Since the commencement of the Ukraine conflict, China has reportedly been providing Russia with a variety of goods, including microelectronics and washing machines, in addition to purchasing its oil.
In the interim, Beijing has been gaining its own strategic advantage: a real-world case study on how to circumvent Western sanctions.
According to individuals with knowledge of the situation, an interagency group that was established by China in the months following the full-scale invasion has conducted regular reports for the country’s leadership regarding the effects of sanctions.
According to the individuals, the objective is to extract lessons on how to mitigate them, particularly in the event that a conflict over Taiwan prompts the United States and its allies to impose comparable sanctions on China.
According to the sources, Chinese officials conduct regular meetings with the Russian Central Bank, the Finance Ministry, and other agencies that are engaged in sanctions countermeasures in Moscow as part of the initiative.
The Chinese study endeavor, which has not been previously published, is indicative of the new era of economic warfare that has been unleashed by Russia’s invasion of Ukraine.
The distinction between economic policy and geopolitical strategy is becoming increasingly ambiguous.
Donald Trump’s second presidential term is expected to further exacerbate this trend by utilizing tariffs as a means of negotiation and coercion.
Individuals who are intimately acquainted with Beijing’s decision-making processes have issued a warning that the study group does not necessarily indicate that the nation is preparing for an invasion.
Rather, the individuals stated that Beijing is preparing for the “extreme scenario” of an armed conflict and its economic repercussions.
One area of particular concern for China is its foreign-exchange reserves, which are the world’s largest, totaling over $3.3 trillion.
Beijing’s increased pursuit of diversifying its accumulation beyond dollar-denominated assets, including U.S. Treasury bonds, was precipitated by the U.S. and its allies’ freezing of Russian assets abroad in response to the Ukraine invasion.
Although the United States has already implemented sanctions against China, such as export restrictions on advanced semiconductors and measures against telecommunications giant Huawei, a crisis over Taiwan could result in an economic conflict of a more significant nature.
According to a report published last year by the Atlantic Council and Rhodium Group think tanks, the implementation of full-scale financial sanctions by the West would jeopardize $3.7 trillion in Chinese overseas bank assets and reserves, disrupt trade, and disrupt the country’s financial system.
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