China and Russia: Is the Marriage of Convenience Headed for Divorce?

Barely a month after Russia’s invasion of Ukraine, the cracks are already beginning to show in China and Russia’s “friendship without limits”. Xi Jinping and Vladimir Putin may have publicly declared their support for one another during February’s Winter Olympics but in the weeks since, Xi has been left walking a tightrope so fine it’s hard to avoid the sense he’s been played by Putin.

In the interests of peace, the West must act fast and capitalise on this potential fissure. China has by no means turned its back on Russia, but there’s a limit to how long Beijing will be able to continue balancing support for its ally, defence of Ukraine’s sovereignty and protection of its economic interests in Europe.

So far, the worst-case scenario – Xi throwing China’s economic and political might behind Putin – has been avoided. Concerted action from the West has put real limits on Beijing’s ability to continue business as usual with its ally. The question now is how close we can get to the best-case scenario.

The good news is China has a vested interest in peace. Beijing knows a peace settlement offers the best solution to its domestic-messaging dilemma, and Xi has already expressed his desire to support EU-led peace talks. The West shouldn’t overstate China’s potential role – it has neither the willingness nor the ability to fully take the lead in mediations – but we should welcome its efforts to take a seat at the table.

But, as this paper sets out, this must be part of a dual-pronged strategy. At the same time as welcoming a Chinese role in mediating peace, we must set out firm red lines on sanctions, energy and disinformation that discourage China from indirectly fuelling the conflict elsewhere.

Handled correctly, this is a rare strategic opportunity for both China and the West to put aside their differences and work constructively for the global good – or, to borrow a term from China’s own diplomatic vocabulary, to forge a genuinely “win-win” path. China and the West both make big promises to the rest of the world; now is the time to deliver on them.

Putin and Xi made headlines worldwide when, during February’s Winter Olympics, the pair released a 5,000-word joint statement declaring China and Russia’s “friendship without limits”. While the language of friendship might have been nothing new, some of the content was: China, for the first time, stood by its friend and publicly spoke out against the expansion of NATO.

But significant as this was, it wasn’t quite the birth of some new authoritarian alliance. Notably, Beijing stopped well short of condoning any Russian military aggression and any mention of NATO was conspicuously absent from the Chinese readout of the two leaders’ talks.

In fact, it seems unlikely that Beijing knew about the specifics of the invasion in advance. Even in the hours leading up to the invasion, Chinese state media continued to ridicule US warnings of an impending Russian attack. In Ukraine itself, the Chinese embassy appeared to have been caught off-guard, only beginning to draw up evacuation plans for its 6,000 nationals the day after the invasion began. Of course, it’s possible that knowledge was kept within an extremely tight circle or that Putin downplayed the scale or the timing of his military intentions, but it still seems unlikely that China’s top leadership would be willing to be publicly proved so wrong by the US – not to mention, to knowingly put its own citizens abroad at risk.

Whatever the case, it’s clear that in launching an invasion of this scale and with this little warning, Moscow has left Beijing in a bind. And far from a deepening partnership, it appears that we’re now seeing the natural limits of a relationship that – to use a cliché – is fundamentally a marriage of convenience. This is not to underplay the strategic value of the partnership – as late as last week, Foreign Minister Wang Yi continued to praise China’s “iron-clad friendship” with its “most important strategic partner”. But it’s a useful reminder that the foundations of the Sino-Russian relationship are first and foremost born of mutual interest, not from any sort of deeper natural affinity.

In the past few years China and Russia have found themselves bound by two major common interests: ensuring regional stability in Central Asia and, further afield, pushing back against what they see as an increasingly hostile US. Both see the US as seeking undue influence in their own backyards – the Indo-Pacific for China and Eastern Europe for Russia. Sino-Russian alignment is a useful way to divide the US’s strategic attentions and mitigate Western efforts to isolate either country.

But while the two clearly enjoy a valuable strategic partnership, if the past few weeks have shown anything it’s that they are not natural allies. In launching his invasion, Putin has made clear his willingness to act against China’s interests. Going forward, our strategy needs to play on China’s willingness to act against Russia’s.

Putin’s invasion has left China in an unenviable position. Likely caught off-guard by the extent of Russia’s military aggression, Beijing now finds itself trapped between four competing concerns:

• The need to – publicly, at least – stand by its self-proclaimed “friend” and crucial strategic partner

• The need to defend the principles of sovereignty and territorial integrity that are absolutely central to Chinese foreign policy, but clearly being violated by the Russian invasion

• The need to protect Chinese economic interests across the EU, Ukraine and, to a lesser extent, Russia itself

• The need to carefully balance relations with the world’s other major superpower, the US

The result, unsurprisingly, has been ambivalence as Beijing attempts to pin down a workable official line. Beijing’s ostensible neutrality – a position it claims to take in all conflicts like this – has so far allowed it to avoid outright criticism of Putin. Both at home and abroad, Chinese officials have consistently blamed NATO, and particularly the US, for their part in knowingly escalating tensions, but they also speak frankly of the unfolding humanitarian crisis and the importance of negotiating a quick return to peace. Among all of this, China frames itself not as an active friend to Putin, but as a clear-eyed mediator, capable of seeing fault on both sides and one of the few countries sincerely invested in peace.

