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March 15, 2023 MEMRI Daily Brief No. 467

Russia Would Listen Only To China In A Political Settlement Of The Ukraine Crisis

March 15, 2023 | By Dr. Vladislav L. Inozemtsev*
Russia, China | MEMRI Daily Brief No. 467

China's Xi Jinping, who was just recently unanimously elected president and chairman of the Central Military Commission of the People's Republic of China at the 14th National People's Congress, is expected to visit Russia, as soon as next week, following a June 2022 invitation by Russian President Vladimir Putin.[1]

The Russian media have been speculating on Xi's visit since early January, as the Kremlin considers "very seriously" the Chinese "peace plan" aimed at bringing about a political settlement of the Ukraine crisis (See Appendix I). The Russian leadership expects China to continue its political and economic support for Moscow. However, the course of the conflict in Ukraine and its prospects make China-Russia relations less predictable than ever before.


(Source: Kremlin.ru)

Russia Depends On China

During 2022, economic relations between Moscow and Beijing grew much closer: China consolidated its position as Russia's most important trade partner, now accounting for around 26 percent of Russia's foreign trade turnover (the trade turnover between the two countries at the end of 2022 reached $190 billion, an increase of 29 percent compared to 2021).[2] Moreover, the share of Chinese cars in the Russian market may exceed 50 percent in 2023,[3] while the share of Chinese brands in the Russian smartphone market has grown to 75 percent.[4] China may also become a "buyer of last resort" for Russian coal and natural gas for the years to come.

It is also worth noting that, even while prior to the current war, Russia became the world's biggest holder of yuan-denominated reserves. In December 2022, the Russian Ministry of Finance declared that it intends to replenish the National Welfare Fund (NWF) in yuan. "Among the currencies of friendly countries, the yuan has the characteristics of a reserve currency and sufficient liquidity on our domestic foreign exchange market to the greatest extent. Therefore, the NWF will be replenished in this currency," Finance Minister Anton Siluanov said.[5] The yuan has emerged as the most traded foreign currency at the Moscow exchange in February 2023, surpassing the U.S. dollar.[6] Furthermore, Russia is now invoicing its exports in rubles and yuan by almost 50 percent, up from a mere 10.5 percent just one year ago.[7]

In almost every sphere, Russia now depends on China. Conversely, Russia is not an indispensable partner for China. As reported by data, China gets from Russia only 17.3 percent of its oil,[8] and around 10 percent of its pipeline and liquified gas imports,[9] while in terms of trade turnover Russia slightly improved its position in 2022 to become China's tenth largest trade partner, just behind Malaysia.[10]

China Is The Greatest Winner From Russia's War In Ukraine

Putin's attack on Ukraine and the subsequent events posed a difficult challenge to the Chinese leadership. Beijing was disappointed by Moscow, as Putin reassured Xi that the invasion of Ukraine would not happen during his trip to China in early February 2022.[11] However, what more disturbed China, during the course of the war, was to see that its "great ally" possesses poor military capabilities and that the Russian high command was greatly misinformed in the beginning of Ukraine's invasion, failing to achieve a quick victory.

In fact, the international media started to compare Russia's and China's military capabilities, doubting that a CCP naval attack on Taiwan would be even possible (despite China possesses the biggest maritime force on the globe). Furthermore, Chinese experts feared that the "Ukrainian crisis" would have pushed the militarization of Japan.[12] At the same time, Chinese leaders realized that Russia became overnight a much weaker power than it was (and seemed) before: more economically dependent of Beijing and less influential in the Pacific.

However, the rising problems in the Russian economy opened new possibilities for Chinese investors that can now strengthen their presence in Russia's Far East. The loss of alternative markets for Russian commodities has also significantly lowered the prices and benefited Chinese buyers. Hence, so far, China looks like the greatest winner from Russia's war in Ukraine in terms of economic opportunities and geopolitics.

