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Wednesday 11 May 2022

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China has ramped up its rhetoric to warn about NATO and the United States' footprint in Asia.

China increasingly sees the war in Ukraine -- and the roles of the United States and its NATO allies in backing Kyiv against Moscow -- as a reflection of future tensions to come between the military bloc and Beijing in the Indo-Pacific.

Ever since Russian tanks first crossed into Ukraine on February 24, Beijing has walked an awkward line between not giving outright support to Moscow's invasion while accusing the United States and other NATO countries of provoking the war by allowing the security alliance to expand eastward despite protests from the Kremlin.

Now, as the war continues to grind on with the Russian military suffering major setbacks on the battlefield, China has ramped up its rhetoric to warn about NATO and the United States' footprint in Asia.

"NATO, a military organization in the North Atlantic, has in recent years come to the Asia-Pacific region to throw its weight around and stir up conflicts," Wang Wenbin, a Chinese Foreign Ministry spokesman, said in late April. "NATO has messed up Europe. Is it now trying to mess up the Asia-Pacific and even the world?"

Wang's comments were in response to earlier remarks from U.K. Foreign Secretary Liz Truss, who called for boosting NATO in the wake of the Ukraine war and warned China that it should "play by the rules."

The added focus on NATO from Beijing comes as both China and the United States see Russia's invasion as a foil for future tensions between the two countries in Asia. NATO said last year that it intended to focus more on China and Beijing is expected to play a large role in the bloc's strategy moving forward.

Likewise, Washington is increasingly convinced that the conflict provides it with an unexpected advantage in the long term, with Bloomberg reporting on May 10 that U.S. officials believe that bolstered European defense spending and a weakened Russia could allow it to accelerate a security shift toward China.

Those aims are part of the shared distrust toward NATO and the United States that has led Beijing and Moscow to become closer in recent years and why many analysts believe that China has not abandoned Russia throughout its brutal war in Ukraine.

Similarly, experts and Western officials warn that Beijing is closely watching the response to Russia's invasion and drawing potential lessons for any tensions over Taiwan, which China claims as its territory and has threatened to invade if Taipei refuses to submit to its control.

"If China joins the West in condemning Russia, it will be much applauded in Washington and most European capitals. But it will lose Russia's partnership," Senior Colonel Zhou Bo, a retired officer of China's People's Liberation Army (PLA), wrote in The Economist on May 9. "And it is only a matter of time before America takes on China again. The Biden administration's policy towards my country is 'extreme competition' that stops just short of war."

Ukraine War As a 'Mirror'

The parallels drawn between U.S. strategy in the Indo-Pacific and NATO's expansion in Europe are not new, with both China and Russia underlining this point in the 5,000-word joint statement they released in February when Chinese President Xi Jinping and Russian counterpart Vladimir Putin declared a "no-limits" partnership.

The document voiced their opposition to the "further enlargement of NATO" and pledged to "remain highly vigilant about the negative impact of the United States' Indo-Pacific strategy."

A giant screen broadcasts news footage of a virtual meeting between Chinese President Xi Jinping (right) and Russian President Vladimir Putin at a shopping mall in Beijing in December 2021.
A giant screen broadcasts news footage of a virtual meeting between Chinese President Xi Jinping (right) and Russian President Vladimir Putin at a shopping mall in Beijing in December 2021.

Despite Chinese protests, experts point out there are key differences between NATO's role and U.S. strategy in the Indo-Pacific region, which also includes a wider range of economic and political policies beyond the bloc and the United States dealing with its long Pacific Ocean border.

Still, the Ukraine war is set to affect the region, with Chinese Deputy Foreign Minister Le Yucheng saying in March that the crisis could be used as a "mirror" to view the security situation in the Asia-Pacific region.

For the administration of U.S. President Joe Biden, the move toward Asia is seen as critical and long overdue.

Washington has increasingly warned about China abusing its military and economic clout in the region, pointing to the country's moves to exert greater control over Hong Kong, expand its military presence in the South China Sea, and crack down on human rights in Xinjiang Province, which has seen more than 1 million Uyghurs, Kazakhs, and other Muslim minorities interned in camps.

But while both U.S. and Chinese officials see parallels between the Ukraine war and rising tensions in Asia, they are each drawing different lessons.

U.S. officials continue to view increased defense spending in Europe, as well as both Finland and Sweden on an immediate path toward NATO membership, as positive security developments that could allow the United States to follow through on its long-delayed "pivot to Asia." That policy was first outlined by U.S. President Barack Obama and the move is seen as necessary as U.S. policy circles increasingly view China, not Russia, as the country's main military adversary.

