United States China Balloon
China Security and Risk Tracker
24 min read

MERICS China Security and Risk Tracker 01/2023

Focus Topic: China’s worsening geopolitical environment

by Helena Legarda

One year after Russia launched its war against Ukraine, Beijing’s view of the international environment is gloomier than ever. The United States and its coalition-building efforts in the Indo-Pacific are seen as the biggest challenge to China’s stability and global ambitions. Largely due to this worldview, Beijing remains committed to its relationship with Moscow, even as Putin’s war of aggression drags on. 

In the past year, China’s “pro-Russian neutrality” has proved not so neutral. Chinese SOEs have reportedly shipped military or dual-use equipment to sanctioned Russian defense firms,1 while President Xi Jinping plans to visit Moscow in the spring. Meanwhile, Chinese rhetoric presenting NATO and the US as drivers of this crisis continues unabated.

The signals coming out of Beijing offer no comfort to some in Europe who hope that Beijing will distance itself from President Putin, and that China may still be convinced to play a more constructive role in this crisis. Xi himself noted during his virtual meeting with Putin in December 2022 that their two countries must “maintain close coordination and collaboration in international affairs”.2

Beijing is likely to continue investing in its relationship with Russia, in the face of the worsening geopolitical environment and despite the tensions created. It does so partly as a hedge against worsening tensions with the US, European nations and other countries.

Western analysts and forecasters identify the continued deterioration of China’s ties with the West as one of the main risks facing Beijing in 2023. They also warn that Xi’s governance approach will be tested by the spread of Covid-19 within China and by the feebleness of China’s economic recovery.3 

Below, we examine forecasts for 2023 from three Chinese organizations to build a fuller picture of the year ahead – the Center for China and Globalization (CCG),4 the Center for International Security and Strategy (CISS) at Tsinghua University,5 and the Center for National Security Research at Renmin University6 – and a number of individual high-profile experts.7 Their analyses are essential to understand what China’s top foreign policy thinkers expect in 2023, as they will help shape Beijing’s agenda and priorities. 

Competition with the US will intensify

They paint a picture of a complicated geopolitical environment for China. The main risk, they say, is US-China competition. Most Chinese forecasts expect it to continue or even intensify this year. Certainly, 2023 got off to a difficult start as US Secretary of State Antony Blinken’s visit to Beijing was canceled after the discovery a Chinese balloon over the US landmass. The visit was intended to seek a framework for managing tensions. 

Washington’s efforts to build a coalition of like-minded countries to contain China’s rise and pursue economic and digital decoupling are cited as major areas of concern. Several forecasts also focus on US domestic crises as risky for China and the rest of the world. Two key scenarios preoccupy forecasters: a US-driven global recession and domestic political polarization, with some experts warning that Washington might try to bait China into war as its global influence diminishes.8 This view rests on Chinese analysts’ assessment that the West is no longer the main driving force of economic growth and development globally. They put this down to the impact of both Covid-19 and the war in Ukraine. 

Even so, none of the forecasts analyzed here expect an open conflict between the United States and China this year. The Xi-Biden meeting on the sidelines of the November 2022 G20 Summit in Bali is credited with having injected some stability into the relationship that may carry over into 2023. However, they were all published before the February spy balloon incident. This incident highlighted how strained US-China relations have become and the lack of trust between them. Although not enough to kill their wish to stabilize the relationship, it has certainly disrupted the process.

Hard security risks are increasing

The United States is omnipresent in discussions about some of the key hard security challenges facing China this year. Most experts see a “frozen conflict” in Ukraine as one of the top issues that Beijing will have to deal with in 2023. Washington is identified as the main cause of the crisis and a major beneficiary of its continuation: one Chinese expert openly called the conflict a proxy war, using language that goes beyond official rhetoric that skirts around the accusation.9 

China is seen as relatively unaffected by any direct impact from the war, but Chinese analysts point to many linked concerns – Europe’s closer alignment with NATO and the United States; a stronger NATO; renewed Western interest in the Indo-Pacific; and more costly oil and gas imports.10 Many Chinese experts call on Beijing to take a more active role in promoting peace talks, though the consensus is that China’s position on the issue will not shift. Neither will its close relationship with Russia. This will therefore reduce the likelihood that Beijing may in fact take on a more constructive role.