The West Is Tired Of The War In Ukraine

Chinese leaders are now closely monitoring the changing mood of Western policymakers, who are supposedly becoming increasingly tired of the war, and dreaming of a prospective peace. European leaders are urging Kyiv to start talks with Moscow,[13] and American officials are advising Ukrainian President Volodymyr Zelensky to "start thinking" about "realistic demands and priorities for negotiations, including a reconsideration of its stated aim for Ukraine to regain Crimea."[14]

Americans and the Europeans, who spent tens of billions of dollars on Ukraine's support and lost hundreds of billions countering the economic effect of the war,[15] are now seeking a peaceful outcome. However, the main problem resides in the fact that the West does not have enough leverage for influencing either the Russian nor the Ukrainian leadership.

From one side, Putin is not worried too much about Russia's economic difficulties and hopes (not without grounds, I would say) that his country can wage the war for several years under the current circumstances.[16] On the other side, Zelensky cannot agree on ceding Ukrainians territories to Moscow without facing a risk of domestic revolt. The West is starting to act with extreme cautiousness, when it comes to supporting Kyiv with modern military equipment and ammunition,[17] and it may delay, or even stop, the Ukrainian counteroffensive, which is scheduled for the coming spring.[18] However, I would say, that even a lack of weapons and trained troops will not force Ukraine to terminate the fighting and start negotiations with Russia.

This is why China matters so much these days.

China Is The Most Valuable Economic Partner For Putin's Russia

It is worth noting that China is not really assisting Russia too much, but is just continuing its routine trade operations and providing a solid financial "bridge" between Russia and the world. China (and most notably Hong Kong) became a gateway for Western goods, many of which are prohibited from entering Russia, to flow into the country. In fact, many investigations suggest that Russian imports of microchips and electronic integral circuits increased last year by 40 percent despite the sanctions targeting all these devices.[19]

China silently agrees to obey to some sanctions against Russia (for example, those imposed on the Russian banks that subsequently fell out of favor with Chinese financial institutions) but in general it continues to insist that sanctions go against common international rules. For this reason, Beijing publicly reiterated that it will not implement the price cap policy on Russian oil (even though India recently said it may respect this regulation).[20]

Furthermore, the Chinese custom system is fully independent and will not restrict any transit of goods to and from Russia, unlike Turkey's custom system, which quite recently blocked third parties' trade operations with Russia.[21] All this makes China the most valuable economic partner for Putin's Russia – but at the same time may indicate huge problems for Moscow if Beijing's policies change.

Only Xi Can Command Putin To Withdraw From Ukraine

Since the late 20th century, China has become a global superpower in all fields except world politics. The CCP is making colossal investments in developing nations and bringing forward its ambitious "One Belt One Road" initiative, but China has not presided over any significant alliances since times immemorial. During the Cold War era, the relation between the Soviet Union and China, which never joined even the Non-Aligned Movement, went through ups and downs, while its most recent creature, the Shanghai Cooperation Organization looks like a dormant structure unable to deliver any economic results of political cooperation.

Many global capitals hosted dozens of important international conferences in recent decades and gave their name to important treaties. However, if one googles the term "Beijing Treaty," the only result that will come out is in reference to the 1860 Peking convention, which is an agreement comprising three distinct treaties concluded between the defeated Qing dynasty of China and Great Britain, France, and the Russian Empire. In China, they are regarded as "unequal treaties."

However, in trying to find a solution to the Russia-Ukraine conflict, China has a good chance to burst into the "major league" of the global powers. These days, Xi is the only person who can command Putin to withdraw from Ukraine (fully or partially), since without China's support Russia's economy cannot survive and the entire myth of Putin's empire successfully pivoting to the East will collapse. If this happens, Putin's rule, and, most probably, his life as well, will come to an end. Hence, Moscow will do what Beijing says, especially if it the latter will not take any objections into account.

Reconsidering The Entire "Grande Jeu"

For several decades, American political analysts wrote dozens of articles about Moscow's dangerous drift toward Beijing, seeing Russia as mostly "a normal country" and depicting China as the U.S.'s most powerful opponent. Their argument was that the West should not "cede" Russia to China and therefore must approach the Kremlin in a politer manner. However, this strategy failed. The West appeased Putin, making him even more aggressive and blatant, and neglected the positions put forward by Central European nations like Poland or Estonia that could have avoided the Russian assault against Ukraine.

