By Jianli Yang & Yan Yu on July 8, 2022

 

Xi Jinping and Vladimir Putin recently spoke by phone for the second time since Russia’s invasion of Ukraine. After the call, each government issued its own statement which display how each government’s strategic goals have changed as the war progresses. In its statement, Russia raised the “historically unprecedented” nature of the current Sino-Russian relationship, while Xi cheered the “legality of Russia’s special military operation.” Without question, Putin hopes to hitch his chariot to Xi as Russia remains stuck in the Ukraine mire by obtaining meaningful military and economic support from China. As for China, its statement eschewed such pointed language, expressing instead only tactful verbal support. Xi has always tried to benefit from the war here and now while at the same time laying a strategic foundation for the achievement of his country’s long-term ambitions. This has become more difficult from Xi Jinping’s point of view, given the war’s expansion in the face of strong opposition from much of the world. So how can China still gain from the conflict without becoming another target of such opposition?

Without question, among these ambitions is the conquest of Taiwan. On June 12, the Chinese defense minister Wei Fenghe emphasized that if there are those who “dare to split off Taiwan,” China “does not fear war,” nor does it “fear paying the necessary price.” He added that the US emphasis on its multilateral Indo-Pacific partnership arrangements is designed to “back China into a corner.” His wording of being backed into a corner echoed other Chinese language with respect to Russia being forced by Western expansionism to invade Ukraine. On June 13, Chinese Foreign Ministry spokesperson Wang Wenbin said that China has sovereignty and jurisdiction over the Taiwan Strait and the concept of so-called “international waters” does not exist in the international law of the sea. This is obviously an attempt to strengthen the legitimacy from the perspective of international law of any Chinese military unification of Taiwan.

If these remarks indicate that Xi Jinping, given that his determination to retake Taiwan by force, is preparing public opinion for this outcome, it is reasonable to ask what he has learned from the Russian-Ukrainian war, which has been going on for more than three months.

From Xi Jinping’s perspective, the key task is to achieve what Putin failed to achieve — a successful decapitating first assault. Russia’s failure in this regard, driven by Ukrainians’ indomitable willingness to fight to save their country, will cause Xi to consider that Taiwanese may be similarly willing to defend their own country against a Chinese invasion. While China has absolute military superiority over Taiwan, Taiwan has the geographic advantage of 100 miles of separation provided by the Taiwan Strait, along with the availability of its central mountains as a redoubt. It also has numerous advanced fighter planes and missiles. This means that Taiwan need only successfully resist the first wave to then be able to benefit from extensive Western assistance. Thus, if the initial assault fails to conquer the island, China too will be drawn into a quagmire, and face economic pressure, diplomatic isolation and domestic turmoil at least as bad as, and possibly more severe than, that now faced by Russia, weakening Xi domestically.

What Xi should learn from the war is that conquering Taiwan will be far more difficult than he has imagined. He needs to be better prepared in the political, economic, military, social and diplomatic spheres. There are signs that he has already learned this to some extent, and is acting accordingly to prepare for what he will face in terms of external sanctions and any internal political crisis that might follow the launch of an invasion. He is preparing to increase his ability to play the long game with the democratic world in six important regards:

