First, as I have previously argued on this blog, I think ideally Xi would want to call an end to the war in Ukraine. It may initially have served a purpose for China, in trying to put Russia and the West/Ukraine at loggerheads, in conflict or proxy conflict, and weakening both, but I think Beijing now sees a real prospect of a catastrophic defeat for Moscow, and perhaps regime change there, with Putin ousted for something likely less aligned with China. That would be a disaster for China, as it would leave the country further encircled by foes. So Xi would love to push a peace deal on Putin and Ukraine, but its only real interest here is saving Putin; it’s not really interested in viewing all this through any Ukrainian prism. Indeed, having done little to engage with Ukraine over the period since independence, Chinese officials simply don’t understand Ukraine, or don’t really want to. And that’s a problem when it comes to forcing a peace on Ukraine, as if China does not understand the Ukrainian perspective, how can it figure out a solution which is also amenable to Kyiv?

Second: if Xi cannot get a lasting peace effort, or ceasefire, it will at least think that it will win plaudits in the Global South, and perhaps even Europe, just for trying. In what it sees as an increasingly polarised world, China hopes to pull elements of the Global South and even Europe away from the US-led Western alliance by marketing itself as a global peacemaker and neutral arbiter (even though it clearly is not).

Third: again, if Xi cannot secure a peace agreement, he will at least want to enforce guardrails on Putin to limit risks of escalation in the conflict away from anything which can destabilise the global economy. Important herein is to understand that China’s long-term game plan is still to win global hegemony over the US through economic development, and through globalisation. China wins through globalisation and hates anything which undermines the global status quo – this war has spiked global commodity prices higher, hurt supply chains and hit global trade and growth, all of which is bad for the Chinese bid for hegemony through economic development.

Fourth: Xi knows Putin is desperate, and increasingly dependent on China. If Putin is willing to offer China cut-price long-term commodity deals, all the better. China will take whatever it can from a weakened Putin.

Fifth: in the “partnership without limits” agreement signed at the Winter Olympics in Beijing in February 2022 the two sides had very different interpretations of the weights of the two partners. Putin saw this at the least as a partnership of equals, whereas Xi definitely saw this as China being the big brother or dominant partner. There was irritation from both sides at the time. However, a year on and Xi will want to rub it in to Putin that he is now the weaker, junior partner and now dependent on Xi. Putin will be kissing Xi’s ring, if not worse and somewhat lower down the Chinese premier's anatomy.

Sixth: I think Xi will want to signal to the US that China has leverage over Russia, and that if the US and its allies want peace in Ukraine they will have to work with China. And that likely means that China will look for compromises from the US elsewhere, perhaps over tariffs and trade, even Taiwan.

Seventh, and importantly: China will not want to get dragged into the conflict. China knows full well that where powers such as Russia and the US have been dragged into wars, as in Vietnam, Iraq, Afghanistan and now Ukraine, they have emerged much weaker.

 

So that’s Xi, what about Putin?

Putin has by now realised that Russia cannot win this conflict – it currently has no path to victory. So Putin really has only two options: first: well, ideally Putin would want full Chinese backing for his conquest of Ukraine. Ideally that would be Chinese military backing to push the Ukrainians back to deliver a full Russian victory. Putin perhaps feels that even the Chinese lining up on his side in Ukraine could be enough to frighten the West into backing off in support for Ukraine, and then eventual Ukrainian surrender to Russia.

Second: if Chinese military backing is not forthcoming – it likely is not – Putin wants China to force Ukraine and the West to the negotiating table to bring a peace. And Putin would now take a peace in Ukraine where he keeps what he has, even better forcing guarantees also of no future Nato enlargement, and some limits on Ukraine’s rearmament. The latter would be aimed at giving a future option of Russia rearming and then re-invading Ukraine. Obviously the latter scenario is in no way acceptable to Ukraine. But I still think that Putin is now so weak and vulnerable that he might just be forced to concede to a deal whereby Russian forces withdraw to positions held before February 24, 2022, with longer-term UN negotiations over the future of Crimea, DPR and LPR, and then some formula around no Nato membership for Ukraine in exchange for some form of Western security guarantees for Ukraine.

Timothy Ash is the senior sovereign strategist at BlueBay Asset Management in London and a veteran observer of Russia, Ukraine, Turkey and other Emerging European markets. This note first appeared on the @tashecon substack blog here.