Today the reconciliation between Russia and the West seems very unlikely, so it might be the time to reconsider the entire Grande jeu in a way Dr. Henry Kissinger has changed it back in early 1970s with his rapprochement with China that produced incredible results, affecting the entire world for more than 40 years.

The West these days has accumulated a lot of points of tension with China, and it seems that Beijing's key role in resolving the largest conflict in post-war Europe might be considered a fair price for some Western concessions and "normalization" with China.

After around 30 years of conducting relatively reasonable foreign policy, based on full-scale economic cooperation with the West and political leaning toward the East, the Kremlin made its choice to pursue political aims while neglecting economic ones. It engaged in a war with "the collective West," as the Russian leaders say,[22] and at the same time dreams about deepening connections with China (or, as one of Kremlin spin-doctors, Sergei Karaganov, points out: on refocusing to the East, with even moving the country's capital to Siberia).[23] As Russia voluntarily turns into China's vassal, there are good reasons for the Western powers to engage with Beijing for making Putin accountable and for ending the hostilities in Ukraine.

The Chinese leadership seemingly has no intention of following Putin's path: just recently, the newly selected Chairman of the State Council Li Qiang reiterated that China seeks better relations with the United States. "All this demonstrates that China and the U.S. can and must cooperate and there are a lot that the two countries can achieve by working together. Encirclement and suppression is in no one’s interest," Li Qiang told the press.[24] Hence, the West might try to offer some kind of reconciliation with China, if Beijing succeeds in pushing Russia back from Ukraine (China's appetite for some diplomatic successes was recently proved as its leaders released news about country's role in restoration of Saudi-Iranian diplomatic relations).

Conclusion

The "peace plan" that the Chinese leadership published on February 24, 2023, on the one-year anniversary of Russia's invasion, means only one thing: Beijing is interested in brokering a peace treaty between Russia and Ukraine. The incentive, I would say, seems to be not too strong these days – it looks like a first preliminary offer made to all parties. The Chinese proposal starts with the paragraph mentioning that "sovereignty, independence and territorial integrity of all countries must be effectively up-held," (See Appendix I) and this point may be taken for a call to restore Ukraine's 1991 borders. China implicitly says that it stays for the resolution of the conflict and awaits those who might be interested in it to deliver their proposals not so much to Moscow or Kyiv, but to Beijing itself.

If the Western leaders are bold enough to offer the Chinese some deliverables in exchange for their pressure on Moscow, the greatest geopolitical game of the early 21st century may start. It seems that such a drift is already visible, as quite recently it was announced that French President Emmanuel Macron may visit Beijing in early April[25] – but now President Xi tries to reach to Russia first, and the American policymakers have started to encourage him to meet with President Zelensky as well,[26] thus creating a feeling that they are interested in serious peace talks.

No one knows how the Ukrainian crisis will evolve – but I believe that China looks by far more predictable and valuable partner for the West than Russia may ever become. It might be a good idea to offer Beijing some revival in mutual cooperation in exchange for dumping Russia. A plan to get Russia on the West's side against China has been unrealistic from the start since the Kremlin realized that if it turns its back on Beijing it would never be forgiven – but the opposite situation looks different: with no allies except Iran, Eritrea, Belarus, and Nicaragua, Russia has few supporters these days...

*Dr. Vladislav Inozemtsev is MEMRI Russian Media Studies Project Special Advisor, and Founder and Director of Moscow-based Center for Post-Industrial Studies.

APPENDIX I – "China's Position On The Political Settlement Of The Ukraine Crisis" – Fmprc.gov.cn, February 24, 2023

On February 24, 2023, the first anniversary of Russia's invasion of Ukraine, China released an English-language paper stating its position on the political settlement of the Ukraine crisis.

Below is "China's Position on the Political Settlement of the Ukraine Crisis," published by China's Ministry of Foreign Affairs:[27]

"1. Respecting the sovereignty of all countries. Universally recognized international law, including the purposes and principles of the United Nations Charter, must be strictly observed. The sovereignty, independence and territorial integrity of all countries must be effectively upheld. All countries, big or small, strong or weak, rich or poor, are equal members of the international community. All parties should jointly uphold the basic norms governing international relations and defend international fairness and justice. Equal and uniform application of international law should be promoted, while double standards must be rejected.