A Taiwanese flag is carried by a Chinook helicopter during a rehearsal for the upcoming National Day celebration in Taipei in October 2021.
A Taiwanese flag is carried by a Chinook helicopter during a rehearsal for the upcoming National Day celebration in Taipei in October 2021.

Chinese officials and experts, however, are reaching different conclusions from the reflections they see in Ukraine.

Beijing -- and Xi in particular -- has long supported "strategic autonomy," a concept pushed by French President Emmanuel Macron that calls for Europe to play a more independent role in its defense that relies less on the United States.

In a May 10 call with Macron, Xi pushed the French president and other European leaders to take security "into their own hands," echoing earlier comments from a May 9 call with German Chancellor Olaf Scholz.

While the long-term implications of the Ukraine war are still uncertain, as is the future of European "strategic autonomy," Beijing increasingly seems to believe that it could further delay the U.S. strategic pivot to China and lead to a lasting division among European and NATO allies.

"Joe Biden had hoped to put Russia policy on a 'stable and predictable' footing in order to focus on America's Indo-Pacific strategy. The war in Ukraine undoubtedly will distract America's attention and [siphon] away resources," wrote Zhou, the retired PLA officer. "The question long Mr. Biden will allow Ukraine to remain a distraction."

People watch a TV broadcasting the news of Russian troops launching their attack on Ukraine at a restaurant in Hong Kong on February 24.

Since its February 24 invasion of Ukraine, Moscow has grappled with severe sanctions on its economy and a flood of Western political and military aid to Kyiv that caught the Kremlin off-guard.

For China, Russia's war in Ukraine has already provided a series of instructive episodes.

Policymakers in Beijing are closely watching the continued Western response toward Moscow to better understand the potential reaction in the event of a Chinese invasion of Taiwan, which China claims as its territory and has threatened to invade if Taipei refuses to submit to its control.

Beijing has thus far been left "unsettled" by the aftermath of Russia's invasion, according to CIA Director William Burns, who told the Financial Times on May 7 that the tough Western response against Moscow came as a surprise to China's leadership and could affect its calculations for Taiwan.

But Burns added that he doesn't believe Chinese President Xi Jinping's long-term desire to gain control over Taiwan has changed.

So what lessons is Beijing drawing from the Ukraine war?

Chinese leadership appears to be pushing forward on a self-reliance drive, a trend that was already under way but which the war in Ukraine made more imperative for Beijing. In the meantime, Chinese companies have moved cautiously while interacting with Russia's sanctioned economy, despite both Xi and Russian President Vladimir Putin declaring a "no-limits" partnership between their countries in February.

With concern mounting in Beijing that it could be blocked from Western economies by sanctions and penalties similar to those that have been put on Russia, RFE/RL spoke with Alicia Garcia-Herrero, the chief economist for Asia-Pacific at the investment bank Natixis.

RFE/RL: We've seen lots of headlines lately about some smaller-scale Chinese refineries buying up Russian oil at a discounted price. What do you make of these moves and what does that tell us about how China will approach dealing with the Russian economy moving forward?

Alicia Garcia-Herrero: There isn't an obvious [answer] here. China is approaching Russia on the surface, at least, in a very friendly way. [When] we look at words rather than the deeds, the narrative is extremely positive: both officially but also in the media; but in reality China is quite hesitant and very careful about avoiding secondary sanctions [from the United States].

Alicia García Herrero
Alicia García Herrero

We see, certainly when it [comes to] banks, they have generally stopped offering letters of credit to Russia. We also know from anecdotal evidence that some smaller [Chinese] refineries are buying up oil [often at a discounted rate]. [But] to me, that's not big proof of massive support because India is doing the same and so are many other [countries]. Therefore, I would not see that as a game changer.

What could be a game changer is Chinese exports [to Russia], but exports of the right thing, meaning exports of semiconductors -- especially commercial and military fusion semiconductors -- because we know that Russia needs that for its military equipment. [But] that can be much harder to track.

But from what we can track, I would argue that all in all, China's being quite careful in its actual actions. If [Beijing] needs to [take a] risk it will be where it's most needed for Russia and I don't think that is imports of energy, because they can always [get it] at a discount.

