Hi China Watchers. This week we examine how China's refusal to join the international sanctions campaign against Russia is reaping economic reprisal talk on Capitol Hill. We'll also unpack the challenges facing newly arrived U.S. Ambassador to China NICHOLAS BURNS, look at the furor sparked by former Secretary of State MIKE POMPEO 's Taiwan speech and digest Chinese Foreign Minister WANG YI's diplomacy-free diagnostic of U.S. foreign policy at China's annual National People's Congress meeting. In "One Book, Three Questions," we get a firsthand account of Beijing's rollback on rule of law in Hong Kong. Got a book to recommend? Tell me about it at pkine@politico.com. Let's get to it. — Phelim China has stood by Russian President VLADIMIR PUTIN since he invaded Ukraine two weeks ago. Now, some in Congress are determined to make Beijing pay. The objective: make the costs of China's Moscow alignment outweigh the perceived strategic benefit of a Russia-Ukraine conflict. There is growing impatience in Washington with the Chinese government's position of advocating for "peaceful settlement of the crisis" while simultaneously denouncing sanctions that might actually affect Russia's war calculus. And suspicions that China will exploit its public positioning on the invasion for strategic and material gain is fueling congressional legislation designed to punish Chinese sanction busters. As the invasion grinds on, the Chinese government will have to choose between grudging compliance with sanctions against Russia or risk U.S. government reprisals for perceived material support for the Russian war machine. "Ukraine is exposing the hypocrisy of the Chinese Communist Party. They preach non-interference in internal affairs of other countries but refuse to condemn an invasion of a sovereign state," Sen. MARCO RUBIO (R-Fla.), a member of the Senate Foreign Relations Committee, said in a statement to China Watcher. "They hypocritically support Russia's criminal invasion because they share a common goal with Putin, to impose a new global order with them at the top and America relegated to becoming a second-rate power." Rubio didn't indicate any concrete action he or GOP Senate Foreign Relations Committee members plan to take toward sanction busters, but bilateral legislation introduced in the House on Monday aimed at punishing Chinese entities that violate the sanctions offers a possible model for a Senate bill. International dismay toward Russia's invasion has fueled a growing list of economic punishments, including President JOE BIDEN's ban Tuesday onRussian energy imports. Chinese Foreign Ministry spokesperson ZHAO LIJIAN responded to that decision by declaring "the willful wielding of the big stick of sanctions can never guarantee peace and security." Zhao's messaging comes straight from the top. "Sanctions will affect global finance, energy, transportation and stability of supply chains, and dampen the global economy that is already ravaged by the pandemic. And this is in the interest of no one," Chinese President XI JINPING told German Chancellor OLAF SCHOLZ and French President EMMANUEL MACRON during a Monday video summit. This positioning reflects Beijing's assessment of the potential strategic advantage of a Russia-Ukraine conflict. A diversion of U.S. focus and resources from the Indo-Pacific would ease Chinese government concerns about the implications of the Biden administration's Indo-Pacific Strategy unveiled last month, which aims to counter China's efforts to create a regional "sphere of influence" through "coercion and aggression." The Russian invasion has prompted a shift in U.S. focus that offers "an unexpected sigh of relief to China as the primary strategic rival to the U.S.," YU JIE, senior research fellow at the Chatham House policy institute in the United Kingdom, wrote in an opinion piece last week. That's a view shared by YUN SUN , China Program director at the Stimson Center, a Washington, D.C.-based think tank. "At a minimum, Russia could distract the United States and blunt the impact of Washington's strategic competition on China," Sun wrote in a recent analysis. The Biden administration's challenge is determining if Beijing's rhetoric about its self-declared "no limits" partnership with Moscow translates into material assistance for its war effort. And it's making clear that China will pay if it provides sanction-violating support. "Nations that side with Vladimir Putin will inevitably find themselves on the wrong side of history," a State Department spokesperson told China Watcher. "Nations that try to evade or work around these measures will experience the consequences of those actions." The