The new US-Russia cold war will accelerate China’s rise

President Biden has made clear that the United States has embarked on a strategy of Containment 2.0 against Russia with what he calls “the broadest sanctions in history.” But Biden is unlikely to have factored in the possibility of a boomerang effect. The unintended consequences could bifurcate the global economy, polarize international politics and strengthen China at America’s expense.

Over the years, the relative ease of imposing economic sanctions has turned them into a grossly overused tool of American diplomacy. The efficacy of U.S. sanctions has been eroding with the relative decline of American power, and a growing body of evidence suggests that such measures have often proved counterproductive to America’s own economic and geopolitical interests. 

The U.S. has virtually ejected Russia from the Western-led financial order at a time when economic power is moving east. Expelling the world’s 11th-largest economy from an order that the U.S. seeks to uphold could intensify the search for a viable alternative system that isn’t dominated by the West. 

What is more certain is that the new U.S.-led hybrid war against Russia, centered on unparalleled sanctions, will help deepen the undeclared Beijing-Moscow axis against Washington and make China the big winner financially and geopolitically, thereby aiding its expansion of economic and military power.

The West’s heavy economic penalties on Moscow, including unplugging key Russian banks from the international SWIFT payments system, are set to turn China into Russia’s banker, enabling it to reap vast profits. In structural terms too, Russia’s sanctions pain will be China’s gain: To help insulate itself from similar Western sanctions if it were to invade Taiwan, Beijing is seeking to boost the payments and reserve role of the yuan and the international use of its competitor to the SWIFT network — the Cross-Border Interbank Payment System, or CIPS. The West’s Russia sanctions are likely to provide a fillip to both efforts. 

Furthermore, the sanctions have opened the path for China to build an energy safety net through greater land-based imports so that it can withstand a potential U.S.-led energy embargo or blockade in the event of a Chinese invasion of Taiwan. The re-imposition of sanctions on the Nord Stream 2 gas pipeline is welcome news for Beijing, which is seeking to further boost energy imports from Russia after concluding new oil and gas deals worth a whopping $117.5 billion during Russian President Vladimir Putin’s Beijing visit last month.

Here’s the paradox: China has faced no Western financial or other meaningful sanctions despite swallowing Hong Kong, redrawing the geopolitical map of the South China Sea, expanding its land frontiers in the Himalayas and establishing a Muslim gulag with more than one million detainees in what two successive U.S. administrations have called “genocide” and “crimes against humanity.” By contrast, as Biden’s two rounds of sanctions last year underscored, Russia has remained an easy target for escalating American sanctions over the past decade because the U.S. has little stake in the Russian economy.

In this light, the West’s targeting of just Russia is certain to make China the main beneficiary of the sanctions, thus aiding Chinese President Xi Jinping’s “China dream” of supplanting the U.S. as the world’s preeminent power.

The new Biden-led sanctions against Russia will likely be undercut by Xi’s regime — unless the West goes after China too. But that possibility seems remote.

As part of a diplomatic strategy to extract important concessions from the West, Beijing will play the same cat-and-mouse game with Washington over the Russia sanctions that it has long played vis-à-vis the North Korea sanctions. It will pretend to cooperate with the U.S. while quietly undermining the Western sanctions, including by helping Russia to find China-centered financial workarounds.

The outrage over Russia’s invasion of Ukraine should not obscure one key fact: China, with about a 10 times larger population and economy than Russia, poses the biggest challenge to America. Whereas Russia’s strategic priorities and ambitions are concentrated in its neighborhood, China is working to supplant the U.S. as the dominant global power.

As FBI Director Christopher Wray said last month, “There is just no country that presents a broader threat to our ideas, our innovation and our economic security than China.” And the “scale of their hacking program…is greater than every other country combined.” China has expanded its spying in the U.S. to such an extent, according to Wray, that the FBI is launching one new counterintelligence investigation on average every 12 hours.

For China, whose global image is at a historic low, the new Washington-Moscow cold war (with Russia reemerging as the “evil empire” in Western perceptions) couldn’t come at a better time. Xi has shown an increasing appetite for taking major risks, believing China has a narrow window of strategic opportunity to modify the international order in its favor before it confronts a demographic crisis, stalled economic growth and an unfavorable global environment. 

Putin, through his war of aggression, is unwittingly helping Beijing, including distracting the U.S. from its China challenge. The war, which has the makings of a drawn-out and dangerous confrontation between Russia and NATO, will help Xi’s pursuit of his “China dream.”

Biden is likely to live up to his pledge to make Russia pay “dearly, economically and strategically.” Taming a largely hostile Ukraine could mire Russia in a quagmire, especially as Western lethal weapons continue to flow to Ukrainian resistance forces. Biden’s request to Congress for a staggering $10 billion in additional Ukrainian assistance shows that his Containment 2.0 strategy includes an Afghanistan 2.0 plan to replicate in Ukraine the CIA-led covert war of the 1980s that ultimately drove Soviet forces out from Afghanistan.

America’s increasing entanglement in European security, however, will open greater space for Chinese expansionism in the Indo-Pacific, a region that will shape the new world order. In fact, U.S. policy, instead of driving a wedge between Russia and China, is serving as a bridge that unites them against an overstretched America.

More fundamentally, U.S. policy has learned little from its strategic blunder in aiding China’s rise under successive American presidents from Richard Nixon to Barack Obama, which has resulted in that country today posing a military, economic and technological challenge on a scale America has not seen before. Almost every time the U.S. has slapped any country with sanctions in the post-Cold War period, it has helped advance Chinese commercial and strategic interests.

The Russia sanctions, although they hold no promise of changing Putin’s behavior, constitute one of the biggest gifts American policymakers have delivered to Beijing. By effectively putting Russia, the world’s richest country in natural resources, in Beijing’s pocket, the sanctions will yield major dividends for a resource-hungry China, including allowing it to dictate the terms of the bilateral relationship and secure greater access to Russian military technology. 

After Biden’s Afghan debacle and failure to deter Russia’s invasion of Ukraine, could Taiwan become his next foreign policy disaster? Xi will likely bide his time and wait for an opportune moment before moving on Taiwan, taking a distracted U.S. by utter surprise and bringing down the curtain on the West’s long ascendancy.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water: Asia’s New Battleground” (Georgetown University Press).

Tags Barack Obama Biden China China christopher wray Economic sanctions International sanctions during the Russo-Ukrainian War Joe Biden NATO Rise of China Russia Russia-Ukraine Russo-Ukrainian War Ukraine Ukraine invasion Vladimir Putin

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