Table of Contents

In a nutshell ....................................................................................2
Strategic coordination ..........................................................................3
Xi Jinping’s U-turn................................................................................3
Flourishing Sino-Russian relations .........................................................5
Persisting Western illusions ..................................................................7
Scenarios .........................................................................................7
Beijing as a peace broker, part 2 ....................................................8
Less likely: Gradual improvement ..................................................8

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 The Burgeoning China-Russia Axis

Bad news for Ukraine and the West: in 2023 Beijing crossed the Rubicon in China-Russia political, economic and
military cooperation.

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Moscow, March 21, 2023: Chinese President Xi Jinping (left) and Russian President Vladimir Putin shake
hands at the Grand Kremlin Palace three days after the International Criminal Court issued an arrest
warrant for the Russian leader for alleged war crimes in Ukraine.

In a nutshell
 A China-Russia geopolitical alignment was long the Kremlin’s dream
 The war in Ukraine has brought the two autocratic powers much closer
 The axis is emerging just as the West is preoccupied with domestic issues

China’s foreign policy today shows it has aligned more closely with Russia. Beijing also is
intensifying its cooperation with the emerging powers of the Global South and digging deeper
into its confrontational anti-American and, generally, anti-Western position.

China’s President Xi Jinping has made Russia his most important strategic partner. Also, he
is using the Belt and Road Initiative and other economic and political levers at his disposal to
pull the Global South into China’s orbit and expand its influence in the United Nations.

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The pro-Russia faction in China’s ruling elite, which is currently the dominant one, rejects all
measures that smack of Western values and governance systems. Nevertheless, China
continues to need Western capital, technology and markets, so it aims to maintain relations
with Western countries while working to undermine the existing international order. Beijing’s
refusal to heed the landmark 2016 ruling of an international tribunal in The Hague that
dismissed China’s claim to much of the South China Sea stands as a prime example of this
strategy at work.

Strategic coordination
Alignment with Russia is now a stated priority of Chinese foreign policy, even if Chinese
diplomats avoid saying so to their Western counterparts at international meetings. It was the
message of the videoconference that President Xi and Russian President Vladimir Putin
reportedly had on the eve of China’s New Year. In China’s Foreign Ministry readout, the leader
in Beijing stated that China and Russia should “strengthen strategic coordination,” safeguard
their “national sovereignty, security and development interests” and “resolutely oppose
external interference in their internal affairs.”

While the pro-West faction wilts, members of the pro-Russian camp prosper in China’s
diplomatic and the military spheres.

Until Mr. Xi arrived in power in 2012, decades of reforms under his predecessors had versed
China’s administrative and technical elites in approaches somewhat close to Western
management philosophy. But since President Xi has moved politically closer to President Putin,
the pro-Russian faction, relatively weak a few years ago, has caught traction and remains
entirely in line with the leader’s political choices. The Chinese Communist Party’s code of
conduct dictates that he should enjoy absolute obedience.

While the pro-West faction wilts, members of the pro-Russian camp prosper in China’s
diplomatic and the military spheres, including the defense industry. A China-Russia tandem is
no longer a flight of fancy. A typical case has been the recent promotion of Dong Jun as
China’s new defense minister. A former navy commander in the critical South China Sea region
and a Russian language speaker, Mr. Dong had been handpicked by President Xi for training at
the Military Academy of the General Staff of the Armed Forces of the Russian Federation,
Russia’s top military institution.

Xi Jinping’s U-turn
President Xi’s diplomatic tightening of the relationship with Moscow was announced
immediately before Russia’s full-scale invasion of Ukraine. On February 4, 2022, at the start of
the Winter Olympic Games in Beijing, the two presidents briefly met there to reiterate earlier
Chinese Foreign Ministry statements that there were “no forbidden areas,” no ending date and
no upper bound in their cooperation.

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When the 2022 invasion into Ukraine began, the pro-Russian faction seemed to have plenty of
confidence that Russia would quickly capture Kyiv. The Chinese embassy in Ukraine was in no
hurry to evacuate the Chinese students studying there; when the hostilities began, the
diplomats merely advised the students to leave the country by car and handed out Chinse flags
for citizens to mount on their vehicles so as not to be targeted.

China has not condemned Russia’s aggression and has abstained during United Nations votes
on it. Soon after the invasion started, however, Moscow’s campaign stalled, its prospects
became uncertain, and President Xi began to worry about China’s dependence on technology,
markets and capital, and took steps to shore up the relationship with the West, especially
Europe. Beijing launched its “smart diplomacy” offensive in 2023, trying to avoid being cast as
Russia’s accomplice in the war and present itself as a neutral mediator. Li Hui, formerly China’s
ambassador to Russia, was dispatched to Kyiv as Beijing’s “special representative for Eurasian
affairs” to meet Ukrainian President Volodymyr Zelenskiy. From there, the envoy went to
Moscow.

