The Limits of a No Limits Relationship

The Limits of a No Limits Relationship

Hello, Little Brother

China is in a tight spot. After decades of economic growth, despite a mega-powerful modernized military (the People’s Liberation Army), China’s autocratic missteps, President’s Xi Jinping’s doubling down and slorping at the denial trough, has led to massive unemployment (especially among rising generations), humongous collapses in mega-real estate development and bank failures everywhere. Nations around the world looked to the Chinese “top-down” centralized control as the model for growth. What the world is learning now is that a top-down severe autocracy grows until it makes a serious of horrific mistakes… and there is no alternative to correct the expanding misdirection.

With sanctions, boycotts and tariffs encircling both Russia and China, much related to the Ukraine War – both nations have been seriously hampered by the global reliance on US-controlled interbank trading platforms (SWIFT-driven) and the pricing structures that still rely primarily on the US dollar – it was only natural for these two powers to generate workarounds into alternative platforms that, nevertheless, simply cannot compete with the long, well established Western alternatives. Last year, according to PRC figures, Russia exported $114.4 billion worth to China and imported $75.6 billion worth from China. For the US, it was $177 billion in exports, and $578 billion in imports. France $35.6 billion of exports, $45.5 billion in imports. Hungary and Serbia, too small to matter. Remember these numbers.

So, when Xi stopped off in France, Serbia and Hungary in early May, he was clearly trying to assert a wedge between the United States and European trading partners, but… er… it did not make much difference. As the May 6th New York Times reported: “Mr. Xi’s trip [came] at a time of tensions with many European countries over China’s support for Russia in the face of its war in Ukraine, its trade practices and its apparent espionage activities.”

Just looking at the numbers between the US and Europe, on the one hand, and Russia and her staunch allies on the other, Xi was forced to ride an unpopular Russian horse to pressure the United States and find a serious ally in his anticipated assault on Taiwan. Xi claims this small but strategic territory as a legacy possession of the PRC, even though the People’s Republic has never governed that island nation. In fact, Taiwan remains one of China’s major Asian trading partners. Now, Vladimir Putin has even more problems, as the body bags continue to be Ukraine’s greatest export to Russia, from an economy primarily based on resource extraction (mostly fossil fuels) and the sale of military hardware, to a seriously devalued currency and status as one of the planets major pariah nations. Russia, in finding the need to import “sophisticated” weapons from America-haters like North Korea and Iran, reflects an untenable inherent military weakness. A recent national parade in Moscow featured a single battle tank!

Last year, when Xi visited the Kremlin to announce a major new strategic alliance, Putin rolled out the red (what else) carpet in an elaborate show of pomp and circumstance. It was in the middle of Moscow’s troubled invasion of Ukraine as our allies poured billions into Kiev. The new Asian “partners” announced a mutually supportive treaty with “no limits,” to herald a new Sino-Russo era. It was to be combination able to implement financial workarounds to sidestep Western sanctions, guarantee Russia a significant buyer for its oil and gas and suggest to the world that “when” China moved to take Taiwan, Russia would be by her side. But look at those above numbers again. China cannot solve her economic doldrums without the massive trade with the West. So, the limits began to flow on the Sino-Russo pact. More than the TikTok battles or the new US tariffs on PRC EV products.

Laura King, writing for the May 16th Los Angeles Times, explains the double edge sword Xi now faces: “In many ways, the strategic relationship serves both Beijing and Moscow — and represents, in the view of many analysts, two autocrats’ unified challenge to the West… ‘China and Russia are forging a partnership increasingly reminiscent of a great power alliance,’ military intelligence analyst Chels Michta wrote in a commentary this week for the Center for European Policy Analysis.

“But while Xi and Putin share a disdain for a U.S.-led world order, their interests are not identical. And the Ukraine war is at times a complicating factor… China does not provide Russia with weaponry. But the Biden administration has prodded Xi’s government over its sale to Russia of so-called dual-use items — components such as machine tools, microelectronics and rocket propellant, which have civilian and military uses… That came up last month when U.S. Secretary of State Antony J. Blinken visited Beijing and chided China for ‘powering Russia’s brutal war of aggression against Ukraine.’

“Washington has also said it will take a harder line against Chinese-based financial institutions and firms that help Moscow circumvent wartime restrictions, warning of secondary sanctions against them… Even as China publicly professes neutrality on Ukraine, many observers believe Putin was emboldened in his war aims by a joint pact struck with Beijing days before the invasion, proclaiming a ‘no-limits’ partnership.

“In the course of the Ukraine war, however, some points of friction have emerged. China has been made uneasy by Putin’s occasional strident nuclear threats, the latest of which came this month when the Kremlin announced it would conduct exercises simulating the use of tactical — or battlefield — nuclear weapons near Ukraine.

“In a variety of international settings — most recently during a high-profile European tour last week — Xi has expressed hopes for peace in Ukraine, even as he has refused to condemn Russia’s ongoing attempt to batter its neighbor into submission… Ukraine has been careful not to publicly denigrate China’s peace proposals — a 12-point plan unveiled more than a year ago, followed by additional ‘principles’ set forth last month — but the government in Kyiv and its allies believe that if Beijing wanted to genuinely play the conciliator, it could use its influence to rein in Putin.”

Indeed, there is something incredibly third world about Russia, an extraction economy roughly the size of each of the US and Saudi oil and gas industries, with virtually nothing else to claim as a driving export. An updated banana republic without bananas. Russia may be a military power, but it wasted most of its efforts from the middle of the 20th century to present on expensive weapon systems, oil and gas, and almost nothing else. Without the slightest doubt, Putin has become Xi’s supplicant, betting heavily on China’s ability to crush US’ influence and economic strength. I suspect both Russia and China are counting on the unraveling polarization within the United States, doing what they are otherwise incapable of doing themselves.

I’m Peter Dekom, and I truly wonder if staunch Republicans like Ronald Reagan are spinning in their graves at the Beijing-Moscow-MAGA cartel that so many American soldiers died to prevent.