Will The Ukraine War Ease US-China Tensions?

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The restoration of a peaceful and constructive Sino-American relationship must happen gradually, supported by the steady rebuilding of trust. But developments in recent weeks suggest that the Ukraine war may mark a turning point for bilateral relations, at least in the economic domain, reports Project Syndicate.

The Ukraine war has put China in a bind

As a friend of both Russia and Ukraine, China has no desire to pick a side. On the contrary, conventional Chinese wisdom dictates that, when two friends fight each other, the primary objective must be to end the conflict through mediation. While China’s balanced stance has aroused more than a little suspicion, it could end up hastening the end of the war – and easing tensions with the United States.

When the war began, Western observers highlighted China’s seemingly pro-Kremlin stance, reflected in Chinese officials’ refusal to use the word “invasion” to describe Russia’s aggression in Ukraine, their accusation that NATO’s actions pushed Russia-Ukraine tensions to the “breaking point,” and their criticism of Western sanctions. But Westerners paid less attention to China’s repeated calls for all countries to respect one another’s sovereignty and territorial integrity – a clear, if indirect, reproach of Russia – and provision of humanitarian aid to Ukraine.

Cooperation agreement with Russia

In fact, the West seemed eager to assume that China – which forged a cooperation agreement with Russia just three weeks before the invasion – was on Russia’s side. On March 13, the day before meeting his Chinese counterpart, US National Security Adviser Jake Sullivan warned that China would “absolutely” face consequences if it provided military assistance to Russia or helped the country to evade Western sanctions.

Yet Sullivan’s seven-hour meeting with senior Chinese foreign-policy adviser Yang Jiechi was not nearly as antagonistic as one might expect. Yang reiterated China’s stance to promote peace talks, so that the conflict can be ended as soon as possible. The next day, Chinese Foreign Ministry spokesperson Zhao Lijian echoed Yang’s statements, noting that China is “completely objective, impartial, and constructive.”

The same message dominated Chinese President Xi Jinping’s virtual meeting with US President Joe Biden a few days later. Xi described China’s regret at seeing Russia and Ukraine resort to military force to resolve their disagreements, and he expressed his hope that China and the US would work together to restore peace.

Becoming more receptive to China’s position 

There is reason to believe that the US is becoming more receptive to China’s position. Following the Biden-Xi meeting, the White House softened its language, noting that Biden had “described the implications and consequences” if China were to provide “material support” to Russia, and “underscored his support for a diplomatic resolution to the crisis.” Moreover, the two leaders “agreed on the importance of maintaining open lines of communication” in order to “manage the competition” between their countries.

Following the meeting, China offered the US further evidence of its commitment to neutrality, announcing another round of humanitarian aid to Ukraine. And Qin Gang, China’s ambassador to the US, explained that while China remains committed to its “no-limits” friendship with Russia, it does have a “bottom line”: respect for the United Nations Charter.

On the American side, the US Trade Representative reinstated 352 expired product exclusions for Chinese export from its “Section 301” tariffs. While the number is smaller than expected – 549 exclusions were eligible – many market analysts interpreted it as a goodwill gesture. And, in even better news for markets, Chinese and US regulators seem set to make progress toward an agreement on US audit inspections of US-listed Chinese firms.

US-China rivalry

China has long opposed US demands to review the accounting information of Chinese companies, for fear that firms would be forced to disclose sensitive information. But Chinese regulators have signaled a new willingness to make some concessions to avert the delisting of Chinese companies, including by instructing major firms to prepare for more audit disclosures. The market has welcomed this shift, giving Chinese stock prices a boost.

Such actions hardly herald the end of the US-China rivalry. The US remains convinced that China has deceived the West – which long supported its economic rise – by employing unfair trade practices, such as forced technology transfer.

As such, any effort by Biden to soften the harsh China policy he inherited from his predecessor, Donald Trump, is likely to face significant political constraints. China, for its part, insists that the US is unfairly pursuing a policy of containment that amounts to a betrayal of the two countries’ longtime economic partnership.

These beliefs have put both sides on the defensive. What neither side recognizes is that many of their fears are unfounded, fueled by anger and mistrust, rather than reflecting genuine threats.

The Ukraine war can help strengthen and sustain the conditions for a shift in US-China relations, and recent moves might mark a turning point, at least in the economic domain.

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Source: Project Syndicate

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