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Ukraine crisis should give China pause on Taiwan

China is counting heavily on the war in Ukraine. If the Russians win, Europe will long be preoccupied, unable to advance the transatlantic consensus that is slowly building around confronting the challenge posed by China and, more broadly, defending the post-Cold War world. that Europe has helped the United States create. A Russian stalemate in Ukraine would serve the same purpose. But if the Russians lose, Beijing will face a West that is not just re-energized, but united and with an ax to grind.

This largely explains China’s support for Russia to date.

But how does all of this affect China’s calculations closer to home, particularly its decades-long plans to take Taiwan? Beijing is on its own schedule there. Even from a strictly military point of view, unless forced to act by an overt move towards formal independence for Taiwan, China is not ready to act. Xi Jinping and the leadership of Beijing are many things, but the eruption is not one of them. Furthermore, they believe that time is on their side in the wider global competition with the United States, Taiwan’s main protector.

Indeed, the Chinese believe they have a much better chance of letting what they see as American decline unfold than rolling the dice on a risky invasion of Taiwan.

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Another factor arguing for caution in Zhongnanhai, the Chinese Communist Party compound in Beijing, is the furious and unprecedented international economic response to Russia’s invasion of Ukraine. I have just touched on some of the highlights: the assets of Putin, senior government officials, oligarchs, Russian business leaders and banks have been frozen around the world; the financial transactions of the Russian central bank were targeted; several Russian banks have been removed from the SWIFT international payments system; business with certain Russian companies has been banned; listings on international stock exchanges have been reduced; and bans and restrictions were imposed on energy imports from Russia as well as a selective ban on exports to the country. The full list of sanctions is much longer.

China is vulnerable to an equally comprehensive sanctions effort in the event of a crisis in Taiwan. It would necessarily be a different, tailor-made package. For example, China is not an energy exporter, much less a country that depends on energy for the majority of its exports. Russia is, in fact, statistically more dependent on international trade than China, due to China’s deliberate policy of prioritizing domestic demand. China has a more diversified portfolio of business interests.

At the same time, China is much more dependent on inward international investment flows than Russia. The same goes for outbound investments. China has a lot more external debt to pay off, if not a healthier ratio to its export earnings. The Chinese economy is also much more capital intensive than that of Russia.

Finally, over the years, there have been a lot of concerns about China’s holding of US debt. Yet who is more vulnerable in this regard, the United States or China? As the old saying goes, if you owe the bank $100, that’s your problem; if you owe the bank $1 million, that’s the bank’s problem. A disruption in financial relations between the United States and China would hurt both, but the Chinese more so because dollars make up such a large portion of its global debt holdings.

The impact on China of a Ukrainian-style sanctions response is clear and no doubt well understood in Beijing. The place of doubt revolves around American and allied determination in the event of a crisis in Taiwan. In other words, given that not only is China dependent on the world, but the world is dependent on China, would the United States and others pull the trigger for comprehensive sanctions?

The answer to this question is “yes”, and for a reason. If China moves into Taiwan, the United States will go to war with China – and that is worth whether the Chinese go all the way in or take just one offshore island. The use of military force changes everything, overnight. If observers thought the United States was pressuring its allies over the response to Ukraine, imagine the pressure when the lives of its servicemen are in danger. Moreover, from the outset, an American military response will involve rallying its allies in combat, notably Japan, but also Australia and probably the United Kingdom.

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There are only a few places in the world where a US military response is so predictable, and Taiwan is one of them. Beijing itself is betting on it. Virtually everything about its military, equipment, doctrine, etc., is designed to prevail in a war with the United States over Taiwan’s future.

All of this pleads for Beijing to bide its time, stave off what it sees as Taiwanese moves towards independence, continue to restrict its international space by keeping Taiwan away from other international organizations and poaching diplomatic recognition, and by directly interfering in the island’s politics in favor of pro-Beijing Outcomes.

After the 2008 financial crisis, Beijing calculated that time was on its side in a global competition with the United States. Nothing has happened since, including in recent weeks, to change his mind. By his way of thinking, one day Taiwan will fall into his lap. That being the case, there is very little value in risking a military confrontation with the United States today. Add to that the threat of crippling penalties, which make stealth the best part of bravery. China better wait.