimea and Odessa, and with Kyiv stuck in a sort of demilitarised anarchy, China will have to navigate very carefully in how to offer an economic lifeline to Russia. Russia is not Iran, and Beijing will need even more caution in dealing with the Russian banking system. Nevertheless the relationship with Russia is not in question. In a recent virtual meeting with Biden, Xi rejected US efforts to force China to exert unilateral pressure on Russia, reiterating the official Chinese line and inviting Russia and Ukraine to reach a peaceful resolution. In a recent discussion at the Atlantic Council, US Treasury Secretary Janet Yellen reiterated the Biden position, calling on Beijing to act: ‘’China has recently affirmed a special relationship with Russia. I fervently hope that China will make something positive of this relationship and help to end this war.’’
An ongoing barrage of articles by the Chinese People’s Liberation Army doesn’t leave much hope for Washington’s requests. The PLA Daily accuses the US ‘of having ’imposed all-round and indiscriminate sanctions on Russia, and even using globalization as a weapon, even in sports, art and academic fields. This fully exposes the hegemonic behaviour of the United States that has always despised international rules and undermined international order.’’
At the moment, it seems very unlikely that China is going to change direction on its unlimited friendship with Russia. Russia’s dependence on China is growing by the day. There is no longer a need to discuss who is the junior partner in the rediscovered relationship boosted by Xi and Putin during the Beijing Winter Olympics. What is though clear is that the renminbi is becoming the new dollar in Russia.
About the Author
Dr Alessandro Arduino is the principal research fellow at the Middle East Institute (MEI), National University of Singapore. He is the co-director of the Security & Crisis Management International Centre at the Shanghai Academy of Social Science (SASS) and an associate at Lau China Institute, King’s College London. His two decades of experience in China encompasses security analysis and crisis management. His main research interests include China, Central Asia and Middle East and North Africa relations, sovereign wealth funds, private military/security companies, and China’s security and foreign policy. Alessandro is the author of several books and he has published papers and commentaries in various journals in Italian, English and Chinese. His most recent book is China’s Private Army: Protecting the New Silk Road (Palgrave, 2018).
Response 2 of 3
Prof. John Gong, Vice President, UIBE-Israel
Principled Neutrality on War in Ukraine
The war in Ukraine is about to enter its fourth month. It doesn’t look like it is going to end any time soon. Both Russia and Ukraine have indicated they will fight for the long haul. Meanwhile the international community is decidedly divided with respect to this war and the sanctions against Russia. At the United Nations General Assembly on March 2, thirtyfive countries representing a joint population of just over 4 billion people, a little more than half of the world’s population, abstained from Resolution ES-11/1 that deplored Russia’s actions. By contrast, countries representing just over 40% of the world population, voted for the resolution. If we add in those countries that voted against ES-11/1, the minority position of the voices deploring Russia in the strongest terms is even clearer. Several large economies and emerging markets abstained – for example, three out of the four countries other than Russia within the BRICS bloc.
None of these four has so far announced any sanctions against Russia.
The Chinese government’s position on this war is very clear. There is a set of complex reasons and causes that led up to the war, some of which are historic, and some of which are geopolitical, but certainly not all of which should be entirely attributed to the Russian side.
China’s official position is one of neutrality, a position that is motivated by its own national interests and national security concerns. Unlike European countries, China shares a 4200-kilometre-long border with Russia.
Toeing Washington’s line on sanctions would essentially plunge China into a relationship of animosity with Moscow.This is a relationship where China has its own history of painful memories. Even more absurdly, it would plunge China into a sceptical Western alliance that may well turn against China once the West’s mission is accomplished with Russia. Most of the countries in Europe and in Asia that have imposed sanctions so far enjoy some level of nuclear protection from Washington.
China does not. China’s nuclear capability is only one tenth of Russia’s.
Beijing watches with great concern the escalation of actions in Ukraine on the part of both superpowers, further wary about the prospect of being dragged into a nuclear confrontation.
Washington’s accusatorial rhetoric against China also makes an argument from a moral standpoint in that the principles of sovereignty and territorial integrity are enshrined in the UN Charter. Nothing in this war, with all its convoluted causes – be it NATO’s eastward expansion, be it Putin’s ambition to restore the historic Russian empire, be it the Ukrainian leadership’s opportunistic blunder, be it America’s push to drive a wedge within the EU – on its own or in combination would render it any less immoral than the countless wars in European and American history.
The neutral position that China has adopted has many historical precedents. In the nineteenth century Great Britain adopted a foreign policy described as “splendid isolation” by historians, which postulated an entire disentanglement from conflicts on the European continent, while still pursuing trade opportunities with every European state. In 1866, British Foreign Secretary Lord Derby said more explicitly:
“It is the duty of the Government of this country, placed as it is with regard to geographical position, to keep itself upon terms of goodwill with all surrounding nations, but not to entangle itself with any single or monopolising alliance with any one of them; above all to endeavour not to interfere needlessly and vexatiously with the internal affairs of any foreign country.”
