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Policy Paper

Ukraine, Russia, and the China Option

May 30, 2014

Andrew Small

Senior Transatlantic Fellow, Asia Program

Beijing has sought to take a neutral stance in the stand-off between Russia and the West. Yet as the recent $400 billion Sino-Russian energy deal illustrates, China’s economic decisions will inevitably have major implications. The question is not whether Beijing will tilt definitively toward one or other party but the extent to which China will prove to be an enabling or a constraining factor for different facets of Western and Russian policy. In a crisis that has hinged to an unusual degree on trade deals, loans, energy exports, financial assets, and sanctions, the world’s second largest economy cannot avoid becoming politically embroiled.

In some areas, there are opportunities for the European Union, in cooperation with the United States, to leverage China’s growing geo-economic interest in Central and Eastern Europe, where Beijing and Moscow’s interests are far from identical. But the principal challenge will be navigating China’s role in mitigating the impact of Western sanctions on Russia. At present there is the risk that the EU and the United States will end up with the worst of all worlds: sanctions that are not strong enough to change Moscow’s behavior or to deter China from further military assertiveness in its own neighborhood, yet just potent enough to push Russia into a closer relationship with China, and to persuade Beijing that it needs to immunize itself against exposure to the Western financial system.

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