Navigating the Vortex
Navigating the Vortex
Moving on from Ukraine? China-West relations between Xi'an and Hiroshima

Moving on from Ukraine? China-West relations between Xi'an and Hiroshima

On Our Radar, 22 May 2023

Four weeks ago, on 26 April 2023, Presidents Xi and Zelensky spoke on the phone for the first time since Russia’s invasion of Ukraine in February last year. This was an important first step in the direction of at least some cooperation between China and the West to work together on ending the war in Ukraine. But progress in this direction has been slow, and fighting in Ukraine has further intensified since. As China and the West have continued to shore up their respective alliances, Ukraine remains a major divisive issue but one that is becoming more and more a sideshow in the competition to shape a new geopolitical and geoeconomic order.


What it’s about: When Xi and Zelensky spoke for almost an hour about their countries’ bilateral relations and the war in Ukraine, the Chinese president focused on the importance of dialogue and negotiation “to bring lasting peace and security to Europe” while his Ukrainian counterpart confirmed “a just and sustainable peace for Ukraine” was inextricably linked to restoring “the territorial integrity of Ukraine … within the 1991 borders.”

This is the position that the G7 leaders’ communique supported as well, specifically calling on China “to support a comprehensive, just and lasting peace based on territorial integrity and the principles and purposes of the UN Charter, including through its direct dialogue with Ukraine.”

The corresponding Xi'an Declaration of the China-Central Asia Summit was unsurprisingly less specific in this regard, but the six presidents nonetheless “reaffirmed their commitment to the purposes and principles of the Charter of the United Nations and stressed that the territorial integrity and sovereignty of States cannot be undermined.”

Why it matters: The war in Ukraine so far has cost hundreds of thousands of lives on both sides, caused hundreds of billions of dollars’ worth of damage to Ukraine’s economy and infrastructure, and contributed to a global cost-of-living crisis by driving up the prices of energy and food. Western sanctions on Russia and the increasingly tough stance by the G7 on sanctions evasion and circumvention have accelerated a trend of geoeconomic fragmentation that reinforces the geopolitical reconfiguration of the international order into a US- and an emerging China-led block.

China’s consolidation of its relations with Central Asia at the summit of the presidents of all five Central Asian states with Xi Jinping in Xi’an indicates Beijing’s expanding influence in a region traditionally dominated by Moscow. Meanwhile, G7 leaders in Hiroshima re-committed to “de-risking, not de-coupling” in their quest for a common approach among them to economic resilience and security.

China and the West both try to maintain some momentum in shaping their respective alliances, and the war in Ukraine continues to matter in this context. But it is increasingly becoming a distraction from a range of other issues that China and the West, as well as the rest of the world, are grappling with. There can be no question that the war needs to be brought to an end but given the broader stakes in the China-West relationship, managing it by containment in the absence of a credible peace plan is becoming a more likely approach—and one that will intensify the political and economic rivalry between China and the West.

Our take: Bringing the war in Ukraine to a just and sustainable end will not be quick or easy, but China’s overt commitment to attempting a process of mediation is now evident with the visit last week by China’s special envoy on the issue, Li Hui, to Kyiv. While any Chinese mediation will play out only slowly, even if it is reluctantly supported by the West, both sides will continue in their efforts to reshape the international order in which a settlement of the war in Ukraine will eventually happen. The two rival summits in Xi’an and Hiroshima clearly demonstrate that the contest over the shape of this new order has taken centre-stage, and the war in Ukraine, and its two main protagonists, are turning into instruments of China and the West in their intensifying rivalry.

To understand why and how this happened, we need to look at the bigger picture. A flurry of European visits to China sought to convey one key message to Beijing, namely that another ‘forever-war’ is in nobody’s interest, especially not one like that in Ukraine near the centre of Europe with the enormously destabilising consequences for the global economy and international peace and security.

Although he was much derided for various comments during and after his trip to China, it seems as if President Macron of France was able to impress this point on President Xi. This was not Macron’s doing alone, and it is important to bear in mind that other ‘messengers’ played an important role as well—EU Commission President Ursula von der Leyen travelled with Macron to China, and German Foreign Minister Annalena Baerbock followed them a week later. Similarly important for Beijing to hear, von der Leyen’s earlier speech about de-risking the EU’s relationship with China, rather than de-coupling from it, was echoed in a speech by US treasury secretary Janet Yellen just days before the Xi-Zelensky call.