Another interesting development was related to Phoenix TV, an important Chinese-language

media outlet. Since the outbreak of the war in Ukraine, it has had a special envoy embedded
with frontline Russian forces. In May 2023 year, however, the station added a female reporter,
Chen Ying, to cover the war in Ukraine with the Ukrainian army, in line with the so-called
neutral diplomacy. The Ukrainian side expressed its appreciation of that.

Then the tide turned. According to Politico and Nikkei Asia, President Putin was alarmed by
President Xi’s decision to mediate in the Ukraine war, seeing it as a move by the pro-Western,
pro-U.S. camp in China’s foreign ministry. He reportedly decided to tip President Xi off about a
worrisome development in his inner circle. Mr. Putin dispatched a trusted official to tell Mr. Xi
that his protegee, Foreign Minister Qin Gang, had allegedly leaked secrets to the United States.
Mr. Gang ended up removed and never heard from again, and a swift purge among Beijing’s
highest officials followed. And after the unlucky minister’s disappearance, China’s leader has
again changed his stance on the Ukraine war.

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Moscow, February 12, 2024: A man poses with life-size cutouts of China’s and Russia’s leaders in front of
a souvenir shop. The two countries’ alignment is being emphasized during Russia’s presidential election
campaign; the vote is planned for March this year.

Li Hui disappeared for a while as a peace envoy, and the female reporter from Phoenix TV was
ordered home from Ukraine. Since these memorable (if still somewhat murky) events, China’s
neutrality rhetoric on the war in Ukraine merely serves as a diplomatic equivalent of a heat
shield. Meanwhile, there have been significant upgrades in many areas of the China-Russia
relations.

Flourishing Sino-Russian relations

In the trade sector, China-Russia exchange in goods and services hit a record high, $240.1 billion
in 2023, a 26.3 percent increase over the previous year, well above the annual targets set by
the two governments. However, China’s trade with both the U.S. and Europe is lower than it
has been in years. In an effort to make up the difference, China has significantly increased its
trade with Global South countries.

Shipments of dual-use equipment and industrial products from China have measurably
contributed to Russia’s war effort.

And there has been an uptick in China-Russia military cooperation. Even if much of the made-
in-Russia war materiel has lost its luster in the Ukrainian battlefields, access to Russian weapons
matters for Beijing, since it sees some of Russia’s cutting-edge military and space technologies
as worth acquiring. In return, Russia expects China to share at least some of the technological
marvels it steals from the West. So far, this has been a sore point between the two countries. In
contrast to his North Korean ally, President Xi does not officially provide “lethal aid” to Russia
to ensure a continued presence of major Western firms in China and avoid Western retribution.

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However, shipments of dual-use equipment and industrial products from China
have measurably contributed to Russia’s war effort.

The mutual assistance is also reflected in the intensified cooperation between the Chinese and
Russian navies in the Sea of Japan, the Taiwan Strait and even the South China Sea. The two
naval forces have conducted several joint exercises and patrols. That may also have significant
implications for President Xi’s ambition of bringing Taiwan – peacefully or otherwise – back into
the Middle Kingdom’s fold.

China’s appointment of the new defense minister looks like a harbinger of tightening military
cooperation. Minister Dong Jun’s first public engagement after taking office was a video call to
his Russian counterpart, Sergei Shoigu. As the Russian News Agency TASS reported, Mr. Shoigu
heard from Mr. Jun: “We have supported you on the Ukrainian issue despite the fact that the
U.S. and Europe continue to put pressure on the Chinese side. Even defense cooperation
between China and the European Union is [now] threatened, but we will not change or
abandon our established policy course over this. And they should not and cannot hinder normal
Russian-Chinese cooperation.”

With the rise of the pro-Russia camp, the anti-U.S. and anti-West ressentiment in China has
grown. This also has to do with Beijing’s perception of the external environment. Political
instability and distrust between Republicans and Democrats in the U.S., the economic
downturn in Europe and the strengthening of President Putin’s relations with North Korea and
Iran (which has been supplying drones and ammunition to Russia) have been, in effect,
weakening Ukraine’s geopolitical position.

As Russia’s full-scale invasion of Ukraine has passed the two-year mark, Beijing’s pro-Russian
faction may begin to believe again that Moscow will eventually prevail in the war.

At this juncture, it looks like the China-Russia alignment may have reached a point of no return,
at least during President Xi’s tenure. The relationship is likely to keep expanding, as the leader
of China appears to have decided to move away from close interactions with Western
governments.

However, as President Xi has demonstrated on several occasions, China still has limits to what it
is willing to do for Russia. Beijing is not ready to cut all ties with Western capital, technology
and markets to meet Moscow’s expectations. China has secretly been helping Russia
circumvent Western financial sanctions. Lately, however, the Chinese banks that have ties with
Russia have become very concerned about doing business with sanctioned Russian companies,
as that could expose them to secondary Western sanctions. Zhejiang Chouzhou Commercial
Bank, very important for Russian exporters to China, and a number of other banks stopped
doing business with Russia and Belarus due to such concerns. Officials in Moscow can only hope
that the transfers through the Financial Messaging System, the Russian equivalent of the Swift
transfer system, will continue unimpeded. Both sides are now looking for ways to sustain the
bilateral trade.