But today we should certainly do better than the 19th century British realists by adding some 21st century moralism. That is how the term “principled neutrality” comes into play. This entails holding back from arms sales into Ukraine; proactive actions to mediate a truce and bring about a peaceful political solution in Ukraine; and the provision of humanitarian assistance to the people in Ukraine. And last but not least, principled neutrality entails, unabashedly, maintaining normal trade relationships with both Russia and Ukraine. This last point of principled neutrality is indeed morally justified. Though it is probably not known to many people, sanctions do in fact kill just as T-72 tanks do. In fact, in a paper published in the international relations journal Foreign Affairs in 1999, John Mueller and Karl Mueller called sanctions ‘weapons of mass destruction’, as they cause economic hardship, denial of access to medical supplies and possibly starvation.
But even if we disregard the potential consequences of sanction casualties in Russia, today’s sanctions led by the West are totally different from past sanctions such as those imposed on North Korea, Cuba, Iraq and Iran. Today’s sanctions will probably kill more people outside of Ukraine and Russia than inside of them. Russia is a major global exporter of agricultural and energy products.
Higher prices of these products are right now causing dramatic rises in the prices of many other products in related and downstream industries. With inflation flying high, countries that rely on imports for food and energy will face grave difficulties. It is the poor among the population that will ultimately pay the price. Maintaining normal trade relations with Russia under principled neutrality is not only vital to fending off global inflation but will also save live as well.
About the Author
Dr. John Gong is professor of economics at the University of International Business and Economics （UIBE）, where he teaches and researches in areas of finance, industrial organisation, and antitrust and competition policies.
Dr. Gong is a prolific researcher and writer with a list of publications in leading international academic journals. He was the executive editor of the Journal of Chinese Economic and Foreign Trade Studies (JCEFTS) published in UK. He is also a renowned op-ed columnist for several leading English newspapers and medias in Asia, including the South China Morning Post, Global Times and CGTN writing extensively on economic and political issues.
He is one of the recognised antitrust and patent dispute authorities in China, serving as an academic affiliate with Global Economics Group, a leading global economics consulting firm based in the US.
He serves as an expert consultant with the Ministry of Commerce’s (MOFCOM) Antitrust Bureau in China, and acted as the chief architect of the Bureau’s national competition database project. He has been regularly hired by the Bureau to help examine numerous merger reviews of high profile multinational merger applications filed with competition authorities in multiple countries. He also participated in the antitrust filing petition for the merger between Didi and Uber.
He played a vital expert witness role in successfully appealing the lawsuit Beijing Rainbow vs. Johnson & Johnson, which is the first antimonopoly lawsuit in China won by a plaintiff in history. Since then he has served as an expert witness in abuse of dominance and monopoly agreement lawsuits to successfully defend notable multinational defendants in the court of law, including Panasonic, Hitachi, Sinopec, Motorola and Netease.
He works regularly for the World Bank Group to advise countries on competition policies, including Kazakhstan and Namibia. He has advised Caincross Foundation regarding China’s competition policies, and the World Bank regarding China’s SOE reform. He is also the principal author for the China section of the policy position paper by the BRICS New World Bank’s steering committee during its foundation time.
Dr. Gong played an important contributing role in US ex-Vice President Al Gore’s National Information Infrastructure (NII) project
Response 3 of 3
Prof. Zeno Leoni, Defence Studies Department at Lau China Institute, King’s College London
The last two months mark a dramatic moment in international history. From the standpoint of China’s foreign policy it has also been an incredibly insightful time. China’s deliberately ambiguous posture on the war in Ukraine will surely become a case study for scholars.
Looking back to February 4ᵗʰ, during the opening ceremony of the Winter Olympics in Beijing, Russia and China promised each other and the world that cooperation would be with “no limits”. Yet, throughout the following weeks, and certainly since the beginning of the territorial invasion of Ukraine by Russia, there has been a mild evolution in Beijing’s posture. The main reason for this adjustment is to be found in China’s worldview. Two pillars of this world-view are “territorial sovereignty” and “non-interference.” Russia’s operations in Ukraine have brought these two concepts into tension with one another. On the one hand, China could not fail to see in the Ukraine war the violation of sovereignty of a country which, even if it was influenced by NATO, it was not a puppet state.
On the other hand, China’s respect for “non-interference” prevents Beijing from intervening in a more assertive manner against Russia.
