Key points to understand China’s position on Ukraine

• Tradition of neutrality, but de facto support for Russia. China is the country with the most ongoing territorial disputes. It has been so since the founding of the People’s Republic of China (PRC). Beijing has therefore been fearful for decades of outside countries supporting its rivals in territorial claims, and any return to the pre-PRC scenario of national fragmentation. This is why China has for decades embraced a foreign policy of non-interference and neutrality in the internal affairs of other states. There are other causes: ever since Mao proclaimed his “three worlds” theory in the 1970s, China has wanted to differentiate itself from the imperialist and interventionist powers of the First World, i.e., the Soviet Union and the United States. China has consistently pursued its foreign policy of non-interference and neutrality over the past decades.

  However, the Russian invasion of Ukraine has placed China in an awkward position. It is clear that an invasion of a sovereign country runs counter to any stance of non-interference. At the same time, a position of neutrality benefits the stronger side of the conflict (Russia). Although Beijing has insisted that it does not take sides in the Ukraine conflict, its “neutral” position means de facto supporting Russia. The “no-limits” friendship that Xi Jinping and Vladimir Putin proclaimed between China and Russia before the invasion is overturning a coherent foreign policy that has benefited Beijing for decades. A non-interfering, neutral China now sound less credible.

• Ukraine was not an enemy of China. Kiev has not been at odds with China, neither before the 2014 Maidan revolution nor after. This was consistent with Beijing’s non-interference foreign policy. China is Ukraine’s main trading partner. It is the top destination country for Ukrainian exports (13.8%) and the country from which Ukraine imports the most (13.3%):

  

  

  China has invested in Ukraine following the revolt against Yanukovich, the annexation of Crimea and the war in the Donbass. China has maintained good relations and economic ties with both Ukraine and Russia. However, Russia is more important economically and geopolitically to China than Ukraine. If Beijing has to choose between the two, it will choose Moscow, and has done so.

• The EU is not an enemy, but a possible balancer against the United States. Some analysts often speak of a confrontation between China and the West. But this is by no means Beijing’s position. China distinguishes between the United States and the European Union. The Unites States is China’s main rival and the great power that wants to halt China’s rise. The European Union is a middle power that is not a rival and can help China soften Washington’s aggressiveness and power. China wants the EU’s “strategic autonomy” to translate into a weaker U.S.-EU alliance.

  More importantly, the EU is China’s largest trading partner, superior to the US or any Asian economy. In particular, the EU is a much more important economic partner for China than Russia. Daily trade between the EU and China is about 2 billion euros, while daily trade between Russia and China is about 330 million euros. These data were recalled by European Commission President von der Leyen at the EU-China meeting that took place last week. The EU ended the meeting frustrated because it failed to get China to commit to criticizing or pressuring Moscow. China also ended the meeting frustrated because it intended to conduct a “business as usual” meeting while ignoring the war in Ukraine. This outcome has soured the relationship between the EU and China.

• At the macro level, China is buying Russia’s narrative that blames NATO expansion. There is another reason why China is seen as an ally of Russia in this war (in addition to its false neutrality): when asked about the causes of the invasion of Ukraine, the main blame is against NATO, not Russia. The Chinese government and mainstream Chinese intellectuals defend that the long-term causes of the war are basically related to NATO’s eastward expansion. Therefore, what Russia is doing now is defending itself against the West. This position is also shared by a large part of the Chinese population. As some analysts have pointed out, the main driver of this narrative is not love for Russia, but anti-Western resentment. This narrative is also creating resentment in the EU against China.

• At the micro level, Chinese media are not automatically buying into Russian propaganda and fake news, and are even reporting Moscow’s massacres. The Chinese media landscape operates under the narrow constraints of an authoritarian system, but it is pluralistic within these constraints. The belligerent stance of the Global Times newspaper is different from the more liberal stance of the CGTN TV channel. This is clear in the coverage of the invasion of Ukraine. For example, a CGTN reporter covered the scene of the Bucha massacre in the company of the Ukrainian Defense Minister. If we look at the news of the People’s Daily or Xinhua, the official mouthpieces of the party line, they use Russian terminology (special operation), but they are covering both Russian and Ukrainian representatives’ statements. More importantly, they do not blindly reproduce Russian fake news, such as that the Bucha massacre was committed by the Ukrainian army against its own people.