As Beijing attempts to reserve judgement, commentators have drawn almost diametrically opposing conclusions from its purposeful fence-sitting. Some have taken China’s unexpected abstention from a UN motion condemning Russia, and Xi’s claim that the conflict is “in no one’s interest” in a call with Biden last week, as evidence that China is quickly moving to side with the rest of the international community. Others interpret a refusal to impose sanctions or to use the term “war” in that same Xi-Biden call as proof that Beijing is doubling down on its authoritarian alliance.

In reality, all this actually shows is the difficulty of settling on an official position that can adequately balance Beijing’s concerns – especially when the situation remains so volatile. In fact, for all its rhetoric, no action that Beijing has taken has been massively substantive in either direction. It hasn’t, say, joined the US and imposed sanctions of its own; nor has it provided active military support to Russia. Of course, left to its own devices, Beijing would clearly prefer to add a slightly more pro-Russia spin to its ostensible neutrality, and we should take the fact that it hasn’t felt able to so far as a moderate success.

There’s cause for cautious optimism on the economic front too. So far, Chinese firms’ compliance with US sanctions has been greater than many expected. There have already been reports that ICBC and Bank of China, two of the country’s biggest banks, have restricted financing for purchases of Russian commodities to avoid violating US sanctions. But once again, this is more the product of an abundance of caution than a sign of the top leadership switching their allegiances.

In situations like these, China claims to maintain a neutral, business-first position. Obviously, this allows China to invoke its principle of neutrality to justify continuing business as usual with Russia, but there’s a positive flipside too: Chinese firms remain responsive to basic market forces that encourage compliance with US sanctions. This means in the absence of clear direction from central leadership, Chinese firms looking to access global markets will likely continue to avoid any actions that could incur the wrath of US regulators.

In other words, the Russian invasion has left Beijing facing an immensely delicate balancing act. Admittedly, there’s no scenario in which Beijing would want to be sending its troops to support Putin or voicing outright support for the violation of another country’s sovereignty. But there is one in which Chinese firms would be keen to buy up cheap energy exports and fill the vacuum left by the withdrawal of Western firms from Russia, leaving Beijing to enjoy privileged relations with one of its key strategic partners and profit from the US’s attention pivoting elsewhere. But instead, for now at least, we are seeing real limits – both political and economic – to the Sino-Russian “friendship”. The challenge will be working out exactly where those limits will lie.

For the time being, the worst-case scenario – in which China throws its full economic and political might behind Russia – seems to have been avoided. How close, then, can we get to the best-case scenario?

Handled correctly, China could provide a much-needed new avenue of influence in attempts to bring an end to the conflict. This means recognising that China has a vested interest in a quick, peaceful resolution – perhaps even more so than the West. Negotiated peace – however optimistic an outcome – is the best route out of Beijing’s current three-part dilemma because: China could avoid explicitly condemning Russia, a key strategic partner; it could position itself as a champion of sovereignty on the global stage; and a return to stability would ensure the least disruption to its economic interests across Europe and Russia. This, of course, is easier said than done, but it’s in everyone’s interests to explore ways to give China a seat at the table – not only because the alternative of China being left out in the cold is a risky prospect.

Offer Up a Win-Win Solution

Beijing likes to espouse “win-win” diplomacy, and we should recognise that for once we’re in a position to offer that. When it comes to potential cooperation with China, framing will be key. Any role for China in addressing the conflict must be sellable to its domestic audience, which means offering collaboration on terms that can be presented as a win for China, rather than Beijing succumbing to Western pressure.

The good news is Beijing has already expressed interest in supporting peace talks. In a call with Olaf Scholz and Emmanuel Macron last week, Xi offered up China’s support for Normandy Format talks and praised EU leaders’ pursuit of a peaceful settlement. That said, we shouldn’t overplay the leverage Xi has over Putin. Beijing has neither the will nor the ability to play the leading role in peace talks. It lacks the regional expertise that has made it successful in other mediation roles closer to home, and the past few weeks have made it clear that Beijing has no desire to be the one delivering tough messages to Putin. Xi himself is clearly aware of these limitations – in his call with Scholz and Macron he offered to support peace talks, not lead them.

But the offer itself is still significant, and it represents a rare opportunity to encourage China to live up to its promise of being a responsible global power. But this will need careful navigation. It’s tempting to pitch the conflict as a binary fight between Russia and the West and yet, both at home and abroad, Chinese officials are careful to disaggregate the US and the EU. The US is painted as a ruthlessly hegemonic power that only pays lip service to peace, with the EU much more amenable to the idea of dialogue, forced to bear the brunt of US-directed economic sanctions. As exaggerated as this may be, there’s a real desire to avoid pushing the US and EU into closer strategic alignment.