"2. Abandoning the Cold War mentality. The security of a country should not be pursued at the expense of others. The security of a region should not be achieved by strengthening or expanding military blocs. The legitimate security interests and concerns of all countries must be taken seriously and addressed properly. There is no simple solution to a complex issue. All parties should, following the vision of common, comprehensive, cooperative and sustainable security and bearing in mind the long-term peace and stability of the world, help forge a balanced, effective and sustainable European security architecture. All parties should oppose the pursuit of one's own security at the cost of others' security, prevent bloc confrontation, and work together for peace and stability on the Eurasian Continent.

"3. Ceasing hostilities. Conflict and war benefit no one. All parties must stay rational and exercise restraint, avoid fanning the flames and aggravating tensions, and prevent the crisis from deteriorating further or even spiraling out of control. All parties should support Russia and Ukraine in working in the same direction and resuming direct dialogue as quickly as possible, so as to gradually deescalate the situation and ultimately reach a comprehensive ceasefire. 

"4. Resuming peace talks. Dialogue and negotiation are the only viable solution to the Ukraine crisis. All efforts conducive to the peaceful settlement of the crisis must be encouraged and supported. The international community should stay committed to the right approach of promoting talks for peace, help parties to the conflict open the door to a political settlement as soon as possible, and create conditions and platforms for the resumption of negotiation. China will continue to play a constructive role in this regard.

"5. Resolving the humanitarian crisis. All measures conducive to easing the humanitarian crisis must be encouraged and supported. Humanitarian operations should follow the principles of neutrality and impartiality, and humanitarian issues should not be politicized. The safety of civilians must be effectively protected, and humanitarian corridors should be set up for the evacuation of civilians from conflict zones. Efforts are needed to increase humanitarian assistance to relevant areas, improve humanitarian conditions, and provide rapid, safe and unimpeded humanitarian access, with a view to preventing a humanitarian crisis on a larger scale. The UN should be supported in playing a coordinating role in channeling humanitarian aid to conflict zones.

"6. Protecting civilians and prisoners of war (POWs). Parties to the conflict should strictly abide by international humanitarian law, avoid attacking civilians or civilian facilities, protect women, children and other victims of the conflict, and respect the basic rights of POWs. China supports the exchange of POWs between Russia and Ukraine, and calls on all parties to create more favorable conditions for this purpose.

"7. Keeping nuclear power plants safe. China opposes armed attacks against nuclear power plants or other peaceful nuclear facilities, and calls on all parties to comply with international law including the Convention on Nuclear Safety (CNS) and resolutely avoid man-made nuclear accidents. China supports the International Atomic Energy Agency (IAEA) in playing a constructive role in promoting the safety and security of peaceful nuclear facilities.

"8. Reducing strategic risks. Nuclear weapons must not be used and nuclear wars must not be fought. The threat or use of nuclear weapons should be opposed. Nuclear proliferation must be prevented and nuclear crisis avoided. China opposes the research, development and use of chemical and biological weapons by any country under any circumstances.

"9. Facilitating grain exports. All parties need to implement the Black Sea Grain Initiative signed by Russia, Türkiye, Ukraine and the UN fully and effectively in a balanced manner, and support the UN in playing an important role in this regard. The cooperation initiative on global food security proposed by China provides a feasible solution to the global food crisis.

"10. Stopping unilateral sanctions. Unilateral sanctions and maximum pressure cannot solve the issue; they only create new problems. China opposes unilateral sanctions unauthorized by the UN Security Council. Relevant countries should stop abusing unilateral sanctions and 'long-arm jurisdiction' against other countries, so as to do their share in deescalating the Ukraine crisis and create conditions for developing countries to grow their economies and better the lives of their people.

