Thread by @CER_Grant

I just spent a week in Beijing, for the first time in many years. A few thoughts. The war in Ukraine is creating huge strains in China's relations with the US and the EU. This is because the war has pushed China into closer alignment with Russia, Iran and DPRK. /1 @CER_EU

What drives China's foreign policy is an obsession with the US - and its efforts to stymie China's emergence as a great power, for example through controls on the export of hi-tech goods. Feeling insecure, China's leaders need all the friends they can find. /2

Russia is a useful friend, on UNSC with diplomatic clout in M East & Africa, lots of oil & gas, and a leader who shares Xi Jinping's world view - that the decadent West is in decline, a multipolar world is emerging, and big countries should enjoy spheres of influence. /3

So Russia must not lose - that would be a humiliation for China. By default, China has also become more closely allied with Iran & DPRK, Russia's friends (and suppliers of arms). Being in an axis of autocracies is not where many Chinese officials & academics want to be. /4

They emphasise how China is pro-globalisation and global rules, while Russia, Iran and DPRK are not, and are seeking to undermine the international order. They say China wants to lead the global south, not an axis of autocracies. /5

But the US and the EU are fed up with China's indirect support for Russia's war effort - it is not supplying arms but is selling important components and dual use goods. And buying much oil. The US is threatening sanctions against Chinese banks. This is causing much concern. /6

Many Chinese officials & academics want good relations with Russia and the West. But they know that Xi will not abandon Russia, even if ties with the West fray. But there is also another factor causing strains between China and the West: China's new economic strategy. /7

China's growth was driven by property and construction. But no longer. Xi wants the new driver to be not personal consumption but 'new quality productive forces' - ie, making high-tech goods. Both US & EU fear over-capacity and the dumping of these goods on their markets. /8

The European Commission has recently got tough on China, investigating Chinese exports of EVs, trains, solar panels, wind turbines & scanning equipment that it thinks have benefited from excessive subsidies. This is a response to the lack of action by the Chinese... /9

when the EU complains about its annual €400 billion trade deficit, and China's reluctance to open its markets further. The US is imposing new tariffs on Chinese steel and hitting China's shipping. So, both Ukraine & economic tensions are pushing China's ties to US & EU..../10

into a downward spiral - even if the current diplomacy is polite. China hopes to pull EU away from alignment with US. But so long as China supports Russia's war effort & fails to do more to open its markets, the EU will stay close to US. And China will stay close to Russia. ENDS