China studies Russian sanctions evasion for lessons in potential Taiwan conflict

Taipei [Taiwan], December 3 : China has established an interagency group to study Russia's methods of evading Western sanctions following its invasion of Ukraine. This initiative aims to prepare for similar economic measures that could be imposed during a potential Taiwan conflict, according to The Wall Street Journal.
Beijing's preparation underscores its acknowledgment of the economic vulnerabilities it could face in a geopolitical crisis, Taiwan News reported.
The interagency group, reporting to Chinese Vice Premier He Lifeng, head of the Central Financial Commission, has been tasked with examining how Russia has sustained its economy under heavy sanctions. Chinese officials have traveled to Moscow, meeting with the Russian Central Bank, Finance Ministry, and other agencies to gain insights.
These efforts reflect Beijing's intent to adapt lessons from Russia's resilience, which relied on strategies like oil exports, rerouting trade, and forging non-Western economic partnerships.
"For the Chinese, Russia is really a sandbox on how sanctions work and how to manage them," said Alexander Gabuev, director of the Carnegie Russia Eurasia Centre. "They know that if there is a Taiwan contingency, the toolkit that will be applied against them will be similar."
China has observed key elements of Russia's approach, such as using non-Western-owned tankers to bypass oil price caps and sourcing goods through ex-Soviet states. Despite Russia's relative success in mitigating immediate economic fallout, replicating these strategies on a larger scale would be significantly more challenging for China due to its deeper integration into global supply chains and reliance on Western markets, reported Taiwan News.
Russia's ability to withstand sanctions has been bolstered by its economic partnership with China. Bilateral trade between the two nations reached a record USD 240 billion last year, with China purchasing Russian oil and supplying microelectronics and other goods. However, the relationship remains asymmetrical; while Russia relies heavily on trade with China, the latter's exposure to Western markets is far greater, leaving Beijing more susceptible to sanctions.
In preparation, Chinese leader Xi Jinping has focused on diversifying China's USD 3.3 trillion in foreign exchange reserves, shifting away from dollar-denominated assets such as US Treasury bonds. This strategy was influenced by the freezing of Russian foreign assets, which underscored the risks of overdependence on the US dollar.
Beijing has also taken note of Russia's pre-war measures, including diversifying reserves, de-dollarizing its economy, and strengthening domestic financial systems. After sanctions were imposed, Moscow implemented fiscal stimulus, redirected commodity flows, and circumvented export controls through third countries. These measures enabled Russia to sustain its war effort but came at the cost of long-term economic growth.
China's study has also highlighted the critical role of Western coalitions in sanctions enforcement. Measures such as removing Russian banks from the SWIFT network and imposing oil price caps required unprecedented coordination among the US, EU, UK, and other allies.
At the same time, Beijing has observed Western disagreements over sanction implementation, driven by concerns about inflation and economic disruption. This complexity points to potential vulnerabilities in any future sanctions campaign against China, Taiwan News reported.
Despite these preparations, sources familiar with China's decision-making emphasize that the interagency group's activities do not indicate plans for a Taiwan invasion. Instead, they are part of Xi's broader strategy to mitigate the economic consequences of a worst-case scenario.
The evolving geopolitical landscape, exemplified by the Russia-Ukraine war, has blurred the lines between economic measures and international relations.
Analysts note that this trend is likely to continue, with economic tools increasingly used as instruments of coercion and negotiation. As tensions in the Taiwan Strait persist, Beijing's focus on economic preparedness signals its recognition of the high stakes involved in any potential confrontation.