China is studying the Russian invasion of Ukraine. The objective: to know the scope of the sanctions when entering another territory

Yesterday we talked about a scenario, a scenario that has not occurred but could happen. What would happen if China decided to invade Taiwan? The question was not trivial, since the nation’s military had identified up to six options to address the alleged challenge. Today it seems to be confirmed that there is something more behind the virtual stage. Apparently, the invasion of Ukraine is serving as a study.

The importance of sanctions. I told it in an exclusive The Wall Street Journal. China has stepped up its scrutiny of how Russia is handling Western sanctions following its invasion of Ukraine. Background: prepare for a possible similar scenario in the event of a military conflict over Taiwan.

A Chinese inter-institutional group apparently studies the measures taken by Moscow, reporting regularly to key leaders, such as Xi Jinping himself. These efforts reflect Beijing’s strategy to mitigate the effects of a possible economic war led by the United States and its allies.

Diversifying reserves. The media reported that, with more than 3.3 trillion dollars in foreign reserves, the largest in the world, China is exploring ways to reduce its exposure to the US dollar. In this regard, the freezing of Russian assets abroad After the invasion of Ukraine, it set off alarms in Beijing.

In 2023, Xi Jinping visited the State Administration of Foreign Exchange to discuss protective measures, following the example of Russia in its attempt to dedollarize its economy before the war, yes, with mixed results.

Priority: avoid isolation. Russia has kept its economy operational by redirecting oil and gas exports to countries like China. In addition, it has used a kind of “shadow fleet” of ships not insured by the West to avoid the oil price cap. From this perspective, Beijing is watching these tactics with interest, assessing how they might fit into its economy, one that is significantly larger and more complex.

Strengthen supply chains. If China studies what is happening to Russia, this is one of the key legs. The impact of sanctions left Russia without access to key components, temporarily paralyzing industries such as the automotive industry. As the WSJ explains, China, as a manufacturing power, has taken note of these problems, seeking to reinforce national production and develop strategic inventories to avoid similar interruptions.

Coalitions and strategies. Key in geopolitics, but more so if what it is about is having allies in the face of a conflict. Russia has strengthened its relations with countries such as Iran, North Korea or China itself to counter Western sanctions. Beijing is also studying how the lack of consensus in the Western bloc, especially on issues such as the price of oil, could weaken the effectiveness of future sanctions, especially given the global impact that an economic confrontation with China would have.

How to prepare. There is no doubt, a conflict over Taiwan could trigger economic sanctions of unprecedented magnitude against China, affecting its financial system and those more than $3.7 trillion in banking assets abroad. Faced with such a scenario, Beijing would be exploring preventive measures, learning from Russian experiences, such as diversifying trade partners and strengthening internal financial mechanisms.

In short, the conflict that is currently taking place in Eastern Europe has many perspectives, and very different ones. The Russian experience can provide the Asian nation with a real-time laboratory for understanding the dynamics of economic sanctions and, perhaps more importantly, how to mitigate them.

Of course, and although none of this implies immediate plans for a conflict over Taiwan, Beijing, according to the WSJ exclusiveuses this analysis to prepare its economy and minimize the risks of this possible economic war with the West. one where strategic collaboration with Russia It also underlines that change in global dynamics towards a more multipolar approach.

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