• China has pro-Russian words, but the facts are less pro-Moscow. With its false neutrality and anti-OTAN narrative, China appears to support Russia. But if we look at the facts, at the actual commitments and costs China is willing to accept, the picture is different. China is not supporting Russia militarily, at least openly. There was information about China selling weapons to Russia, but it appears that this was part of a pre-invasion agreement and that these arms could not be used in battle in the short term. China is not willing to make a serious commitment to support Russia militarily in this war. This would entail significant sanctions and economic costs that do not make sense to Beijing, since Russia is not that important to China.

  However, direct sanctions are not the only concern for China. Even if Beijing does not directly support Moscow, if China helps Russia mitigate international sanctions, it could become the target of secondary sanctions. China wants to avoid these secondary sanctions, and it is quietly reducing its ties and investments in Russia, particularly in critical sectors. One example is energy, as Supchina noted:

  “China’s Ministry of Foreign Affairs reportedly urged executives of three major energy conglomerates — Sinopec, China National Petroleum Corp. (CNPC), and China National Offshore Oil Corp. (CNOOC) — to review their business ties to Russian partners and refrain from buying Russian assets in the short term”

  “China’s largest oil and gas refiner, Sinopec, has suspended a potentially half-billion-dollar investment in a major petrochemical plant, along with a gas marketing deal, in Russia”.

  This has happened and will happen in other Russian economic sectors. In addition, many Chinese companies with ties to Russia and EU economies will sever those with Russia if they perceive that maintaining both could harm their presence in the European single market.

• In the short term, China will try to avoid Western sanctions; in the long term, it will control the Russian economy. Weakening some key economic ties with Russia is China’s short-term strategy to survive international sanctions against Moscow. In the long term, as Russia experiences greater economic isolation and the economy declines, it will become more dependent on China and thus China will have more leverage over Russia. Although it appears that the EU will not cut its gas imports from Russia in the short term, in a few years the EU will likely: 1) shift entirely to buying gas from North Africa and Liquified Natural Gas (LNG) from other regions; 2) build a stronger nuclear power system; and 3) increase its share of energy produced by renewable energy technologies. The idea is that the EU will stop buying Russian energy in the medium term. In this scenario, Russia will have to sell more to China and thus become more dependent. The same will happen with other minor Russian exports. In addition, Russia will also need China to avoid financial sanctions, such as the recent ban on the SWIFT system.

• The Taiwan comparison: Ukraine is far less important to the US and to the global economy. It is tempting to compare Russia’s invasion of Ukraine to a possible PRC invasion of Taiwan. In particular, some argue that the U.S. and Western response to Ukraine would affect Beijing’s calculus about an invasion of Taiwan. Some argue that poor U.S. engagement in Ukraine could embolden Beijing. Others argue that the economic costs of war and international sanctions on Russia are making clear to Beijing the enormous costs of such a decision. Comparisons are always possible, but I think in the case of Taiwan two important points need to be raised. First, Taiwan is much more important to the United States than Ukraine. The conflict involves the PRC, the main rival of the United States and the only power capable of replacing Washington at the top of the world order. Moreover, the United States has strong defense commitments and military relations with Taiwan, which began in the 1940s and still continue. A war in Taiwan would be decisive for U.S. power and credibility, and the one in Ukraine is not.

  Second, the economic impact of a war in Taiwan on the world economy would be far greater than that caused by the invasion of Russia. Because of the war in Ukraine, we have seen a rise in energy and certain commodities prices. Because of a war in Taiwan, we would see massive damage to global semiconductors supply chains and, therefore, massive damage to the world economy:

  

  Taiwan dominates 63 % of the global semiconductor industry’s market share. One Taiwanese manufacturer, TSMC, accounts for 54 % of the global market share. Semiconductors are essential for basic industries such as IT, telecommunications, banking, transportation and healthcare. We have experienced a severe semiconductor crisis due to the COVID pandemic and the heavy economic costs it has caused. A war in Taiwan would be a nuclear shock to the global economy.