Wagner mutiny leaves Chinese exporters uncertain

Beijing — As news broke on Saturday that mercenary Wagner troops were careering towards Moscow in a short-lived rebellion, several business people in southern China began calling factories frantically to halt shipments of goods destined for Russia.

While the mutiny — the biggest test of Russian President Vladimir Putin’s leadership since his February 2022 invasion of Ukraine — faded quickly, some of these exporters now question their future dependence on Beijing’s closest ally.

“We thought there was going to be a big problem,” said Shen Muhui, head of the trade body for companies in China’s southern Fujian province, recalling the scramble among members exporting car parts, machinery and garments to Russia.

Though the crisis eased, “some people remain on the sidelines, as they’re not sure what will happen later,” he said, declining to name the companies pausing shipments.

China has sought to play down the weekend’s events and voiced support for Moscow, with which it struck a “no limits” partnership shortly before Russia’s “special military operation” in Ukraine. But a top US official on Monday said the weekend uprising unsettled Beijing’s leadership.

Some analysts inside and outside China have reportedly begun to question whether Beijing needs to ease off its political and economic ties to Moscow. “It has put a fly in the ointment of that 'no-limits' relationship,” said Singapore-based security analyst Alexander Neill.

China’s foreign ministry, which described the mutiny as an “internal” Russian affair and expressed support for Moscow’s efforts to stabilise the situation, did not immediately respond to a Reuters request for comment.

Calls for caution

Yevgeny Prigozhin, head of the Wagner private army that fought some of Russia’s bloodiest battles in Ukraine, led the revolt after alleging many of his fighters were killed by friendly fire.

But the mercenary leader abruptly called the uprising off on Saturday night after his fighters met virtually no resistance in their advance of nearly 800km on Moscow.

China did not comment as the crisis unfolded, but issued a statement on Sunday when foreign minister Qin Gang met Russia’s deputy foreign minister in Beijing.

At the heart of China and Russia’s relations is a shared opposition to what they see as a world dominated by the US and the expansion of the Nato military alliance that threatens their security.

After securing an unprecedented third term as president in 2023, Chinese President Xi Jinping made his first foreign trip to Moscow to meet his “dear friend” Putin.

While nationalistic commentators in state-run Chinese tabloids cheered Putin’s swift efforts to end the rebellion, even some in China, where critical speech is tightly controlled, started to question Beijing’s bet on Russia.

China “will be more cautious with its words and actions about Russia”, said Shanghai-based international relations expert Shen Dingli.

Some Chinese scholars went further. Yang Jun, a professor at Beijing’s China University of Political Science and Law, called in commentary published on Saturday for China to directly support Ukraine to avoid being “dragged into a quagmire of war by Russia”.

“With the development of the current situation and the trend of the war ...(China) should further adjust its position on Russia and Ukraine, make its attitude clearer, and decisively stand on the side of the victors of history,” he wrote in Chinese-language Singaporean newspaper Lianhe Zaobao.

It was unclear if Yang’s article was written before the Wagner rebellion. He did not respond to requests for an interview.

Other China-based academics, however, said Beijing would not change its stance on Russia as a result of the incident.

Investor uncertainty 

China is Russia’s top trading partner, Beijing exporting everything from cars to smartphones and receiving cheap Russian crude oil that is subject to sanctions in much of the rest of the world.

But even with energy, which fuelled a 40% jump in trade between Russia and China in the first five months of 2023, there are signs of caution in China. Chinese state energy companies executives said it is too soon to comment or they sidestepped questions on new investment in Russia.

“Should Russia lose the war or see changes in the domestic leadership, it will create huge uncertainties for Chinese investors,” said Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies.

He said the Beijing government also seemed to be cautious, mentioning that Beijing had not yet signed a deal for a major new gas pipeline connecting the countries despite a push from Moscow.

While China is vital to Russia’s economy, China’s trade with the likes of the US, the EU and Japan — among the fiercest critics of Moscow’s war in Ukraine — dwarfs its dealings with Russia.

“Beijing now has more reason to have more reservations and to become more transactional in its dealings with Putin’s Russia,” said Wen-Ti Sung, a political scientist at the Australian National University.

“There’s no point making long-term investment in someone who may not credibly survive into the long-term.”

Reuters