Yesterday we talked about a scenario, a scenario that did not happen but could happen. What happens if China decides to invade Taiwan? This question was not a trivial one, as the country’s military had identified as many as six options to meet the so-called challenge. Today it seems to be confirmed that there is something else going on behind the virtual scene. It seems that the invasion of Ukraine serves as a study.

The importance of sanctions. This was covered in an exclusive The Wall Street Journal. China has stepped up scrutiny of Russia’s handling of Western sanctions following its invasion of Ukraine. Background: Be prepared for a possible similar scenario in the event of a military conflict in Taiwan.

It appears that an interagency group in China is reviewing the measures taken by Moscow and reporting regularly to key leaders such as Xi Jinping himself. These efforts reflect Beijing’s strategy to mitigate the effects of a potential economic war led by the United States and its allies.

Diversification of reserves. Media reported that China, the world’s largest with foreign exchange reserves of more than $3.3 trillion, was exploring ways to reduce its exposure to the US dollar. In this context, the freezing of Russia’s assets abroad after the invasion of Ukraine caused alarm in Beijing.

In 2023, Xi Jinping followed Russia’s example and visited the State Administration of Foreign Exchange to discuss protective measures. reduce the dollar economy was before the war, yes, with mixed results.

Priority: Avoid isolation. Russia has kept its economy running by directing its oil and gas exports to countries like China. He also used a kind of “shadow fleet” of ships uninsured by the West to avoid the oil price ceiling. From this perspective, Beijing is watching these tactics with interest and considering how they might fit into its significantly larger and more complex economy.

Strengthen supply chains. If China investigates what happened to Russia, this would be one of the most important pillars. The impact of the sanctions left Russia without access to key components, temporarily paralyzing industries such as automotive. As the WSJ explains, China, as a manufacturing power, is taking these issues into account and trying to strengthen national production and develop strategic inventories to prevent similar disruptions.

Coalitions and strategies. It is key in geopolitics, but even more important when it comes to having allies in the face of conflict. Russia has strengthened its relations with countries such as Iran, North Korea and China against Western sanctions. Beijing is also exploring how a lack of consensus in the Western bloc, particularly on issues such as the price of oil, could undermine the effectiveness of future sanctions, especially given the global impact an economic conflict with China would have.

How is it prepared? There is no doubt that a conflict over Taiwan could trigger unprecedented economic sanctions against China, affecting China’s financial system and banking assets abroad by more than $3.7 trillion. Faced with such a scenario, Beijing will be exploring preventive measures by learning from Russia’s experience, such as diversifying trading partners and strengthening domestic financial mechanisms.

In short, the current conflict in Eastern Europe has many perspectives, and very different ones. Russia’s experience could provide the Asian country with a real-time laboratory for understanding the dynamics of economic sanctions and, perhaps more importantly, how to ease them.

Of course, and while none of this implies plans for an immediate conflict over Taiwan, Beijing is using this analysis to prepare its economy and minimize the risks of a possible economic war with the West, according to the WSJ exclusive. Strategic cooperation with Russia also underlines that global dynamics are changing towards a more multipolar approach.

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