As we wrote in an earlier piece, Europe-China relations: still just muddling through? (On Our Radar, 9 April 2023), maintaining channels of dialogue between Europe and China “is by no means a bad thing at a time when communication is often the first victim of intensifying geopolitical and geoeconomic rivalry.” Yet, not only is this rivalry between China and the West far from over but it appears to be intensifying despite the war in Ukraine which is unlikely to come to a sustainable solution without cooperation between Beijing, Brussels, and Washington.

At the time of the Xi-Zelensky call, China and the West were seemingly treating the war in Ukraine as an issue where they might demonstrate to each other that progress towards a settlement reflected their self-interest in restoring even a modicum of geopolitical and geoeconomic stability, including in their own relationship.

This may still be the case, to some extent, but the two summits in Xi’an and Hiroshima also indicate that things have moved on. Through the Xi’an Declaration, China has firmly locked the five Central Asian states into its expanding sphere of influence. Economically, this has been a trend for the last decade since President Xi launched the Belt and Road Initiative in Kazakhstan in September 2013. Politically and in terms of security, China’s influence has gradually and substantially increased as well—partly because of the crisis in Afghanistan, partly because of the war in Ukraine. The statement in the Xi’an Declaration that “China firmly supports the development path chosen by the Central Asian countries and supports all countries in safeguarding their national independence, sovereignty and territorial integrity and in adopting independent domestic and foreign policies” leaves little doubt that the days of Russia’s dominance in the region are over while also sending a clear message to the West that China will not tolerate any rival influence there.

The G7 Hiroshima Leaders’ Communiqué is similarly unequivocal about the rivalry between China and the West being the defining feature in the contest over the geopolitical and geoeconomic shape of the new international order. While there are some proverbial olive branches extended to China in relation to cooperation on climate change, biodiversity, debt sustainability, global health, and macroeconomic stability, there follows a long list of concerns regarding China’s conduct. These include practices of economic coercion, market distortion, industrial espionage, and so on, leading the G7 leaders to conclude that “economic resilience requires de-risking and diversifying.”

As we wrote earlier in Black Swan Events & Business Resilience: Insights from Ukrainian Companies amid War (On Our Radar, 15 May 2023), many of the measures adopted by states to ensure their economies’ resilience to both external shocks, like the war in Ukraine, and the effects of increasing rivalry with China have a significant impact on businesses as well. That this will continue to be the case, and perhaps even more so, is also apparent from the separate and more detailed Statement on Economic Resilience and Economic Security. Here, the G7 Leaders acknowledge that they have yet to “provide clarity to the private sector” regarding the implementation of policies on economic resilience and economic security. Yet, the overall direction of travel is clear, including, among others, more export and investment controls when it comes to critical and emerging technologies, more protection of global value and supply chains against “illegitimate influence, espionage, illicit knowledge leakage, and sabotage”, more “coordinated responses, [to] deter and, where appropriate, counter economic coercion”, more due diligence regarding the “political, economic, and other risks of a non-technical nature posed by vendors and suppliers”, and more “resilient supply chains through partnerships around the world, especially for critical goods such as critical minerals, semiconductors and batteries.”

There can be little doubt that if implemented this strategy will involve far more decoupling than political leaders are willing to admit, or perhaps imagine, at the moment. It will put significant burdens on the private sector to re-shore, near-shore, and friend-shore, while potentially leading to lost market and investment opportunities. It could also mean a higher burden on taxpayers if states were to decide that some of the likely costs borne by the private sector should be absorbed by the public purse.

To be sure, this emphasis on economic resilience and economic security is politically driven and one of the key lessons from the war in Ukraine—to avoid economic dependencies (like Europe’s dependence on Russian energy in the run-up to February 2022) and to limit the transfer of defence-critical technologies to potential adversaries.

Even if limited, the inevitable de-coupling of China and the West in some sectors of the global economic and financial systems will have ripple effects beyond these imagined narrower boundaries. It will be more difficult for countries in the Global South not to take sides and thereby contribute to the ongoing process of fragmentation. It will also limit the availability of resources and goodwill to cooperate on truly global problems like climate change, health, and poverty reduction.

And it will turn issues like the war in Ukraine even more into one of the instruments of this new great-power rivalry. China’s focus on Central Asia and the West’s depressing long list of broad global security concerns, however, also make it abundantly clear that as the war in Ukraine is well into its second year, neither side has a workable plan of how to end it. And even if a carefully hatched plan between them did exist, it may not survive contact with a reality in which Kyiv and Moscow have very different ideas about how to end this war and when.


Navigating the Vortex
Navigating the Vortex
We live in a complex and ever-changing world. To navigate the vortex we must adapt to change quickly, think critically, and make sound decisions. Lucy Marcus & Stefan Wolff talk about business, politics, society, culture, and what it all means.