"11. Keeping industrial and supply chains stable. All parties should earnestly maintain the existing world economic system and oppose using the world economy as a tool or weapon for political purposes. Joint efforts are needed to mitigate the spillovers of the crisis and prevent it from disrupting international cooperation in energy, finance, food trade and transportation and undermining the global economic recovery.

"12. Promoting post-conflict reconstruction. The international community needs to take measures to support post-conflict reconstruction in conflict zones. China stands ready to provide assistance and play a constructive role in this endeavor."

 

[1] Lenta.ru/news/2022/07/05/ne_priehal/, July 5, 2022.

[2] Rbc.ru/economics/13/01/2023/63c0ffb79a79474aaf45862d, January 13, 2023.

[3] Tass.ru/ekonomika/16646481, December 21, 2023.

[4] Telecomdaily.ru/news/2023/02/28/itogi-2022-dolya-brendov-kitaya-na-rossiyskom-rynke-smartfonov-vyrosla-do-75, February 28, 2023.

[5] Tass.com/economy/1556281, December 27, 2022.

[6] Kommersant.ru/doc/5862221, March 6, 2023.

[7] Wsj.com/articles/russia-turns-to-chinas-yuan-in-effort-to-ditch-the-dollar-a8111457, February 28, 2023.

[8] Enerdata.net/publications/daily-energy-news/chinas-crude-oil-natural-gas-and-coal-imports-fell-2022.html#:~:text=According%20to%20the%20Chinese%20General,from%20513%20Mt%20in%202021.

[9]Aa.com.tr/en/economy/china-is-set-to-become-russias-main-gas-importer-to-replace-eu/2762421, December 13, 2022.

[10] Customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/4794352/index.html

[11] Republic.ru/posts/104139, June 11, 2022.

[12] Republic.ru/posts/103895, May 15, 2022.

[13] Wsj.com/articles/natos-biggest-european-members-float-defense-pact-with-ukraine-38966950, February 24, 2023.

[14] Responsiblestatecraft.org/2023/02/16/on-ukraine-is-biden-signaling-that-as-long-as-it-takes-may-have-an-end-date/, February 16, 2023.

[15] Reuters.com/business/energy/europes-draft-plan-cushion-power-price-spikes-2023-03-07/, March 14, 2023.

[16] See MEMRI Daily Brief No. 444, For The Time Being, Russia Looks Secure Against Financial Troubles, by Dr. Vladislav L. Inozemtsev, January 6, 2023.

[17] Theguardian.com/world/2023/feb/17/zelenskiy-urges-west-speed-up-arms-support-ukraine-russia-offensive, February 17, 2023.

[18] Washingtonpost.com/world/2023/03/13/ukraine-casualties-pessimism-ammunition-shortage/, March 13, 2023.

[19] Reuters.com/investigates/special-report/ukraine-crisis-russia-missiles-chips/, August 8, 2022; Forbes.ua/ru/news/rosiya-suttevo-zbilshila-import-chipiv-u-2022-rotsi-naybilshe-mikroskhem-nadkhodilo-z-kitayu-31012023-11404, January 31, 2023.

[20] Bloomberg.com/news/articles/2023-03-12/india-to-ensure-no-breach-on-russia-oil-purchase-sanctions, March 12, 2023.

[21] Bloomberg.com/news/articles/2023-03-10/turkey-blocks-transit-of-goods-sanctioned-by-eu-us-to-russia, March 10, 2023.

[22] Gazeta.ru/army/news/2022/09/21/18613117.shtml, September 21, 2022.

[23] Rg.ru/2023/03/01/ukraina-i-sibir.html, January 3, 2023.

[24] In.china-embassy.gov.cn/eng/zgxw/202303/t20230314_11040394.htm, March 13, 2023.

[25] France24.com/en/live-news/20230225-macron-to-visit-china-after-beijing-s-ukraine-peace-plan, February 25, 2023.

[26] Scmp.com/news/china/diplomacy/article/3213418/white-house-hails-possibility-xi-jinping-speaking-ukrainian-president-zelensky, March 14, 2023.

[27] Fmprc.gov.cn/mfa_eng/zxxx_662805/202302/t20230224_11030713.html, February 24, 2023.

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