China s belt and road strafed by Vladimir Putin

Russia is destroying what China is trying to build. Having refused to condemn President Vladimir Putin s invasion of Ukraine and suppressed domestic criticism of Russia_ Beijing is alienating many eastern European countries where it is constructing trade_ investment and technology relationships under its ambitious Belt and Road Initiative.

Ukraine is strategically positioned across rail_ road and energy pipelines linking Russia to the rest of Europe. Since it joined President Xi Jinping s signature infrastructure policy in 2017_ Chinese companies have been upgrading the country s ports and subways. And in 2020 Kyiv signed a memorandum of understanding with telecoms giant Huawei Technologies_ which the United States has been trying to drive out of worldwide networks. With a population of 44 million_ Ukraine provides an attractive market for companies such as smartphone maker Xiaomi _ and it is an important source of agricultural produce. China bought 30% of its corn imports from Ukraine in 2021.

With Russian army convoys advancing toward Kyiv_ Beijing is stuck watching missiles wreck a country once receptive to its overtures. The attacks are galvanising pan-European sentiment against China_ which refuses to call Russia s move an invasion. As the West and Moscow make it harder for private companies to transact_ the flow of goods along the  Iron Silk Road_ a rail system across which $75 billion of Chinese products travelled to Europe in 2021_ is likely to slow.

Another casualty of war might be China s relationship with Poland_ which has been trying to strike its own balance between Beijing and Washington. Poland is a major rail node on the Belt and Road and hosts Huawei s regional headquarters. Having experienced tribulations under Russian dominance_ it is now being swamped by Ukrainian refugees who blame China for supporting Putin. Former Soviet satellites are aligning more closely with NATO and the European Union_ further undermining Beijing s strategy in the region.

China s investment in the EU was already cooling. Its M&A deals there dipped to 6.5 billion euros in 2020_ a 10-year low. Having miscalculated by openly backing Putin_ Beijing is now trying to hedge that position. Unless it can orchestrate peace_ however_ the diplomatic and commercial damage will be hard to repair.