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China’s support for Russia in the Ukraine war is reaching its limit, as domestic costs for President Xi Jinping begin to outweigh the benefits of confronting the US.
Whether it is a trade war or a real one, as in Ukraine, China has demonstrated that it will try to keep its geopolitical struggles with the United States from harming the domestic economy. A rapidly deteriorating Covid situation, as well as the need for Xi to maintain stability in a pivotal year, make it less likely that the Chinese leader will allow Vladimir Putin’s invasion of Ukraine to reverberate at home.
Domestic pressure was visible on Tuesday, as U.S. warnings against Chinese financial and military support for Russia heightened investor fears that the world’s two largest economies might decouple. An index of Chinese shares listed in Hong Kong fell 6.6 percent to its lowest level since 2008, while the Shanghai Composite Index fell the most in two years. A so-called fear gauge, similar to the VIX in the United States, has risen by 78 percent in the last two days.
In this context, Foreign Minister Wang Yi told his Spanish counterpart, Jose Manuel Albares, that Beijing wanted to avoid further damage from the sanctions that are roiling global markets.
“China is not a party directly involved in the crisis, and it does not want to be further impacted by sanctions,” Wang said Monday, according to a Foreign Ministry readout of their call.
The remark is consistent with China’s calls to de-escalate the crisis, even as Beijing attempts to blame the US for instigating the conflict and its diplomats promote Russian conspiracy theories about bio labs in Ukraine. Beijing’s actions appear to be calculated to reduce the possibility of being drawn into a global conflict or being dragged further down economically as it seeks a way out of the pandemic.
“China will attempt to maintain its strategic partnership with the Russian Federation while also attempting to offset reputational and economic costs,” said Joseph Torigian, an assistant professor at American University who is working on a book about power struggles in the Soviet Union and China after Josef Stalin and Mao Zedong. “China has also not sacrificed its own economic interests to assist Russia in breaking free from Western sanctions.”
The war in Ukraine has exacerbated Xi’s challenges in a year when Chinese policymakers have pledged to prioritise political stability.
The Communist Party chief must reaffirm his status as China’s strongest leader since Mao ahead of a twice-decade reshuffle in the second half of this year, when he is expected to extend his tenure to a record-breaking 15 years.
