China and the Wagner coup
The Wagner coup in Russia was an awkward, embarrassing, and potentially destabilizing moment for China. China’s quiet support for Russia—while adhering to the letter of U.S. sanctions—was a balancing act that has thus far played in China’s favor. As Alexander Gabuev of the Carnegie Endowment noted, “To keep China happy, Russian leaders will have little choice but to accept unfavorable terms in commercial negotiations, to support Chinese positions in international forums such as the United Nations, and even to curtail Moscow’s relations with other countries, such as India and Vietnam.” China’s Ministry of Foreign Affairs spokesman has publicly stated that this is Russia's internal affair. “As a friendly neighbor and comprehensive strategic cooperation partner in the new era, China supports Russia to maintain national stability and achieve development and prosperity.” But under the covers, there is much more grumbling about what Russia’s problems mean for China.
Economically, China has been a winner, importing $88 billion of major commodities from Russia in 2022, a 52 percent increase from 2021. Most of those commodities were priced in yuan, a victory for the yuan-dominant bulls in China. Total trade between the two countries has risen 31 percent to $190 billion.
However, the long-term, geopolitical and economic ramifications of instability in Russia outweigh the short-term gains from improved trade. The Wagner insurrection increases the threat of political instability to China domestically and internationally. This will have several consequences for policymaking in Beijing.
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