“I think it’s a disaster for China,” said J Capital Research’s Anne Stevenson-Yang, referring to Beijing’s support for Russia’s invasion of Ukraine.
Foreign policy elites have for years thought about how to break up the growing China-Russia partnership. Now, they should be cheering the tie-up and hope the two large states get even closer.
Why? Russia is fast diminishing China.
Most observers see China as the winner of the Ukraine war. “They’ll be the primary beneficiary of the sanctions against Russia, the yuan will benefit from the decline of the ruble, and they have been given a case study of what the world’s response would look like if they were to invade Taiwan,” said Steve Gray, a former FBI special agent working on China cases, to Fox News. “It would not be surprising at all to learn that this is shaping up exactly as China planned.”
China does have big plans, evident after Xi Jinping spoke for more than two-and-a-half hours with Vladimir Putin in Beijing on February 4. Beijing and Moscow “reaffirm that the new inter-State relations between Russia and China are superior to political and military alliances of the Cold War era,” their 5,000-word joint statement announced. “Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation.”
This extraordinary document, released February 4, was drafted at a time Chinese leaders knew Moscow would invade. The New York Times reports that the Chinese got Moscow to postpone the war until the Beijing Winter Olympics concluded. The Games ended on February 20; Russia invaded four days later.
Starting February 4, Russia announced large commodity sales of energy—oil, gas, and coal—to China and Beijing removed restrictions on the importation of Russian wheat. Beijing is, in addition, making its financial system available to Russian institutions as the U.S. and Europe cut them off from theirs. Beijing is supporting Russia in U.N. councils and using state media to propagate absurd Russian narratives. China, in sum, is a combatant.
In the short term, Beijing, as Steve Gray suggests, reaps big advantages. “China will take advantage of Russia’s pariah status, as it always does,” Stevenson-Yang said in comments to me. “In fact, China loves to take advantage of crises: It’s gotten very chummy with Iran since the 2012 sanctions, it became Iraq’s biggest telecom supplier after the U.S. invasion, and there’s North Korea, in a whole separate class. They’ve already hammered Russia on oil and gas prices, and they will undoubtedly get a good deal on grains and trace minerals.”
The reckoning, however, will come soon. As she says, these immediate gains are “all small stuff.”
“What really matters is that China has destroyed two decades of efforts trying to play with the Big Boys in international organizations,” Stevenson-Yang points out. “Now China will find it harder to raise money, will have to pay more for its bonds, and those efforts to internationalize the renminbi or act as a counterbalance to U.S. power? Say goodbye.”
The big downside for China is that its association with such a bad actor affects its standing with the countries it really needs. “China needs Western trade and has to follow the rules-based order to keep the machinery of economic growth on track,” Andrew Collier of Hong Kong-based Orient Capital Research wrote to me.
Don’t let anyone tell you China isn’t reliant on the American market. Last year, the country’s merchandise trade surplus with the U.S. accounted for 58.6% of its overall surplus. And this calculation assumes the accuracy of Beijing’s numbers, which have traditionally understated exports to America.
China is risking its access to America and Europe as well. Without them, the Chinese economy, increasingly export-dependent, would crumble.
Beijing is hitching itself to an imploding power. Even if Moscow eventually annexes all of Ukraine—Russia’s battlefield advances are gaining momentum according to the Pentagon—the effort will weaken the Russian state. The cost of this gigantic misadventure is estimated to be $20 billion a day, and Russia’s economy, according to recent estimates, will shrink between 15% to 20% this year.
“If it hasn’t already, Beijing will discover soon that an alliance of two between China and a shriveling power with an economy one-thirtieth the size of its own and incomparably less dynamic—even one propped by a surfeit of nuclear weapons—isn’t much of an alliance,” writes journalist Howard French. Russia, he believes, “will emerge as a shriveled version of its recent self: a weak, isolated, and increasingly dysfunctional state.”
True, China could let Russia wither, but that would be a waste of a valuable asset. The Russian Federation is valuable to the People’s Republic of China only if it’s a strong state, French argues, because that will prevent the world paying too much attention to Beijing. The risk for China, therefore, is that it will be tempted to bail out Moscow so that Russia can perform this distract-others function.
Yet Beijing, burdened with massive Belt & Road and other commitments abroad, can ill afford another sinkhole obligation like Russia. At the moment, China, with a slow-moving debt crisis at home and a stagnant economy, looks overstretched. Russia then begins to resemble an albatross firmly tied to the neck of the Chinese state.
It is not clear that Xi Jinping, focused on geopolitics, is willing to cut Vladimir Putin loose, however. China’s leader sees great value in the Russian aggressor.
As the Economist writes, “In Beijing, scholars and high-ranking government advisers predict that today’s shows of Western unity will fade sooner or later, as sanctions fail to break Russia and instead send energy prices soaring.” The Chinese believe the invasion will “hasten America’s decline and slow retreat from the world.” The resulting “new global order” will allow China to establish its sphere of influence.
Xi looks like he believes now is the time to get rid of America. He’s willing to support a weak state to do so. He is betting on everything to win the world.
Yet the bold Chinese ruler is making a critical mistake. Russia is diminishing China.
Gordon G. Chang is the author of The Coming Collapse of China and The Great U.S.-China Tech War. Follow him on Twitter @GordonGChang.