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China's Close Alliance with Russia Tested by Wagner Mutiny: An Economic Dilemma Unfolds

A recent rebellion by the Wagner mercenary group has raised critical questions about China's economic dependence on Russia, causing distress among Chinese businesses and sparking debates within the cloistered leadership in Beijing.

Vladimir Putin and Xi Jinping
Vladimir Putin and Xi Jinping

China's Economic Uncertainty Amid Russian Rebellion

In the wake of news of the Wagner mercenary troops moving towards Moscow in a fleeting rebellion, many businesses from southern China found themselves scrambling to halt shipments of goods earmarked for Russia. Although the rebellion, which is the most severe challenge Russian President Vladimir Putin's leadership has faced since he invaded Ukraine in February 2022, has now subsided, many Chinese exporters are beginning to question their reliance on Russia.

China's Reaction to the Wagner Mutiny

China, which had declared a "no limits" partnership with Russia shortly before the Ukrainian invasion, has downplayed the weekend's turmoil and expressed solidarity with Moscow. Yet, the rebellion has provoked uncertainty within Beijing's leadership, leading some analysts to suggest that China may need to reconsider its political and economic ties with Russia.

Mercenary Uprising Shakes Up Power Balance

Yevgeny Prigozhin, the leader of the Wagner private army, spearheaded the armed revolt, citing friendly fire incidents that resulted in the deaths of many of his fighters. However, the rebellion was abruptly called off as Prigozhin's troops neared Moscow, facing little resistance in their advance.

China's Delicate Diplomacy Amid Crisis

Amid the unfolding crisis, China refrained from commenting until Sunday when Foreign Minister Qin Gang held an unexpected meeting with Russia's deputy foreign minister in Beijing. The fundamental thread tying China and Russia together is their shared resistance to the US and NATO-led global order that threatens their security.

Questioning the Sino-Russian Alliance

Despite a celebratory tone in state-controlled Chinese tabloids regarding Putin's quick resolution of the rebellion, some voices in China have started questioning their country's association with Russia. As per international relations expert Shen Dingli, China is likely to exercise more caution regarding its actions and statements about Russia in the future.

Potential Shift in Chinese Stance on Ukraine

Professor Yang Jun from Beijing's China University of Political Science and Law has suggested that China should reconsider its position on Russia and Ukraine, supporting Ukraine to avoid becoming ensnared in Russia's war. However, other academics believe Beijing will not change its stance on Russia due to the incident.

Investor Uncertainty and Economic Implications

While China is Russia's largest trading partner, with trade spanning numerous sectors, even the energy sector boosted a 40% increase in Russia-China trade in the first five months of this year shows signs of caution. Michal Meidan, head of China energy research at The Oxford Institute for Energy Studies, warned that political instability in Russia could spell significant uncertainties for Chinese investors.

Changing Dynamics of the Sino-Russian Relationship

Despite Russia's economic significance to China, Beijing's trade with other global powers such as the United States, the European Union, and Japan outpaces its dealings with Russia. As a result, political scientist Wen-Ti Sung suggests that Beijing might have more reservations and adopt a more transactional approach in its interactions with Russia.