Beijing orders ‘stress test’ as fears of Russian-style sanctions grow | China

Concerned about the sweeping Russian-style sanctions from the west, Beijing has ordered a full “stress test” to study the implications of a similar scenario for its economy, the Guardian has learned.

According to someone with direct knowledge of the matter, a massive exercise began in late February and early March when Western allies imposed unprecedented sanctions on Moscow. Several key Chinese government agencies – from banking regulation to international trade – were asked to offer responses if the West imposed the same embargoes on China.

“Those involved in this exercise are using how Russia was treated as a baseline for China’s own policy response should it be treated the same way by the West,” the person added. “This stress test involves a range of methodologies, including modelling.”

Beijing did not specify why it asked its vast bureaucracy to conduct such an exercise, the person said. They said it was a “natural reaction” from Beijing given its close relationship with Moscow. A second source, who wishes to remain anonymous, said Chinese diplomats have also met with experts in recent weeks to understand the trajectory of this conflict.

“From Beijing’s perspective, if US-led Western allies could take such action against Moscow, they could do the same with China as well. Therefore, he needs to know how resilient the country really is,” said Tong Zhao, senior fellow at the Beijing-based Carnegie Endowment for International Peace.

But Edward Fishman, a former adviser to John Kerry on economic sanctions at the US State Department, said no economy – not even China – was immune to the kinds of financial sanctions the West has imposed. against Russia. “There is no good alternative to the Western financial system, and that will probably remain the case for a long time,” he said.

“The future of the economic conflict between the West and China will therefore likely be narrower in scope than what we have seen from the West in recent months against Russia. It will focus on finding leverage in strategic areas – such as advanced technologies and next-generation infrastructure – and not on trying to cause large-scale economic disruption.

Zhao said Beijing’s current exercise could be an attempt to figure out what the short-term cost would be to China if it provided material support to Russia during this conflict. This week, US officials said they had yet to see military and economic support for Russia from China, despite earlier warnings of the possibility.

On April 22, officials from China’s finance ministry and central bank held a meeting with domestic and foreign banks, including HSBC, to discuss how they could protect Chinese assets overseas if sanctions from Russian type led by the United States and its Western allies were also imposed. , according to a recent Financial Times report.

Chinese analysts were caught off guard by Russia’s February 24 invasion of Ukraine, several staffers said. But the Western response, according to Zhao, was “more surprising to Beijing’s leaders initially.”

“In recent years, Beijing leaders have increasingly feared that a strategic conflict between China and the West is not a question of whether it will happen, but when it will happen, especially on the question from Taiwan.”

Beijing has firmly opposed any ties to Taiwan when discussing the war in Ukraine, insisting they are two separate issues. Last week, the Chinese Embassy in London again criticized the British media’s comparison between the two, saying the Taiwan issue “deals with China’s core interests and we will not tolerate any outside interference”.

China’s State Council Information Office has been contacted by the Guardian for comment.

“Security Guarantee”

Last week, China’s Foreign Ministry stepped up its rhetorical support for Russia, saying the two sides “rise above the Cold War-era model of military and political alliance”, and that the two countries “undertake to develop a new model”. international relations”.

Curiously, around the same time, Ukrainian Foreign Minister Dmytro Kuleba told the official Xinhua news agency that Kyiv was keen to involve Beijing to ensure its security. “We propose that China become one of the guarantors of Ukraine’s security, it is a sign of our respect and trust in the People’s Republic of China,” he added. said Saturday.

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In 2013, China agreed to provide Ukraine with “security guarantees” if it were invaded or threatened with nuclear attack. But critics say Beijing remained evasive on the same issue after invading Russia in February.

Kuleba also told Xinhua that European countries are concerned about the situation because they cannot guarantee that Russia will not invade them tomorrow. “We also believe that this war is not in China’s interest,” he said, adding, “If Russia is not stopped now, it will lead to other crises a few years later. late”.

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