Chinese government is responding to criticism of its Russian alignment with the time-honored tactic of misdirection. On Monday, China's Foreign Ministry sidestepped any mention of Russia's shelling of civilian areas, its attacks on humanitarian corridors or potentially catastrophic damage to the Soviet-era Chernobyl nuclear facility in favor of a focus on alleged U.S. bioweapons labs in Ukraine. Zhao fired off a litany of falsehoods in a March 8 press conference, alleging that "the biological military activities of the U.S. in Ukraine are merely the tip of the iceberg." That echoes a Chinese government conspiracy theory that has tried to link Covid-19 origins to the Fort Detrick military base in Maryland and prompted a withering administration response from the White House. "To be clear: this is preposterous," JEN PSAKI, White House press secretary said in a statement to China Watcher. "Now that Russia has made these false claims, and China has seemingly endorsed this propaganda, we should all be on the lookout for Russia to possibly use chemical or biological weapons in Ukraine, or to create a false flag operation using them. It's a clear pattern, and no one should fall for it." China's anti-sanctions position willfully ignores its economic leverage on Russia. China is already Russia's largest trading partner, with bilateral trade soaring 36 percent in 2021 to a record $147 billion. Within hours of Russian tanks rolling over the border into Ukraine, China's customs administrationlifted restrictions on Russian grain imports. That decision followed an announcement last month that China was in negotiations to seal an estimated $20 billion deal to purchase 100 million tons of Russian coal. "Russia is counting on China to supply a wide range of consumer and industrial goods, and to buy wheat, corn, sunflower oil, metals, and above all oil and gas," said GARY HUFBAUER , former U.S. Treasury department deputy assistant secretary for international trade and investment. "Current estimates suggest Western sanctions could cost Russia a 10 percent drop in GNP. I think the absence of Chinese support could cost Russia another 2 percent." The U.S. and its allies last week imposed restrictions on exports to Russian maritime, aerospace and defense industries of high technology items, including lasers and semiconductors. But China's massive industrial manufacturing capacity and a well-established black-market supply chain may enable Chinese suppliers to provide Russia with the high tech products blocked by sanctioning countries. "Russia and China have made sanctions evasion into a team sport," warned Rep. MICHAEL MCCAUL (R-Texas), lead Republican on the House Foreign Affairs Committee, who urges zero-tolerance for Chinese sanction busting. "You can imagine enterprising Chinese and Indian companies importing things that Russia needs and then reselling them to a Russian company at a markup," said VICTOR SHIH , the Ho Miu Lam chair in China and Pacific Relations at UC San Diego's School of Global Policy and Strategy. "China has an enormous financial system, and it can hide Russia-related transactions within China," Shih added. "Eventually maybe the U.S. or other countries will find out through various means, but it could take months or over a year … just because there's so many financial transactions in China every day." But any move by China to side with opponents of the Ukraine invasion and impose sanctions against Russia would be unlikely to inflict the degree of economic pain needed to prod Putin to pull back his troops. And China going all-in on a Russian sanctions regime would carry the collateral damage of imposing economic costs on the U.S. and Europe. "One should not overestimate the China piece in the effectiveness of an overall sanction regime … [because] Russia's trade with European countries as a whole is multiple times bigger than its trade with China," said SHANG-JIN WEI, N.T. Wang professor of Chinese business and economy at the Columbia Business School. "And if China were to replace its energy imports from Russia by imports from the Middle East or other regions, we might see a noticeable additional increase in gas and electricity prices in the U.S., Europe, and elsewhere. So we might want to be careful about what we are asking." On Monday, a bipartisan group of House members introduced a bill to block China from helping Russia get around sanctions. The Direct Investigations on China, Take Action to Oppose Russia (DICTATOR) Act of 2022 "would help shed light on whether the government of, or entities associated with, the People's Republic of China (PRC) are illegally helping Russia evade sanctions imposed