The war in Ukraine looked like a win-win situation for China. That is now changing

Home Publications CEIAS Insights The war in Ukraine looked like a win-win situation for China. That is now changing
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Over the past century, the Sino-Russian relations have been marked by swings between two extreme positions. The Soviet Union assisted in the formation of the Chinese Communist Party, but at the same time, it also supported the nationalist government in its struggle for power in the battle-torn country.

The founding of the People’s Republic of China has helped nurture an image that the two countries are natural allies: two huge communist countries supporting each other. However, this relationship was significantly asymmetrical, with the Stalinist USSR dominating and China – a junior partner – increasingly dissatisfied with its inferior position. This situation eventually culminated in a Sino-Soviet split, which lasted until the collapse of the Soviet Union.

The Sino-Russian relations have improved considerably since the 1999s, however, just like in the past, they cannot be defined as a “fraternal cooperation”. This relationship is instead rooted in a shared effort to balance power against the geopolitical West and is complemented by the economic exchange of natural resources for consumer products and technologies.

Therefore, the joint statement by the leaders of China and Russia, issued prior to the start of the Winter Olympic Games and in which they announced a “no limits“ partnership, should be seen through the same prism. There is no military, economic or political alliance between Russia and China; it is still just a “partnership of convenience”, with the only difference being that the intensity of exchanges between the two are currently above the long-term average.

Self-interested support of Russia

Chinese declarations on the war in Ukraine should also be perceived from this perspective. China’s leadership has largely adopted Russian rhetoric – whether it is labelling Russia’s aggression as a “special military operation”, claiming legitimate Russian security concerns, a loud criticism of the expansion of the North Atlantic Alliance, or the support that the US and European countries provide to Ukraine.

Rather than demonstrating solidarity with Russia, such rhetoric is an expression of Beijing‘s own security concerns, since the United States, together with its European and Asian allies, have recently stepped up its Indo-Pacific strategy, largely aimed at curbing China’s power ambitions.

From a diplomatic perspective, the rhetoric China adopted is similar to the one it used in reaction to the Russian annexation of Crimea and separatist activities in the Donbas back in 2014. However, unlike today, its diplomatic balancing did not encounter a strict scrutiny by the West; rather, it was quite successful: only a few have pointed out that the Chinese side has nonchalantly overlooked its implicit support for separatism, which it normally tends to sharply criticize due to its stance on Taiwan. At the same time, the war in Donbas and Crimea has temporarily occupied the attention of the West, giving China more room to pursue its own ambitions.

A win-win strategy

In the current war in Ukraine, however, the Chinese leadership feels less at ease than it felt eight years ago. This time the Russian aggression lacks a plausible pretext, the goal of a rapid overthrow of the Ukrainian government has failed, and the bombings of civilian targets push the Chinese rhetoric into a corner, from which it responds with an increasingly aggressive criticism of the West.

Notwithstanding this, the diplomatic problems themselves may not prove to cause China a headache. Some analysts suggest that, in the sense of a win-win strategy, China can only gain from the war in Ukraine. If Russia wins, the victory will geopolitically strengthen its ally at the expense of the West, which will benefit China. On the other side, facing a Pyrrhic’s victory or even a defeat – which no one seems to have counted on – Russia will be economically weakened and tied to China. On top of that, whatever the outcome of the conflict, China will have the opportunity to observe the military and technological capabilities of both sides, thereby gaining the knowledge it may need in the future.

However, China’s support for Russia does not seem to be problematic only in diplomatic terms, but also in the realms of strategy and economy. It is already clear that even with Russia’s eventual victory, Moscow will be significantly weaker on the international stage than it was before the attack. Not only will it face a devastated economy and weakened military, but it will also find itself in international isolation.

Furthermore, the Russian aggression has provoked an unprecedented reaction in Europe, which declares to spend huge resources on armaments. Therefore, Russia’s diminished position vis-à-vis Western Europe diminishes the value of a “no limit” partnership between Beijing and Moscow.

