Reva Goujon
For all the economic turmoil stirred up by Russia’s invasion of Ukraine, there is one important step in the escalatory spiral that has been averted so far: China has gone out of its way to comply with the G-7-led sanctions regime. However, as the world moves into the next phase of the war and the U.S. administration’s China strategy, the uneasy detente between Beijing and Washington could break down, feeding a fresh cycle of U.S.-China tensions.
Blustery political rhetoric aside, both sides have exercised caution for good reason. Beijing, caught off guard by the nature of Russia’s aggression and the robustness of the G-7-led sanctions campaign, has prioritized access to dollar financing and critical technology at a time when the Chinese economy is facing headwinds at home. Washington, trying to avoid bruising allies with unilateral moves and aggravating trade tensions with China, has held back on expanding secondary sanctions while trying to tame inflationary pressures.
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