Tensions in the Taiwan Strait are also listed among 2023’s challenges, though a far less important one than last year. The situation is expected to remain stable, though a potential visit to Taiwan by the new US Congressional leadership is identified as a potential trigger for another flare-up.11 

Finally, some predictions warn nuclear tensions could escalate in Northeast Asia due to the current dynamics on the Korean peninsula.12 To be sure, North Korea is not seen as the responsible party behind this potential crisis. Instead, the US, Japan and South Korea are seen as the culprits, due to their failure to consider North Korea’s security concerns and their unreasonable response to China’s rise. It is an account that reflects Beijing’s persistent view of the United States as its main adversary and a driver of instability. 

Global economic slowdown will fuel decoupling 

Chinese experts share a negative view of the global economy this year, as inflation, the energy crisis caused by the war in Ukraine, and a general economic slowdown are expected to hit all major economies. China is seen as being better placed than most to weather this crisis, but forecasters predict more protectionism, greater securitization of supply chains and a bigger push towards decoupling by Western countries, which will hurt China’s economy.13 

A potential economic slowdown in China, though seen as unlikely, is cited as a potential risk to domestic stability. Like the wave of Covid-19 infections after the country reopened, a weak economy is seen as something that could shake public confidence in the party-state’s governance model, opening opportunities for “Western ideological infiltration.”14 

In keeping with the official line, the Covid-19 pandemic has lost much of its weight as a challenge for China in 2023. Most forecasts appear optimistic about China’s reopening. Among the few issues of concern raised were global access to medical resources and the possibility that new mutations may enter China from abroad.15 

The way forward: China’s priorities in 2023

The forecasts examined here outline how Chinese experts see Beijing’s way forward in 2023. According to them, China-US geopolitical competition will remain center-stage in shaping China’s foreign policy, though they advocate preserving stability in the relationship. US-China tensions have become a permanent feature of Chinese assessments of the external environment. Strengthening ties with developing nations is also seen as a priority, partly to foil any attempts to contain China by the United States and its allies. Ex-foreign minister Wang Yi (who is now Director of the Office of the CCP Central Foreign Affairs Commission) echoed this approach in his review of his ministry’s foreign policy priorities for 2023.16 The policy areas and issues to watch this year therefore are:

  • Attempts to stabilize China-US relations: Beijing will try to smooth over tensions caused by its continued support for Russia and the spy balloon incident in February. It will seek to restart communication and prevent tensions from escalating. But a fundamental change in approach is unlikely.
  • Continued support for Russia: China-Russia relations are likely to remain strong, as Beijing has committed to deepening its “mutually beneficial cooperation” with Moscow. This may extend to limited economic and material support for Russia’s aggression in Ukraine. This would help Moscow to sustain the war effort and stay away from the negotiation table.
  • Outreach to developing countries: Beijing will also focus on deepening ties with developing nations by presenting China as a reliable partner that does not interfere in domestic issues. Beijing will leverage its Global Development and Global Security Initiatives (GDI and GSI) to build a China-centric network of countries to support its global governance reform ambitions.
  • Defense of China’s core interests: Beijing seems likely to push back even more aggressively against any attempts to infringe on China’s “sovereignty, security and development interests”. Developments that involve either Taiwan or the US presence in the Indo-Pacific are the most likely to trigger forceful responses. 
  • Strengthening China’s messaging and foreign affairs legislation: Beijing will continue to strengthen its international communication capacity to “tell China’s story well”. New legislation strengthening Beijing’s extraterritorial reach and its ability to retaliate against Western sanctions, or unilaterally impose its own, can also be expected.
  • Improving relations with Europe: Europe seems to have become less of a priority, though Beijing will continue efforts to pull it away from the United States and to get relations back on a positive track. China’s ongoing diplomatic charm offensive reflects these ambitions, but it would be unwise to see it as signaling a permanent policy shift.

China faces a difficult year as international challenges are compounded by domestic crises, including a decelerating economy and rising Covid cases. In 2023, the CCP will have to find a balance between preventing instability domestically, and projecting strength internationally to support goals set out at the 20th Party Congress last October. However, with geopolitical competition front and center, tensions between China and the United States, or with Western countries more broadly, are unlikely to diminish.