The limits of the Chinese hedge

The announcement of several economic deals between Russia and China just before the start of the war in Ukraine suggests that Russia was anticipating Western sanctions and tried to hedge in the east. China’s motivation also seems obvious: to take advantage of the situation not just economically, but also strategically – ensuring access to raw materials and food from Russia.

But the extent and intensity of Western sanctions together with the long duration of the war seem to have eroded this calculation on both sides. The sanctions imposed on Russia are unprecedented not only in scope but particularly in the use of the “nuclear sanction”, whereby the assets of the Central Bank of Russia were frozen.

Russia’s plan to use these assets to mitigate the impact of economic sanctions on its economy has failed, leading to a sharp collapse of the ruble, a halt to stock market trading and an exit of many Western firms from the Russian market.

As a result of the sudden collapse of the Russian currency and economic activity, several Chinese companies also considered withdrawing from the Russian market, however, public opinion and the government’s position did not allow them to do so. In any case, as a result of the sanctions, Russia is much more dependent on Chinese support than anticipated, and it is likely that China will be unable or unwilling to deliver the aid to the required extent.

The long duration of the war in Ukraine contributes to the increase of inflation in global markets. Prices of oil and natural gas are rising, exports of nickel, of which Ukraine is a major global producer, have decreased, and prices of food and fertilizers, of which Ukraine and Russia are major global exporters, are climbing. Inflation is causing problems for the Chinese economy, which is currently experiencing production outages as it combats the omicron epidemic.

Considering the economic benefits and difficulties that the war in Ukraine poses for China, it is clear that the four-week dynamics of the conflict has changed the picture of the unambiguous win-win situation that was initially outlined for the Asian giant.

This can be also seen in the so-called secondary sanctions, which may apply to Chinese companies if they trade with sanctioned Russian entities. Certain actions by Chinese firms, such as the reluctance of state-owned banks to go against the US sanctions, suggest that trade with Western countries is still very important to China and that they will therefore comply with the sanctions.

Military cooperation

Sanctions may also significantly affect the dynamics of Russian-Chinese cooperation in the military field. Although China produces most of its weapons independently, it buys certain technologies from abroad, mainly Russia, which accounted for three-quarters of China’s total military purchases during 2016-2020. These purchases focused mainly on the Sukhoi fighter jets, in the production of which the Russian producers use a large number of semiconductors.

One of the first sectors to be included on the sanctions list were semiconductors, of which the world’s largest exporter – Taiwan – has joined the anti-Russian sanctions. As Russia does not produce state-of-the-art semiconductors on its own, the embargo on their purchase will slow down or even halt the production of the Sukhoi fighters jets, ultimately impeding the growth of the Chinese air force’s military capabilities.

A possible Chinese attack on Taiwan, which is often mentioned in connection with the war in Ukraine, would stand and fall on the strength of the Chinese navy and aviation. Without Taiwanese semiconductors in Russian military exports, the potential Chinese invasion would likely be delayed by 10 to 15 years. This is the time China likely need to develop the ability to produce high-level fighter jets on its own.

If China monitors Russia’s invasion of Ukraine and takes important lessons for its intended invasion of Taiwan, it is likely that the economic, diplomatic, and military response of the West to Russia will force Chinese strategists to weigh the consequences. If China wanted to further mitigate the effects of a potential Western response, Beijing would have to do its utmost to reduce the dependence of its economy and military production on foreign countries – a process that would take decades.

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Article was originally published by SFPA in Slovak language and can be found here.

  • Martin Šebeňa is a CEIAS Research Fellow. He studied political science and sinology at the Charles University in Prague (2011) and finance at Curtin University (2016). He is currently pursuing his PhD degree at The University of Hong Kong. In the past, he studied Chinese at Zhejiang University in China (2006-7) and political science at the University of Pisa (2008-9) in Italy. He has worked in the finance industry in Switzerland, Australia, Hong Kong and Czechia. Among his various interests are social events in contemporary China, in particular issues of urbanization, education, health, consumerism and popular nationalism.