  1. Xi must accelerate the internationalization of the renminbi (RMB), and build an international commercial network based on it, free of entanglement with the dollar (USD). According to people familiar with the matter quoted by The Wall Street Journal, Saudi Arabia and China for six years have been discussing how to implement oil contracts paid in RMB. China already purchases more than 25% of Saudi Arabia’s oil exports, and if such an agreement is finalized it will vastly increase the role of the RMB in the world oil market. Beyond Saudi Arabia, other countries including Iran, Russia, and Venezuela, have separately announced they will consider denominating contracts for oil and other energy resources in the currency. Such agreements could extend to countries such as India and Indonesia. For such countries that have in the past or may in the future be sanctioned by the US, such an arrangement provides a promising alternative. Even for countries unlikely to be the target of such sanctions, it can be hoped that such RMB-based exchange provides an opportunity to lessen exposure to geopolitical risks.
  1. As for the economy, his task is to increase the reliance on “domestic circulation” to generate economic growth, while still permitting limited international exchange where necessary. In this way, China can minimize the impact of whatever prohibitions might be imposed from abroad with respect to high technology, foodstuffs and fuels. This framework intensifies the approach Xi began in 2020 as an alternative to several decades of thorough reliance on foreign trade and investment, the so-called “binary international line” development model in which China imported raw materials from other countries and then exported manufactured goods to the West. The main element of the new strategy involves reorienting Chinese consumption toward domestic industry, and comprehensive reliance in high technology on domestic production. But in the face of growing Western imposition of restraints on Chinese acquisition of European and American technology and China’s resultant long-term economic difficulties, ladled on top of the heavy blows the government’s attempted zero tolerance toward COVID-19 has dealt to Chinese economic consumption and investment, to build a primarily domestically driven yet still vibrant economy would require a miracle.
  1. He must also pressure and assist those CCP political families and oligarchs who are reticent to transfer or shield overseas assets to do so. The longer they wait, the more likely they are to turn against Xi due to the losses they would suffer in response to substantial sanctions imposed by Western countries. After Russia invaded Ukraine, the United States, the United Kingdom, the European Union, Japan and other countries and organizations imposed severe economic sanctions on Putin, his subordinates and the country’s oligarchs, which not only hurt their wallets, but also otherwise substantially interfered with their way of life. On May 19, 2022 the Wall Street Journal reported that the Communist Party’s Central Organization Department of the Central Committee had issued a notice in March that “prohibits spouses and children of ministerial-level officials from holding—directly or indirectly—any real estate abroad or shares in entities registered overseas,” along with banning them “from setting up accounts with overseas financial institutions unless they have legitimate reasons for doing so—such as study or work.” The article’s sources said that the CCP’s measure was both to prevent the West from suddenly targeting China’s senior leadership with sanctions similar to those imposed on Russian elites, and to give Xi leverage heading into the 20th Party Congress later this year, where he seeks to break longstanding precedent and achieve a third term as leader. This notice is a necessary first step for any attack of Taiwan, as it would prevent retaliatory economic sanctions imposed by Europe and the United States on China’s core leadership from causing the domestic situation to spiral out of control and threaten Xi’s leadership.
  1. One of the main reasons why the U.S. and NATO have thus far spared the rod with respect to the invasion of Ukraine is Putin’s nuclear threats. The lesson other nations have learned is undoubtedly that nuclear threats work. In his day, when Mao Zedong was developing nuclear weapons he said that possessing nuclear weapons was necessary to gain international respect: “You need rice in your hand, otherwise the chickens won’t come.” In today’s China with its current ambitions, Xi Jinping’s thought process is, “How can I get to the top without riding a mushroom cloud?” China is now energetically expanding its still-modest nuclear arsenal. Of course, if a nuclear war broke out, all of China’s economic development and international status after decades of reform and globalization would disappear overnight, but this will not prevent Xi from continuing to vigorously develop China’s nuclear arsenal and, come the time, to threaten to play the nuclear card. In order to prevent the United States from directly intervening in any potential military conflict in the Taiwan Strait, China is also more likely, backed by the threat of nuclear retaliation, to demand Taiwan’s unconditional surrender.
  1. The Russian-Ukrainian war has united the democratic world as never before, and Xi has seen the strength of that unity, but also its incompleteness and fragility.  For example, pressure on India via such channels as elements of the United Nations, the G20 and other multinational organizations to join with other major democratic actors in the campaign against Russia, has seen little success. India thus far has insisted on not condemning Russia, has continued to import Russian fuels, and has abstained on 11 votes in the UN on the Ukraine crisis. Of course, this is based on India’s consideration of its own interests, including its need for weapons and energy as well as hedging against China-Russia’s ever closer strategic alliance. But at present, cracks within the United States, Europe and NATO have also begun to appear due to economic strain. The lesson thus learned by Xi is to continue to fracture the democratic world by persuading as many members as he can that the situation is not that “the economy depends on China, but your security depends on the United States” but that “the economy depends on China, and the economy is security.”
  1. Should an attempted Chinese conquest of Taiwan also enter a period of stalemate, preventing Chinese domestic anti-war activists from using international public opinion to enhance their strength and promote political change may be Xi’s first priority. As long as there is no internal chaos and his leadership status is not threatened, Xi will have the confidence to deal with an ongoing war situation.  Potential anti-war activists include genuine pacifists, dissidents, human-rights activists, nationalists (if an attack on Taiwan does not go well), domestic capital interests damaged by international economic sanctions, and, most importantly, opportunists inside the party who might seek to take power. While Putin’s authoritarian system nominally has sovereignty granted through universal democratic suffrage, his power does not depend on any party machinery, and is thus very great. While Xi Jinping’s position in an explicitly and comprehensively one-party state has been continuously strengthened, he is nonetheless in contrast constrained by the CCP system with its multiple factions, and his degree of control over the military is not as absolute. In recent years China’s economy has deteriorated, its policies with respect to prevention and control of COVID-19 have been criticized, and Xi’s authority has been increasingly questioned. Such constraints will force Xi to guard against threats to his power that may emerge if he takes a riverboat gamble of a war against Taiwan. On June 13, he signed the “Outline of Non-War Military Actions (Trial)”, which provides a “legal” basis for the Chinese military to perform actions other than wartime combat. Xi’s rogue declaration bypassing China’s official legislative process on the one hand is an attempt to demonstrate to the outside world his power over the military at this critical run-up to the 20th National Congress of the Communist Party of China. On the other hand, it provides legal cover for preparation for and possibly the actual use of the military to enforce domestic stability and to prevent possible political changes (not tried since Tiananmen square). The CCP’s recently introduced and rapidly developing social-control system centered around its new health-code system and the 360-degree network monitoring constructed during the epidemic have also provided the perfect tools to support any Xi crackdown in the event of a sudden domestic crisis.

Whichever side wins the Russia-Ukraine war, as long as Putin survives, it is in the Xi regime’s best interests, because Putin’s Russia will continue to consume the attention of the democratic world against long-term threats to it. The energy and resources devoted to confronting the ultimately more dangerous threat, China, Xi believes, will correspondingly diminish. This will give his regime an opportunity to advance its aforementioned strategic plans. If Russia achieves a certain measure of victory in its invasion of Ukraine, it will be a huge incentive for Xi Jinping to form a larger international network of potential allies, and enhance his confidence against whatever challenges the Western democratic world might raise.

To minimize the positive impact of Xi’s influence, Western powers such as the United States and the EU should effectively resist the brutal expansionism of autocratic countries by providing sufficient support to Ukraine to help Ukraine to quickly win the war, thus turning the substantial unity of the democratic world into a decisive military factor. Otherwise, it will be much more difficult for the democratic world to contain Xi Jinping’s ambition to annex Taiwan by force.