Analysis: China’s Role in Russia Sanctions

China will ease sanctions imposed by the United States and Europe, but that will not stop a brutal Russian economic crisis. The sanctions limit Russians’ access to compensation in dollars and euros. Companies and the Russian government would find it difficult to buy and sell American and European currencies, which causes numerous problems, such as an exchange rate explosion, import limitations, inflation, and possible financial crisis.

Russia is counting on Chinese help to limit the damage to its economy, but Chinese support is not unconditional. China and Russia are allies against the US and the European Union in geopolitical matters, but there are two brakes on Chinese support: a history of confrontations between the countries, and the two countries’ different view of the West: Russia sees them as enemies, but China sees the US and EU more as adversaries.

China and Russia were not unconditional allies even when both were the world’s leading communist countries. Mao withdrew from the Soviet Union after Stalin’s death. The problems between Mao’s China and Khrushchev’s and Brezhnev’s Russia escalated to an undeclared war in 1969. For seven months, there were several skirmishes, including the Battle of Zhenbao Island, in which Chinese troops attacked Soviet soldiers, killing dozens of soldiers and a colonel. During part of the 1970s and 1980s, China considered Russia its greatest enemy, while opening diplomatic relations with the US. Russia supported the invasion of Cambodia by its ally Vietnam, which ended in the overthrow of the Chinese-backed Khmer Rouge. In retaliation, China invaded part of Vietnam in 1979.

Since then, relations between the two powers have evolved in different ways, with normalization and strengthening of diplomatic relations, technological cooperation, and closer economic ties. But this does not mean absence of tensions. For example, India is one of the few countries that has not vigorously denounced the Russian attack on Ukraine, for Russian support for its geopolitical conflicts with China. Another country in the midst of these pressures is Mongolia.

Today, relations between China and Russia are formalized in the Treaty of Good Neighbor and Friendly Cooperation, signed in July 2001. Interestingly, the treaty ended last month, but in June 2021 a five-year extension was signed. The treaty establishes several mechanisms for military, economic and financial cooperation; in 2001, the biggest Chinese interest was access to Russian military technology.

China will not abandon Russia and has even asked Putin not to invade Ukraine during the Winter Olympics, which ended on February 20. But there are limits to what China can do. Today, more than 85% of trade between the two countries is settled in dollars and euros. Chinese banks that lend foreign currency to Russian companies would be subject to sanctions. The yuan is not convertible worldwide; for the Russians, there is no point in selling something and receiving it in a currency that can only be used in China.

The Chinese government is changing its speech in support of the Russians and even letting criticism of Ukraine’s actions reverberate in the local media. With Chinese economic growth and Russian decline, the balance of power between the two countries shifted. Russia continues to offer something to the Chinese, which is geopolitical support. But the Russians’ usefulness to China is much less than in the past. The world is not a zero-sum game in which Russia and China can only gain something at the expense of the rest of the world. Russian actions are fundamentally irrational, which runs counter to Chinese pragmatism. Unfortunately, China must not act strongly to end the war, but at least it will not assist the Russians with weapons; in a proxy war, China will wash its hands. But it’s little.

Chinese officials like to declare that their aim is for the world to respect China as a world power. This is an excellent opportunity for China to be a protagonist. Will the Chinese work hard for peace? For the good of all, we hope so.