China is closely monitoring the effects of Western sanctions on Russia in order to prepare for a possible invasion of Taiwan, The Wall Street Journal reported, citing people familiar with the matter.
Unnamed individuals told the outlet that China formed an interagency group in the months after Russia’s full-scale invasion of Ukraine in 2022. Its aim was to provide regular reports on how to reduce the impact of sanctions should the US and its allies impose similar measures on China in the event of an armed conflict over Taiwan.
They also said that Chinese officials regularly travel to Moscow to meet with Russia’s central bank, finance ministry, and other institutions involved in combating sanctions.
One unnamed person familiar with China’s outreach on sanctions said that Beijing is “very interested in practically everything: from ways of circumventing them to all sorts of positive effects, such as incentives for the development of domestic production.”
Alexander Gabuev, the director of the Carnegie Russia Eurasia Center, told the Journal that Russia is serving as a “sandbox” for China for how sanctions operate and how they should handle them.
“They know that if there is a Taiwan contingency, the tool kit that will be applied against them will be similar,” he said.
The US and its allies have imposed multiple rounds of sanctions on Russia since the start of the war.
Russia has managed to mitigate some of the effects by turning to intermediaries, bartering, and trading with non-sanctioning countries, including China, India, and Turkey.
Even so, Russia’s economy has been heavily impacted by the ongoing conflict and the Western sanctions imposed on it.
Russia’s central bank hiked its key interest rate to a record high of 21% in October to combat inflation, and last month the ruble dropped to a two-year low against the dollar.
Russian companies and defense firms have recently said they’ve scaled back their operations and struggled to turn a profit due to high interest rates and sanctions.
Alexander Libman, a professor of Russian and East European politics at the Free University of Berlin, told BI that it doesn’t surprise him that China is trying to learn from Russia’s experience.
“China has always tried to understand how it can avoid Russia’s mistakes, at least since the collapse of the USSR, which was very carefully studied in Beijing,” he said.
Libman added that China has probably already learned that its economy can adapt to “nuclear” Western sanctions through trading with other countries, adapting production facilities to quick and unpredictable changes of supply lines, and living without access to Western technology.
“Essentially, the experience of the last three years substantially reduced the fear of large authoritarian states with respect to Western sanctions, and this is very concerning,” he said, adding that China-Russia economic cooperation would make any future Western sanctions against China less effective.
People close to China’s decision-making process told the Journal that the existence of the research group does not suggest the country is preparing for an invasion of Taiwan, but rather for the “extreme scenario” of an armed conflict and its economic consequences.
However, some military analysts and defense officials have predicted that a Chinese invasion of Taiwan could happen within the next few years.
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