To wage war requires money, and the money that China receives from trade with Europe, America, and Japan can help Russia continue its attack on Ukraine. So the West must consider how to impose costs on Beijing so that it stops supporting Russia economically.
According to China’s Ministry of Commerce, the country is Russia’s largest trading partner, as trade between the two countries in 2021 reached $146.87 billion. China is also a massive investor in Russia. In the more than nine years since Xi Jinping took power, his country has invested more than one trillion dollars in Russia. Ultimately, the primary sources of these funds are from the United States, Europe, and Japan.
In 2021, China exported $3.36 trillion worth of goods, of which 3,722.44 billion renminbi (RMB, roughly $590 billion) was earned from exporting to the United States. Exports to the European Union amounted to 3,348.34 billion RMB (roughly $530 billion). Exports to Japan were worth roughly $156 billion. The three items add up to about $1.276 trillion. China’s overall trade surplus in 2021 was $676 billion, and as of the end of 2021, Chinese foreign-exchange reserves were $3.502 trillion. Beijing can use these funds to help Russia survive Western sanctions and fight its war against Ukraine.
Russia’s current annual GDP is only about $1.4 trillion. In comparison, California’s GDP in 2021 was more than $3.2 trillion. Yet despite the size of its economy, Russia launched a war of aggression against Ukraine and placed its nuclear weapons in a “special mode of combat duty.”
Putin knew that his invasion of Ukraine would lead to severe sanctions. But he attacked because of Xi Jinping’s strong support for him. According to the New York Times, Xi received information from the United States that Russia was about to attack Ukraine in December 2021. The Chinese refused to mediate and then signed a large oil purchase order with Russia and authorized the purchase of Russian wheat, which provided Moscow a lifeline. On February 4, 2022, Xi and Putin issued a joint statement on the opening day of the Beijing Winter Olympics, saying that “the friendship between our two countries is boundless and there are no limits on our cooperation.” They also announced an extensive Sino-Russian economic cooperation plan. On the same day, China placed another order for 100 million tons of Russian oil. China is already Russia’s largest export destination, and the two countries agreed during the Olympics to increase bilateral trade to $250 billion in 2024. Meanwhile, if Russia’s economy survives thanks to China’s support, Moscow will continue its violence.
How should the Western world react to these developments?
Contrary to previous arguments that were once popular in the West, economic development in authoritarian countries do not necessarily lead to political reform, and trade with democratic countries can instead increase the funds available to a repressive government. For a long time, Western countries have ignored this possibility or how trade affects basic human rights and freedoms globally.
Many in the West have now realized that trade with China will not lead to democracy there, but some still optimistically believe it will, especially those who control major sources of capital. This blindness means that such investors rejoice when the Chinese Communist Party claims that it needs to adjust its backward-looking economic policies, and merely mentions reforms and opening up. Western funds jump at this and are eager to invest more in China.
Others believe that if Western countries win via market competition, democracy will inevitably follow. For example, the Biden administration has formulated a China policy that favors competition and coexistence, not directly seeking to change China’s political system. With this policy, the White House naively thinks that democratic countries and autocracies can coexist peacefully. But authentic free-market competition cannot occur between capitalist economies and totalitarian countries. If a Western country coexists and competes with a totalitarian system—the latter essentially consisting of a giant labor camp that has more than one billion inmates, has a director who knows how to reward and punish inmates, and can learn new technologies from other countries—Western countries cannot win through coexistence.
But the Russian attack on Ukraine has awaken Western countries: sometimes national security must be placed above economic costs, because every penny that Western countries give to autocratic regimes may become guns and bullets for these authoritarians to attack democracies. Therefore, trade and human rights must be linked.
A country that ignores the basic human rights of its own people and those of people in other countries is a threat to all peaceful countries worldwide. The aggressive Russian war against Ukraine fully demonstrates the necessity and urgency of democratic countries to work together to promote internal changes in autocratic countries and ultimately to eliminate autocratic governance. To this end, democracies must first stop providing economic lifelines to authoritarian regimes.
Before China joined the World Trade Organization, the US Congress annually debated whether to allow China to retain its most-favored-nation status for trade, and the debate focused on human rights. But since 2001 when China was admitted to the WTO, Beijing has not needed to worry about human rights affecting international trade. Meanwhile, China’s economic development has not brought about improvements in human rights, and the human rights situation in China deteriorated after Xi came to power.
No longer needing to worry about human rights issues, China has integrated itself into the industrial supply chain of the world’s manufacturing industries. So separating China from global trade would be painful for the world’s democracies. But this is the price democratic societies must bear if they want to protect liberty and defeat dictatorships. Consider:
- If the former Soviet Union had been able to earn more than $3 trillion every year from foreign trade, would it have collapsed? (China’s foreign-trade export revenue in 2021 was $3.36 trillion.)
- If China’s autocratic regime receives a steady stream of capital from Western countries, a large portion of these funds will enable the long-term suppression of the Chinese people’s pursuit of freedom and democracy, the external expansion of the CCP’s strength and influence via the Belt and Road Initiative, and its continued support for Russia. The funds for the invasion of Ukraine may also allow Russia to aggressively target some other Western country and help both Beijing and Moscow to maintain their nuclear arsenals—which have always been directed at the United States, Europe, Japan, and others. Can Western countries keep their heads in the sand and decouple trade from human rights?
Western countries can no longer simultaneously reap blood money from adversaries and protect themselves. At this point, they should issue the following unambiguous demands:
- China must decouple from Russia economically, and Western countries must set a clear scope and timetable to the CCP for doing so. Otherwise, the CCP will face sanctions.
- The West must set a timetable for the Chinese government to improve its domestic human rights environment. If the Chinese government does not do this, the West will significantly increase tariffs on products imported from China in stages across sectors and promote the reconfiguration of the world’s manufacturing supply chains.
- Sanction Chinese government officials for violating human rights.
- Give much more military and economic support to Taiwan.
Some worry that, if the West makes too many demands or imposes sanctions on China, Beijing will be forced to align with Moscow, which will lead to deeper alliance between the two major powers. This worry is understandable. Many years ago, before Russia and China formed such a close de facto alliance, a policy of treating them differently was reasonable. The United States joined China to confront the Soviet Union back then, and the policy was effective, although it had negative consequences.
China’s current surface neutrality in Russia’s war of aggression against Ukraine is also worth encouraging. However, Western countries must accept the lesson that the sanctions imposed by Western countries on Moscow after Russia’s occupation of Ukraine’s Crimea in 2014 were rendered much less effective by the CCP’s secret support of Russia. So now democracies must make clear demands on China, and then listen to what it says and observe what it does. If China continues to aid Russia in its aggression against Ukraine, Western countries must abandon appeasement and implement strong sanctions.
Huge forces for change are latent inside Russia and China, and seemingly powerful autocratic regimes are prone to sudden collapse. The environment inside China and Russia is like the silence of a volcano just before it erupts. Although the resistance forces in both places are still building their strength underground, those who are attuned can sense it. External sanctions are an essential catalyst for change.
Turning China and Russia into forces for world peace and stability would make the world a safer and better place. Western countries should have a clear understanding of this and act decisively.
Evan Osborne translated this article for Wen Jian.