Could China benefit from the Ukraine crisis?

Russia has begun to face a range of complications, including unprecedented sanctions from the Western world over its attack on Ukraine, triggering a regional churning that also affects its ally China.

While Moscow and Beijing have shown mutual understanding on the world stage as both seek to break the Western hegemony, Russia's attack on Ukraine has given China some breathing space. 

“They [the Chinese] will benefit as the world is distracted with Russia and not focusing on them, and that will enable it to take a bit of pressure off China,” says Raffaello Pantucci, a senior associate fellow at Royal United Services Institute (RUSI), a British think-tank

The Russian attack on Ukraine has caused various tensions in international alliances, “highlighting the fact that China is maybe a difficult actor on the world stage. But it is not like Russia, so it can be seen more like a benign actor,” Pantucci tells TRT World. 

The Ukraine conflict can also help China relax slightly on the Indo-Pacific front, a crucial region for Beijing’s political and economic competition with the Western world. Under Washington’s leadership, the US, the UK, and Australia have recently formed the AUKUS, an anti-China military alliance focusing on the Indo-Pacific region.  

But due to the situation in Ukraine, China’s ruling communist party “may also hope that the impetus behind the AUKUS group is also weakened,” wrote Charlie Parton, the EU’s former First Councillor on China. 

In addition to “the distracting factor,” which is “very positive” for China in the longer term, Russia’s Ukraine attack will strengthen Beijing's hand over Moscow, Pantucci says.  

“Russia is going to find itself in a less bargaining position when it’s trying to negotiate deals and agreements with China,” Pantucci says. 

“Now otherwise friendless, Russia will be in no position to resist the PRC’s (People’s Republic of China) geo-political or economic intrusion in Central Asia, Siberia, the Arctic, India or other future potential areas of contention,” Parton observed.

“Ultimately, at the moment, the way things are shaping up, it’s very positive for China,” Pantucci says. 

Economic benefits

The ongoing Russian offensive will produce both positive and negative effects on China, according to Charlie Parton, who has extensive experience and knowledge of China after spending 22 years of his 37-year diplomatic career in the UK foreign office working on the Asian giant.

Under immense US pressure, which even imposed a ban on Russian gas and oil imports, “Russia will have to turn even more to the PRC to sell oil, gas, and other commodities. This will make it easier for the PRC to drive down the price,” Parton wrote in a paper on March 3, pointing out an economic benefit for Beijing. 

Western sanctions might also mean that Russia, as an isolated country, will increase its imports of goods and equipment from China. In 2019, 22 percent of Russian imports of goods and equipment came from China while the EU imports to Beijing stood at 37 percent, Parton said. As a result, China’s share of Russian imports will probably significantly increase. 

Another potential benefit China can sow from Russia's bloody adventure is related to the country’s Cross-Border Interbank Payment System (CIPS), an alternative financial tool to move from the US dollar to the Chinese yuan. 

Because the US government froze Russia’s central bank assets and the ruble lost a lot of ground, Moscow might be willing to join the CIPS, which will boost China’s global financial ambitions. 

While Parton believes “[w]ar will disrupt Chinese trade with Ukraine, which was picking up from a low base of $8.25 billion (£6.19 billion) in 2020,” Pantucci thinks that Ukraine will want to continue trading with China, presenting another benefit for Beijing.

How a dragging offensive affects China

Still, a dragging Russian military engagement in Ukraine also makes China nervous, accelerating its efforts to find a peaceful resolution to the conflict. China previously emphasised its principles of “territorial integrity” and non-interference in other sovereign nations, directly referring to Ukraine. The Russian attack clearly violates these rules.  

“China does not want to be seen to take sides in the conflict, especially since its official position is to support sovereignty and oppose the unilateral action of powerful states,” says Neil Melvin, the Director of International Security Studies at the RUSI. A dragging Russian assault might cost China to lose “its vital economic interests in Europe and the US,” he says. 

“As the war drags on, the balance of advantage versus disadvantages turns against China. They must be very worried about the disruption to trade and investment. The more China sits on the fence or is seen as still supporting Russia, the more liberal democracies will turn against China politically and economically,” Parton tells TRT World.

However, “the nightmare outcome for China” could occur “if Putin were to be unseated,” Parton suggests. “It would then depend on where Russia went. But if it democratised and looked West, as is the Russians' natural condition (they are European, not Asian), Beijing would lose an ally.” 

“Chinese would be worried” about a regime change in Russia, but “chances of that happening are pretty slim,” says Pantucci. As a result, they are not too worried, he adds. 

Melvin thinks that the Russian attack has already placed China in a difficult situation because a Sino-Russian strategic relationship against the Western alliance was developing prior to the conflict. “The conflict is uniting the Western community, and this will also be a challenge to China, which has sought to weaken the links between Europe and the US,” Melvin observes. 

“The war is raising important questions about the costs of the relationship with Russia for China,” Melvin tells TRT World. He believes that Putin did not inform Xi that “Russia would launch a war in Ukraine” and Chinese intelligence appears to have no knowledge about Moscow’s intentions on Kiev. 

“Both raise questions for Sino-Russian ties. As the war goes on, these tensions will likely increase. China will offer Russia some support but is not in a position to replace western markets and investment in Russia,” Melvin says. As a result, China appears to walk “a tightrope between keeping up its relations with Russia but not supporting the war.”

Also, a dragging Russian offensive has considerably spiked oil prices, which, according to Pantucci, is “painful” for China, the world’s second-biggest economy.

Food security

The Communist party-ruled China needs to feed the world’s biggest population. As a result, ensuring food security is crucial for Beijing. In that aspect, the Ukraine crisis worries China a lot because Kiev, the fifth largest exporter of wheat and the exporter of 16 percent of global grain, accounts for around 30 percent of Beijing's corn imports. 

“If food prices go up as a result of Ukraine no longer being able to produce the amount of grain it does, that’s a problem for China. It’s going to raise prices for everybody,” says Pantucci. 

In the longer term, it’s not good for them, Pantucci says. But at the same time, if elevated food prices hurt everyone, it’s going “to blunt the effects on China,” he adds.