by the U.S. and our allies," according to a statement from Rep. ELISSA SLOTKIN (D-Mich.), who introduced the bill along with Rep. YOUNG KIM (R-Calif.). That legislation will likely find GOP Senate support. "The international community took the [Chinese Communist Party] to task when they offered Pyongyang an escape hatch; the same rules should apply if they attempt to do the same for Moscow," Sen. MARSHA BLACKBURN (R-Tenn.), a member of the Senate Armed Service Committee, said in a statement. "Secondary sanctions against China should be on the table if Beijing decides to throw in their lot with Putin." Despite bilateral trade routes along China's 2,600-mile land border with Russia, the U.S. likely has the capacity through satellite imagery, trade invoices and open-source data to detect Chinese supplies of materials that could support Russia's military. That can enable the U.S. to apply targeted sanctions against Chinese firms if warranted. "You can probably get it down to a list of 20-30 products needed in fighting a war and really target your monitoring of the flow of these goods from China to Russia," Shih said. "And if [China] is seen as contributing directly to the war effort in Russia, then I think targeted sanctions, which already are in place somewhat through [Uyghur Forced Labor Prevention Act] sanctions can be expanded." Beijing and Moscow are still primed to benefit from their existing economic partnership even under the most rigorous sanctions regime. "Chinese companies, except for Huawei, and a few other cases have managed to comply with sanctions on Iran whilemassively increasing their presence in Iran, so if anybody thinks that China can't continue to support Russia while still complying with the sanctions is mistaken," said ALICIA GARCIA HERRERO , senior fellow at the European think tank BRUEGEL. And support for Russia, rhetorical or material, will inevitably deliver Beijing a windfall in political leverage in Moscow. "A major cost to Russia of the Ukraine invasion is future heavy dependence on China — everything from finance to semiconductors," said Hufbauer. "For the next five years, I can't see Russia diverging from Chinese preferences on major policy issues." TRANSLATING WASHINGTON — BLINKEN SLAMS CHINA'S 'COERCION' OF LITHUANIA: Secretary of State ANTONY BLINKEN criticized China's "economic coercion" of Lithuania on Monday ata press briefing in Vilnius with Lithuanian Foreign Minister GABRIELIUS LANDSBERGIS. The Chinese government has blocked imports from Lithuania in reprisal for allowing Taiwan to christen its new representative office in Vilnius the "Taiwanese Representative Office." — WHITE HOUSE STALLS CHINA INVESTMENT CONTROLS: Disagreements between key White House national security and economic officials are delaying Biden administration rules on American banks that invest in Chinese technology firms and startups, POLITICO'S GAVIN BADE reported Monday. National security officials, led by national security adviser JAKE SULLIVAN, want an executive order prohibiting many American investments in Chinese technology firms and startups to prevent funding for software or devices later accessible to China's military. Treasury and Commerce are pushing back, arguing that new rules would harm American firms' competitiveness. — BIDEN CONVENES UKRAINE-FOCUSED QUAD CALL: Biden last week convened a call between leaders of "the Quad," to discuss unspecified "broader implications" of the Ukraine crisis. The Quad is an informal geopolitical grouping that includes the U.S., India, Australia and Japan focused on countering China's rising economic, diplomatic and military power in the Indo-Pacific. Biden, Japanese Prime Minister FUMIO KISHIDA, Australian Prime Minister SCOTT MORRISON and Indian Prime Minister NARENDRA MODI reiterated their support for a "free and open Indo-Pacific" protected from "military, economic, and political coercion." — AMBASSADOR BURNS LANDS IN BEIJING: U.S. Ambassador to China NICHOLAS BURNS arrived in Beijing on Friday and will spend the next three weeks in mandatory Covid-19 quarantine, the Bureau of East Asian and Pacific Affairs tweeted last week. "[Burns] faces the most challenging environment of any American ambassador to China: suffocating repression and censorship in China; aggressiveness abroad; and interference in other countries' societies," former U.S. Ambassador to China WINSTON LORD told China Watcher. "He will play a central role in deciphering the complex Chinese calculations on this [Ukraine] crisis and seeking to move the Chinese position towards the world consensus with a blend of sticks and carrots."
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