Beijing’s Kyiv conundrum

The Chinese word for Ukraine is Wukelan (乌克兰). The word itself is a broadly phonetic representation of the country’s name but each of the three Chinese characters has a meaning in its own right. The middle character ke (克) translates as ‘overcome’.

That seems all the more profound given the situation Ukraine finds itself in – invaded by its vastly larger neighbour Russia. It is putting up a staunch resistance in defence of its homeland even as missiles target buildings in it major cities like Kyiv and Kharkiv. True to the second character in its Chinese name, after just over a week of fighting the country has shown a steely will to fight back and overcome Moscow’s attempts to force it into submission.

How has China reacted?

China’s own reaction to the massive invasion has been complex, to say the least. As recently as Monday the BBC reported: “China is still far from condemning the situation, with Foreign Ministry spokesman Wang Wenbin refusing to refer to what is happening there as an ‘invasion’.”

Indeed last Friday when Russia vetoed a US-backed resolution at the United Nations Security Council requiring Russia to withdraw from Ukraine, China abstained.

A day before that China Daily was reporting that Chinese Foreign Minister Wang Yi had told his Russian opposite number that “China always respects the sovereignty and territorial integrity of all countries, and also understands Russia’s reasonable security concerns, as a complicated and special history lies behind the Ukraine issue.”

The Financial Times noted here the “rhetorical gymnastics of China’s diplomats” as they tied themselves in knots over a stance it described as “pro-Russia neutrality”.

These intellectual contortions were a result of trying to square two key – but incompatible – planks of Beijing’s foreign policy. The first is a longstanding tenet of China’s entire approach to international relations: a commitment to the territorial boundaries of sovereign nations and a diktat prescribing non-intervention in their domestic affairs. Given China’s own experience of territorial incursions in its ‘century of humiliations’ this has long been a sacrosanct principle for Beijing’s foreign policy elite.

However, with Russian leader Vladmir Putin looking to use his invasion to decapitate the Ukrainian government and demilitarise the country – as well as redraw the country’s borders – those acts amounted to a fairly monumental breach of Beijing’s own ideological priniciple that neither it nor any nation should intervene in another sovereign state’s domestic affairs.

This ran uncomfortably up against another reality: the growing diplomatic friendship between China and Russia, embodied in the warm relations between Putin and China’s own paramount leader Xi Jinping, who had earlier thrown his weight behind Putin’s opposition against NATO expansion when the Russian leader visited Beijing for the Winter Olympics last month.

The Wall Street Journal commented on that same Putin trip in an article looking at its significance in the context of the 50th anniversary of Richard Nixon’s groundbreaking visit to China in 1972 (which had peeled Beijing away from its ideological alliance with Moscow; see WiC574). It noted that a new ‘triangulation’ was underway in ‘great power’ politics with China and Russia closing ranks against the US. The US newspaper wrote: “Russian President Vladimir Putin launched his military drive into neighbouring Ukraine 20 days after he and Chinese leader Xi Jinping forged their own joint statement, one for a ‘new era’. In a lengthy broadside against the US-led global order that has dominated since the collapse of the Soviet empire, the two autocratic leaders described a friendship that has no limits, there are no ‘forbidden’ areas of cooperation.”

This context explains why Beijing’s diplomatic corp initially went out of its way to offer some geopolitical justification for why Russian tanks and artillery had crossed the border into Ukraine and were advancing on its capital city Kyiv. Last Thursday Foreign Ministry spokeswoman Hua Chunying gave reporters this historical context: “When the US, in violation of its agreement with Russia, expanded NATO eastward five times to the doorstep of Russia and deployed a large amount of offensive military weapons, have they ever considered the consequences of cornering a major power to a desperate situation?”

In this light, Hua and her ilk were positioning Putin’s aggression as the understandable defensive act of a party long wronged. Trying to thread the needle, the China Daily began its editorial column on Monday with an extraordinary piece of moral rhetoric: “The time-tested truths of history have taught generation and generation of Chinese to maintain a proper sense of right and wrong, and stand on the right side of history.”

Putin waits till after the Olympics…

That said, there was also the question of the timing of the invasion and China’s potential influence here.

“Significantly”, noted the BBC, Putin waited till after the Winter Olympics were over before sending in troops. Xi had not wanted his high profile Games disrupted and Putin may have realised if he wanted to keep Xi’s China on side, he’d better not act during the Olympiad. He waited till not much more than 48 hours after the Closing Ceremony to roll his tanks into his southern neighbour.

Three things may have taken Beijing more by surprise than Putin’s decision. The first was the slow progress of the Russian military in the opening days. What was supposed to be a blitzkrieg looked anything but. Instead, rolling coverage by CNN and other networks showcased the fierce and well organised resistance of Ukrainian troops (an eye-opening report by CNN’s Matthew Chance showed a column of Russian vehicles annihilated during a counteroffensive on a bridge outside Kyiv). Ukraine’s leader Volodymyr Zelensky offered his own defiance in video messages posted via social media. Russia’s own propaganda machine looked flatfooted by comparison and in terms of global opinion was badly losing the ‘information war’.