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Persisting Western illusions
On January 14, 2024, in the run-up to the World Economic Forum in Davos, host Switzerland
and Ukraine welcomed some 120 national security officials to drum up support for the 10-
point peace plan for Ukraine put forth earlier by President Zelenskiy. And in early February,
during a session of the Sino-Swiss strategic dialogue in Beijing, the Swiss side reiterated its idea
of a global peace conference. As of this writing, the Chinese had yet to respond.

It is hard to imagine that EU member states or the U.S. would sacrifice their economic and
security interests in exchange for Beijing’s half-hearted bid to help Ukraine.

Apparently, Ukraine and the countries of Europe are still counting on China to use its influence
on the president of Russia in ways that would be helpful to Ukraine. The presence of Chinese
Premier Li Qiang at the Davos event fueled optimism about Beijing playing a pivotal role in the
talks with Russia.

These hopes are unlikely to be realized. President Xi is not ready to return to the posture of
feigned neutrality that China’s diplomacy adopted in the first half of 2023. Beijing will not
partake in a Swiss-sponsored peace conference nor play a mediator between Russia and
Ukraine. China might eventually be interested in Ukraine’s reconstruction, but President Xi will
not risk repeating last year’s situation, which made Mr. Putin unhappy.

Presumably, Beijing expects a quid pro quo if the West wants something from China, such as
opening the EU market fully for China-made electric vehicles and other strategic products. It is
hard to imagine, though, that EU member states or the U.S. would sacrifice their economic and
security interests in exchange for Beijing’s half-hearted bid to help Ukraine. The hypothetical
concession would also need to be extended to Russia. Moscow, no longer fearing a rout in the
Ukrainian battlefields, would almost certainly demand ending the Western military supplies to
Ukraine as a precondition. No self-respecting power in the West could succumb to such
demands.

Scenarios

During the Covid-19 pandemic, President Xi memorably claimed that China’s radical “zero-
covid” policy would be carried out until the disease was eradicated in the country. Then, after
nearly three years of lockdowns and quarantine, the Chinese leader made a sudden policy U-
turn in the face of mounting public protests and epic economic costs. Similarly, Beijing in late
2023 signaled that China had no interest in being part in peace talks proposed by Ukraine and
the West, and maintained it had “limited influence” on the two fighting sides. But something
apparently has changed, and in late February 2024, China’s foreign ministry announced that the
special envoy, Mr. Hui, would embark on “the second round of shuttle diplomacy” and go to
Ukraine, Russia, Germany, France, Poland and Brussels to “find a political solution to the
Ukrainian crisis.”

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Beijing as a peace broker, part 2

This renewed interest in brokering peace talks may be related to China’s alarmingly worsening
economic outlook. President Xi badly needs the West to open its profitable markets to
advanced Chinese products, and the EU is very high on its wish list. However, unlike its previous
attempt at mediation, Beijing is not going to surprise President Putin with its diplomatic activity
and, presumably, it will heed Moscow’s interests in the talks.

The question now is what the future of the China-Russia alignment will be and how this
complicated international situation can develop. Much may hinge on the coming U.S.
presidential elections. If former President Donald Trump returns to power, global tensions,
already considerable, could increase further. Mr. Trump is perceived as more ready to
accommodate Russia and less critical of President Putin than the European leaders would like
to see. Many find this alarming, as NATO’s European allies largely depend on the U.S. for
strategic security – the arrangement that Mr. Trump has consequently questioned.

Combined with the EU’s deepening economic troubles and political instability, Mr. Trump’s
presence in the White House weakens the West’s hand vis-a-vis Russia and China, which shows
in the eventual peace negotiations. Ukraine’s failure to defend itself against Russian aggression
also encourages President Xi to step up his pressure on Taiwan and further strengthen the pro-
Russian camp in China.

Less likely: Gradual improvement

The U.S. election results leave American society badly divided, but the state machinery
continues to work, and the country’s isolationist temptation is tamed. U.S. aid to Ukraine
continues but is significantly reduced. Across the Atlantic, the EU manages to solve its energy
problems, tackles inflation and its leading economies pick up, boosting Brussels’ self-confidence
– and, significantly, the output of Europe’s ammunition factories. Ukraine shores up its war
economy and successfully executes its asymmetric high-tech defense strategy, making Russia
continuously suffer and look for a way out with an increased sense of urgency. All this provides
a shot in the arm for the pro-Western faction of the Chinese Communist Party. Fearing that his
friend Vladimir may suffer more misfortunes, President Xi offers to resume his role as a go-
between for Russia on one side and Ukraine and the West on the other. Mr. Putin accepts the
talks under China’s umbrella.

In both these scenarios, the U.S. policies are a crucial factor.

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