RFE/RL: It seems that some investors are pulling back from the country and there are reports that Chinese regulators have held an emergency meeting with domestic and foreign banks to discuss how they could protect the country's overseas assets from potential future U.S.-led sanctions similar to those imposed on Russia for its invasion of Ukraine. So, how is the war in Ukraine affecting the Chinese economy?

Garcia-Herrero: First we need to notice that beyond Russia and the war, China is going through its own hell due to COVID, which is a major shock for the country. So it's hard to disentangle those, in my view. COVID and [COVID-related lockdowns] are much bigger economic hits. So even if China's ambiguous position on the war in Ukraine could have had an impact, we might not see it because of COVID having such a larger one.

But beyond this immediate impact there [were] quite large [investor] portfolio outflows from China [in] March and April. So one could say that's a sign that investors are fearing sanctions, but I think there are many other reasons to explain that. For instance, the yield differential with the United States has vanished because we're well above 3 percent already for U.S. treasuries, so, it just doesn't make much sense to keep your Chinese sovereign bonds right now with a depreciating currency. That makes it hard for me to say that China is really suffering from its position on Ukraine. Rather, what I would say is that Beijing is anguishing over what may happen to China because of Ukraine, which is not necessarily something immediate.

Soldiers train during a military exercise in northern Taiwan in January 2021.
Soldiers train during a military exercise in northern Taiwan in January 2021.

I think that's the key. It's more about how China may react. It's a fear over what may happen to China [and how] that could actually change the picture rather than any sanctions themselves.

This brings me to the reported emergency meeting that the [People's Bank of China] held about what to do in the event of sanctions [on China]. We only have some leaks here and there [about this meeting], so it's hard to know what they were discussing; but my sense from those leaks is that it was not really about secondary sanctions. I think what China is really worried about is what happens if [Beijing] does something about Taiwan.

When you read [the leaks], it's more about protecting China's [foreign-currency] reserves. That means it's actually preparing for a type of Russia scenario, but on steroids, because China's foreign-currency reserves are many times bigger than those of Russia.

And fretting about this could indeed lead China to make decisions that could be quite something for the world, like starting to divest from U.S. Treasury [bonds]. So, it is indirectly related to what we've seen happen from the war in Ukraine, but it's not a direct [effect]. I think that it's important to take into account that the whole world is learning right now from the [Western reaction] to [Russia's invasion] and, in the case of China, it is even preemptively reacting based on what it is learning from this war.

RFE/RL: The future is obviously very difficult to predict, but what is a realistic forecast for what we can expect from China economically and also down the road with its relationship with Russia?

Garcia-Herrero: I think China will continue to make precautionary, isolationist decisions. We've already seen this with the Great Firewall that blocks off the Internet and we saw more moves happen related to the trade war with the United States that happened under the [administration of U.S. President Donald] Trump.

[Beijing] has already been creating barriers, but this [process] has accelerated because of Trump and then COVID, then [the war in] Ukraine, and then again due to COVID [in China]. I don't think we're going to see that trend change, either. If I were asked to advise the Chinese government -- which I don't think will happen -- about what to do to reduce the risk of sanctions, I would say to do the exact opposite of what they are doing now. They should be increasing their interdependence because that's their leverage [with the West]. The fact that they're not even seeing it this way is because this [more isolationist] mindset has already [set in].

A screen shows the eastern route during an official ceremony to launch Russian natural gas supplies to China via the Power of Siberia pipeline in the Black Sea resort of Sochi in December 2019.
A screen shows the eastern route during an official ceremony to launch Russian natural gas supplies to China via the Power of Siberia pipeline in the Black Sea resort of Sochi in December 2019.

This brings me to Russia, which is also in a similar mindset. That makes it a type of strategic partner, but in a coincidental way. [Beijing and Moscow] find themselves seeing the world in a shared way with the same type of mindset and that has brought them closer, but I think it's important to note that these kinds of coincidental partnerships don't last very long, especially if you look at Russian and Chinese history. The [set of] conditions that made them partners might change over time and could change very quickly when it finally does.

I think that it's unavoidable for Russia and China to be closer together, but it's not a choice. It's a friendship of need, not of want. They happen to be in similar circumstances, and I don't even want to say that they were forced into these circumstances, it's mainly due to their vision of the world.

And for the West, I think it's important to understand the reasons why, because other than China and Russia, there's many other countries out there watching [who] could begin to feel the same way.

This interview was edited and condensed for clarity

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In recent years, it has become impossible to tell the biggest stories shaping Eurasia without considering China’s resurgent influence in local business, politics, security, and culture.

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