Secondly, the US, the EU, the UK and others rapidly retaliated with a host of coordinated measures aimed at crippling Russia’s economy. These included financial sanctions against Putin and others in his circle, the ejection of key Russian banks from the international payments system Swift and bans on the sale of semiconductors and other technology to Russian entities. The Russian central bank’s dollar reserves were also frozen, weighing on its ability to shore up a plunging currency. Offshore bank accounts and assets of Putin’s oligarch supporters were seized. Germany cancelled a controversial Russian gas pipeline and announced a major rearmament drive. More symbolically, Russia was ejected from membership of practically every key sporting body, losing the ability to play in November’s football World Cup and to host the Champions League final (now moved by UEFA from St Petersburg to Paris).

Thirdly, refugees fled Ukraine in what has become a growing humanitarian disaster, and one that’s directly attributable to Putin’s actions (the UN said Wednesday a million people had left).

All told, in a matter of days Russia and its economy respectively achieved pariah and isolation status.

A new stance?

These three factors have seen a telling modulation in Beijing’s stance. Late on Tuesday evening the FT reported that China was now “ready to ‘play a role’ ” on brokering a ceasefire in what the newspaper termed a “shift in Beijing’s public position”. This followed a call between Wang Yi, Chinese foreign minister and his Ukrainian counterpart Dymytro Kuleba in which Wang said Beijing was “extremely concerned about the harm to civilians” and that Ukraine was now ready to “strengthen communications with China” and that Beijing would exert a role in “realising a ceasefire”.

Kuleba said that Wang had assured him “of China’s readiness to make every effort to end the war on Ukrainian soil through diplomacy, including as a permanent member of the UN Security Council”. Wang also “thanked” Ukraine for helping to evacuate some Chinese citizens, including students who were moved from Ukraine to Uzbekistan.

The FT said that the dramatic changes in the war situation of the prior days had likely refashioned Wang’s real politik calculus: “Some analysts say China is trying to position itself as a regional peacemaker, leveraging its close ties with the Kremlin.”

Of course, much uncertainty remains: not least because the 40 mile long convoy of Russian military vehicles remains in place on the outskirts of Kyiv and commands enormous potential firepower. Putin has begun to unleash an almighty barrage of guns and missiles on the Ukrainian capital and other cities, leading to huge loss of civilian life and infrastructure. But will this ruthless strategy also finally attain his military and political objectives (removing Zelensky)?

And while the military outcomes remain hard to fully predict, there is a sense that China faces a minefield of its own in the weeks and months ahead in navigating the barrage of economic sanctions that have been unleashed on Moscow by Washington, Brussels, London and others.

Of course, China has never been a fan of US sanctions or blacklisting. As Wang told his German counterpart Annalena Baerbock on Saturday: “China disapproves of using sanctions as a means to solve problems and rejects unilateral sanctions that are not based on international law. Experience has shown that sanctions do not solve problems, but create new ones.”

Putting to one side Wang’s registrations of disapproval, Chinese businesses are going to face some hard choices dealing with Russian entities going forward. The international community has economically shunted Russia into a similar position to Iran. It is worth remembering that the initial problems Huawei faced in the US can be traced back to its alleged busting of international sanctions in its dealings with Tehran.

That experience will give other Chinese firms reasons for pause: what dealings with Russia might get them onto a ‘secondary’ sanctions list and hurt their ability to do business elsewhere in Europe and the US? As the Wall Street Journal explained: “Punitive economic measures imposed on Russia, particularly export controls on certain technologies, would potentially hit China if its businesses and banks try to help Moscow, according to [US] officials. If China ‘or any other country wants to engage in activity that would be subject to our sanctions, they’ll be subject to our sanctions,’ a State Department official said.”

The Washington Post notes that the tech ‘blacklisting playbook’ learned via banning Huawei from America’s extensive semiconductor supply chain has now been applied to Putin’s regime. “The global computer chip industry, including the giant Taiwan Semiconductor Manufacturing Company, has begun halting sales to Russia in the wake of US sanctions aimed at punishing Moscow’s invasion of Ukraine,” the newspaper reported, adding: “The Biden administration announced the sanctions [last] Thursday, saying they would cut off more than half of Russia’s high-tech imports and kneecap the country’s ability to diversify its economy and support its military.”

China’s tech and financial transactions with Russia will be closely monitored. As Sergei Guriev, an economist at Science Po University in Paris, put it: “Chinese state banks are already blocking financing of Russian oil sales. China is afraid and rightly so of secondary sanctions. This is really a game-changer.”

Two bigger strategic questions…

The first: will China end up an ultimate long term winner from Putin’s adventurism and its consequences. That’s because regardless of whether Ukraine is overrun rapidly or not, Putin’s actions will only make Russia more economically dependent on China than it already is.

First some key numbers in this regard. China holds 14% of Russia’s forex reserves, the biggest single share. Russia is by far Beijing’s biggest recipient of loans from official sector institutions, totalling as much as $151 billion between 2000 and 2017, according to AidData, an international research lab at the College of William & Mary in Virginia. Bilateral trade hit a record high of more than $145 billion in 2021, after a 36% year-on-year rise.

