China Needs To Pick A Side, And It Just Might Pick The West

China knows that the war has had catastrophic consequences for both Russia and Ukraine. Estimates indicate that Putin's conflict in Ukraine could cost Russia US$1.3 trillion and at least 315,000 in troop casualties. So, win or lose, the post-war damage to Russia would be immense.

This is bad news for China. Not only will it have a weakened ally but the West could then have a free hand to consolidate its resources in dealing with the “Chinese threat.”

This concern isn't unfounded. After all, a substantial portion of Americans view China as the greatest enemy of the US , and China is sometimes characterized as a member of an “axis of evil” alongside Russia, Iran and North Korea.

So, the Chinese government needs to hedge itself against becoming the“target of all arrows” (众矢之的), as the famous Chinese saying goes, resulting from Russia losing the war in Ukraine. Reviving panda diplomacy and sending China's leaders on state visits then become tools to mend ties with the west, and serve as insurance policies.

But NATO's criticism of China in July 2024, which echoes a similar statement by US Secretary of State Anthony Blinken in late April 2024, suggests that these soft power initiatives are insufficient to appease the West.

China needs to press Russia to sue for peace with Ukraine. With this, Russia gets to preserve its national strength, while China could concentrate efforts on being the world leader in AI and healing its ailing economy .

For months, China has been reeling from a real estate crisis , a volatile stock market , a massive 288% debt-to-GDP ratio , as well as high youth unemployment .

And recently, Chinese government bond prices soared from increasing demand, suggesting that investors are seeking safer investment alternatives as confidence in the Chinese economy remains low .

But a battered economy isn't the only problem the Chinese government faces. It has traditionally employed economic performance to legitimize its rule. So given the poor economic climate, Beijing needs to jump-start its ailing economy to maintain power.

However, there is one major flaw with Beijing's economic growth strategy: it centers around exports, which rely heavily on Western demand. While China has increased its exports to various regions across the world, almost 30% of its exports in 2023 were meant for the US and the EU.

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As it stands, cracks are surfacing in Beijing's export plans. In May 2024, the US raised tariffs on Chinese electric vehicles (EV) to 100%. The European Union followed suit by raising its own Chinese electric vehicle tariff from 17.4% to 37.6% , which comes on top of an existing 10% duty imposed on all Chinese electric vehicles coming into Europe.

But things may get worse for China's economy depending on what it does with Russia. A day after NATO's proclamation, US President Joe Biden announced that China's continuous support of Russia will bear dire economic consequences for the Asian superpower.

He added that“some of our European friends are going to be curtailing their investment in China”, alluding to what China might face if its support for Russia continues.

For its own sake, China is hoping that the war ends with a peace settlement that favors Russia . Failing this, China's sense of self-preservation will put its partnership of no limits with the Kremlin to the test.

After all, as the quote widely attributed to the 19th-century British prime minister Lord Palmerston goes,“There are no permanent enemies, and no permanent friends, only permanent interests .”

Chee Meng Tan is Assistant Professor of Business Economics, University of Nottingham

This article is republished from The Conversation under a Creative Commons license. Read the original article .

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