This distinction should be factored into our strategy, ensuring efforts to bring China to the table constructively are spearheaded by the EU and framed – correctly – as a genuine “win-win” step for China, Western countries and, most importantly of all, the Ukrainian people.

Hope for the Best, Prepare for the Worst

So far, we seem to be seeing the upside to Beijing’s business-first stance. China may be Russia’s top trading partner, but Russia doesn’t even factor into China’s top ten, and the prospect of losing access to the dollar market has kept Chinese banks and firms’ compliance levels high.

But we do have to prepare for the eventuality that politics wins out over economics. Without instruction otherwise, most large private businesses are likely to continue complying with US sanctions. But Russia’s substantial foreign-currency reserves, 14 per cent of which are kept in China, give Beijing potential room for manoeuvre. While the West keeps up the pressure on China and Russian energy exports continue to bring in foreign currency, it still seems an unlikely prospect, but China’s central bank could theoretically help stabilise the rouble by selling Russian-held securities with a discount paid in dollars.

More pressing is how the West approaches the very real prospect of China buying up cheap Russian energy exports, and undermining the impact of EU and US embargoes in the process. There’s no likelihood of China acting as a complete shock absorber – increasing domestic production means China’s oil stockpiles are already relatively high, while the new Gazprom pipeline will take a couple of years to operationalise – but Western countries should still act quickly and in concert to determine exactly what their red lines look like when it comes to China propping up Russian energy firms.

This means we also need to figure out a longer-term strategy. China might be complying, by and large, with Western sanctions, but it has no intention of imposing any of its own. Instead, Beijing will try to maintain its neutral, business-like stance as far as we allow it to – a lot depends on how closely the international community attempts to regulate China’s behaviour.

Left unchecked, China could easily become a “no-questions-asked” buyer of cheaper Russian energy exports in the long term, while Chinese tech firms like Baidu and Huawei could choose to flout US sanctions and fill the void left by Google and Apple’s withdrawal from Russia. And while China’s financial-information exchange system CIPS is not an immediate alternative to SWIFT, in the long term it could be developed and expanded to provide a welcome boost to Beijing’s efforts to internationalise the renminbi.

There are no easy answers, but Western countries will have to work out what they think is worth fighting for – as well as what would be unnecessarily antagonistic. Beijing will not want to be bossed about, especially by the US, and it is important that progress isn’t unravelled in pursuit of unrealistic concessions and compliance. But that doesn’t lessen the need for firm red lines, mutually agreed between Western countries and laid out to Beijing in advance. This is the best way to avoid spiralling into a worst-case scenario of double-edged secondary sanctions that serve only a punitive, not deterrent, purpose – or, in other words, a “lose-lose” outcome.

Putin has left Xi in a difficult position, but Western countries are in the position to offer at least a partial solution. China being welcomed to play as constructive a role as possible in peace talks and encouraged not to undermine Western sanctions is Beijing’s best hope for addressing its domestic-messaging dilemma. And, most importantly of all, this is an outcome that would genuinely work for the good of the Ukrainian people.

Obviously, this is easier said than done. The problem will be that while Beijing does want peace, it does not want Putin to lose power – and it doesn’t want to be seen to be made to fall in line with the US, either. But this doesn’t mean we should rule out a constructive role for China in addressing the war. People may assume China shares a natural affinity with Russia, but the same case could easily be made for Ukraine. Seeing a country have its sovereignty violated by an unaccountable major power chimes with much of China’s own experience in the 19th and 20th centuries.

We should be looking at China’s domestic picture too. If Covid cases, already at a two-year high, continue to grow, China may soon be grappling with a threat to stability within its own borders. Defending Russia at a cost to its own economic interests might suddenly seem less appealing.

Above all, this is a question of shared responsibility. China and the West both make big promises to the international community – China that it is a “peaceful partner” and global champion of sovereignty; the West that we’re prepared to defend democratic values and tackle humanitarian crises beyond our borders. When it comes to Ukraine, both sides have a responsibility to ensure we’re living up to these promises.

Recommendations

• Welcome Chinese support for peace talks: Encourage China to play as constructive a role as possible in supporting Normandy Format talks led by France and Germany.

• Consider the messenger: The EU is better equipped than the US to encourage Chinese participation in peace talks. The US should not relinquish its role of conveying tough messages on the consequences of supporting Russia, but it should also make clear its willingness to engage in constructive dialogue with China too.

• Make our red lines clear: Use both public and private channels to lay out clear red lines and consequences for crossing them, including zero tolerance for China helping to spread Russian disinformation.

• Focus on the energy question: Explore ways to prevent China becoming a no-questions-asked buyer of Russian energy exports while still allowing it to meet its energy needs.

• Stay realistic: Identify China’s own red lines (imposing sanctions of its own or calling for Russian regime change, for instance) and focus efforts on genuinely deliverable cooperation.

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