Therefore, during the first weeks of the campaign, Foreign Minister Wang Yi suggested that a middle ground could still be found to respect Ukraine’s sovereignty and accommodate Russia’s security. Xi Jinping had a private conversation with Putin where, in all likelihood, he reiterated Wang’s message. China also abstained during two votes on the current crisis, once in the Security Council and once in the General Assembly.
Yet, in the end China has not joined the West in sanctioning Russia as many had hoped. This was the one action that would have titled the balance of forces. On the contrary, China has continued to blame NATO and the West for waging wars around the world. This is much to the surprise of the media who could not understand why China has not sanctioned Russia when its economic interests with Europe by far outweigh those with Russia.
What can we infer about China’s foreign policy stance on such a controversial issue?
There are several take-aways, but the over-arching theme is that China has political priorities which at times can supersede immediate economic interests.
Within this framework, the most important lesson is that China is currently going through a historical stage of its grand strategic trajectory where it must make “friends”. These friends – whether partners or allies, the substance does not change – are crucial if China wants to project its influence beyond Southeast Asia and Central Asia; to shape multilateral institutions from the inside so as to change the rules of international regimes and standards; and to start building the basis for developing forward basing military capabilities. While prioritizing long-term political interests reflects an attitude that some might characterise (or even caricature) as ‘very Chinese’, it is in fact not at all unusual for any countries to strive for allies in great power politics.
If one looks at the United States, for instance, it is fair to ask what there would be of American hegemony, if it was not for the network of alliances that helps Washington DC project influence quasi-globally? Without Germany, Italy and the UK in Europe, Saudi Arabia and Bahrain in the Gulf, and Australia and Japan in the Pacific, the United States would probably be a local power in the Western hemisphere. But, as the Ukrainian crisis clearly shows, China is not on the lookout for friends among the core states of the European Union, despite having commercial relationships with these countries, worth billions of euros. The sort of friends that China will need to build a sphere of influence are to be found in the developing world – among those states that have not wanted to sanction Russia.
For the time being, EU members will continue to argue against China on a political level, and there is little China can do to please them. At the same time, Beijing is confident that the Europeans will not have the guts to impose secondary sanctions on China because they need access to China’s market.
There is, however, another reason why China has not intervened in the conflict and against Russia. At a time when the United States, NATO, and the EU have limited or no diplomatic credibility – since they are not impartial in the conflict – many in the West assume that China could be the natural mediator. They may have discounted two things. At a time of American disengagement from multilateralism, China is not yet ready or interested in taking the lead.
Moreover, China may simply not be as shocked and concerned by the war as European countries are. This is a very important point because it signals that current times mark a period of ‘hegemonic vacuum.’
In the short-term, China is not going to act as an international arbiter of disputes among other states in the way that the US has done for decades.
More specifically, we should not always assume that in the International System of States (ISS), made-up of sovereign national entities, one country can easily influence another country.
Although China is becoming a great power, it might not be enough for Xi Jinping to hold a phone call with Putin to persuade him that the war in Ukraine should be ended. This is just not how sovereign states operate and certainly this is not the case for Russia. Ukraine seems to be a high priority for the Kremlin and it is certainly not a high priority for the Chinese leaders in Zhongnanhai. Above all, this might also become dangerous territory for China. Should Beijing insist on mediating but fail to achieve a tangible outcome, this could represent a setback. It might signal that China has limited leverage over its partners. Or that its diplomatic influence remains limited to its own region or to minor powers alone. Finally, there may be another way to interpret China’s “on the fence” posture. This has to do with betting on the right horse or choosing the lesser evil In Myanmar, China accepted a military coup and the subsequent Tatmadaw junta,
because the alternative might have been greater instability. Similarly, China has for years seen North Korea as an inconvenient partner. Ensuring regime stability has been a core interest for Chinese elites. Equally, opposing Russia more confrontationally in Ukraine might have a more destabilizing effect than letting the more powerful military side follow its objectives.
So, is China’s patience endless? What could prompt Beijing to intervene? It is likely as along as this conflict remains local – that is, inside Ukraine’s borders – Beijing will be able to live with it. Yet, should the conflict spill over, China could flex its muscles. China would never accept a scenario of hostilities spreading to the Mediterranean region, for instance, where both NATO and Russia have naval assets facing off each other. If China was to see impacts on the bulk of its trade to Europe, which passes through those waters, the calculus could change. This is not an impossible outcome. A classic example of what might trigger tensions is the missile that struck a Japanese cargo-ship in the Black Sea off the coast of Ukraine. This could shift the geographical centre of gravity of this war.
About the Author
Dr Zeno Leoni is a Lecturer in ‘Challenges to the International Order’ at the Defence Studies Department of King’s College London, based within the Joint Services and Staff College (JSCSC) of the Defence Academy of the United Kingdom. He is also an affiliate to the Lau China Institute of King’s College London, where he is coconvenor of the same institute’s policy brief series named China in the World.
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