When Putin met Xi in Beijing last month, Russia’s Gazprom and China’s CNPC signed a 25-year deal on a new gas supply route (the Power of Siberia pipeline). Rosneft, Russia’s top oil exporter to China, recently agreed to supply CNPC with 100 million tonnes of oil (via Kazakhstan) over the next 10 years. Russia and China are also working on a third gas pipeline project via Mongolia.

With fewer willing buyers for its oil and gas output in Europe, it seems likely Russia will sell ever greater proportions to China. Not only will that give Beijing the whip hand in negotiations over future prices, it will also be a boon for Chinese energy security.

FT columnist Rana Foroorar expressed a similar sentiment when she wrote about the invasion: “It will also make Russia much more economically dependent on China, which will use the US and EU sanctions as an opportunity to pick up excess Russian oil and gas on the cheap.” Indeed, she went further: “Russia’s invasion of Ukraine is a key economic turning point that will have lasting consequences. Among them will be a quickening of the shift to a bipolar global financial system – one based on the dollar, the other on the renminbi… All this supports China’s long term goal of building a post-dollarised world, in which Russia would be one of many vassal states settling all transactions in renminbi.”

The FT also noted, for instance, last week that Gazprom Neft had switched all settlement for fuelling Russian planes in China to renminbi, the first Russian company to do so. But likely not the last. A potential beneficiary of this shift: CIPS, China’s payments alternative to Swift. Trade will drive up CIPS volumes. “China needs oil for its development, and Russia needs manufactured items from electronics to automobiles,” economist Yuan Gangming at Tsinghua University told the Singaporean newspaper The Straits Times.

What does it mean for Taiwan?

That brings us to the second big strategic question: what does (and will) the ongoing invasion mean for Xi’s own thinking on Taiwan, which he views in much the same ‘renegade’ terms that Putin does Ukraine.

Indeed, on both sides of the Taiwan Strait the interconnected nature of the two issues has been apparent. Sohu News says that the ruling DPP party in Taipei has rallied around the slogan “Ukraine today, Taiwan tomorrow” in seeking a global coalition of support. On Sina Weibo there have been no shortage of hawkish comments calling for China to seize the chance to take Taiwan back now when the US is occupied with the Ukraine crisis.

Former US President Donald Trump also weighed in on the topic when he gave an interview to Fox News last week. During an appearance on The Clay Travis & Buck Sexton Show at his Mar-a-Lago estate, Trump said Xi will take Russia’s actions against Ukraine as a signal to seize Taiwan.

“China’s going to be next,” Trump pointed out, predicting Xi wanted to invade Taiwan now that the Olympics was done.

In recognition of this possibility, the Biden administration had Taiwan in its sights this week too, even though most of its activity was directed towards Ukraine. Michael Mullen, former chair of the US joint chiefs of staff, was sent to Taipei on Tuesday to lead a US delegation that also included Michele Flournoy, a top Pentagon official. “There’s a sense that it is a good idea to give Taiwan reassurance at this time,” said Bonnie Glaser, a China expert at the German Marshall Fund, “Sending a group of former senior officials now outside government is a good way to do that. It sends the right message in an unprovocative way.”

So far the Biden administration hasn’t changed its policy of ‘strategic ambiguity’ on Taiwan – i.e. its deliberately unclear messaging on whether it would defend the island militarily in the event of invasion – even with fresh lobbying that it should do so from former Japanese leader Abe Shinzo this week. However, Kurt Campbell, the top White House Asia official, says there has been no change in approach, though he also added that the recent events surrounding Ukraine – and the West’s tough response – are likely to be colouring Beijing’s decisionmaking. “They [Beijing] have been concerned by some of the solidarity that everyone has witnessed in the aftermath of the invasion,” Campbell pointed out at an event for the German Marshall Fund.

It seems self-evident that Putin’s progress in Ukraine and its ramifications for Russia both economically and diplomatically will be weighed up carefully by Xi. It will inform his own cost-benefit analysis when he contemplates whether to invade Taiwan. Had Putin largely won a bloodless coup in the first 48 hours – with virtually no economic pushback from the US or the EU – it would have sent a bold signal to Xi. As it stands, Xi is likely looking at the situation in Ukraine and assessing the reaction very differently.

The longer and messier the Ukraine situation proves to be for Putin, the more Xi too will rerate the risks of a Taiwan invasion, given the strategic difficulties (it requires a massive coordination of three military branches – air, sea and land – and a landing involving overwhelming force across a major body of water). With China’s military largely untested in joint mass operations since the invasion of Vietnam in 1979, a thrust against Taiwan would be a highly challenging operation to green light even were both the weather and political conditions ideal.

Meanwhile the Foreign Ministry in Beijing has adopted a dismissive tone on the topic: “It is unwise of certain people of the Taiwan authorities to latch on to and exploit the Ukraine issue to their advantage. Taiwan for sure is not Ukraine. Since the Ukraine crisis broke out, Taiwan has been frequently mentioned by some people. Some of their remarks fully reveal their lack of knowledge of the history of the Taiwan question.”

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