Opinion: China has just won world war III

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China has won world war III.

Let me elaborate. This will be a long piece, so if you are one of “TL;DR” people, stop right here.

First of all: by invading Ukraine, Putin basically handed Russia over to China. But let me summarize some facts first.

It is clear now that Putin’s initial plans for invasion have failed in spectacular way. There are numerous reasons for that, but underestimating the enemy, very weak state of Russian army and military leadership incompetence are three main ones. Instead of having a quick “get in and out” operation which would involve overthrowing the government and installing a pro-Russian one, it turned out into conventional warfare. Most likely, Kremlin counted on western countries not reacting fast enough and imposing only mild sanctions, if the plan of short, three day intervention would succeed. And this was highly probable judging by their response to annexation of Crimea.

But it all went trainwreck. Ukraine put up a brave fight, the weakness of Russian army was laid bare and “second strongest military in the world” myth has proven to be nothing more than muscle flex. Without being able to win against Ukrainian army in the field, Putin and his generals did the only thing they are good at – terrorising and killing the civilian population. Nonetheless, they are still experiencing heavy losses. Their army is, to put it simply, poorly trained and uses outdated equipment, unable to compete in modern warfare.

Ukraine has managed to build up their army basically from scratch in 6 years and they have almost reached a defensive potential of other mjor European nations. Russia has been “building empire” for 20 years, since Putin came to power and still struggles against just one country. Few weeks back everyone was sure that if large-scale conflict involving Russia happens, their forces will absolutely roll over enemy’s defences. Hell, US intelligence were predicting that Kiev will fall in matter of hours. Now it is obvious that all Putin have left in terms of military deterrent are nukes, as his air and land forces strength was smoke and mirrors all the time.

Whereas in the very first days of war there was still a way out for Russia and minimise the damage, by using diplomatic solutions, it has disappeared pretty quickly and now, almost all ties with Europe, US and many other nations are lost.

Putin is perceived as a war criminal. The only thing still connecting the Europe and Russia is energy resources trade – because Europe cannot just drop buying gas and coal from Russia overnight. But it will happen eventually, seeing as EU governments are doubling down on seeking alternatives. Germans already made agreements on building a gas port, they are even evaluating their policy on nuclear energy, which they wanted to abandond. Others are increasing funding on renewable energy sources. It is safe to say that Europe will get independent from Russian supply of energy sooner than later. They are also planning to ban imports of rare metals, steel, wheat and few others. This will be a huge blow, as European countries are/were one of Russia’s most significant trade partners. USA are already in talks with Venezuela to leverage the latter’s oil supply to reduce imports of Russian oil – something unthinkable two weeks back.

Sanctions driven Russian economy into a free-fall, rouble is now worthless in international trade and it was never a strong currency to begin with. This is why Putin has amassed significant reserves in USD and EUR in advance. These are now frozen and Russian government is unable to use these assets – it may be the case that it will never be. The country is now cut off from international stock trading market, effectively from western banking system and so on. They aren't opening the Moscow stock market in fear of total monetary system collapse.

Furthermore, as sanctions were raining down, business has started to flee Russian market. It was so rapid that Kremlin has passed a law dictating that foreign companies are banned from selling their Russian assets, in desperate attempt at saving the economy.

Now they are planning to go one step further and pass the law allowing the government to seize and nationalise all assets, both financial and physical, of companies which pulled out from the market or stopped providing services in Russia over war in Ukraine.

This obviously makes Russia a no-go zone for business. Even if Putin would decide to end the war and sanctions will loosen a bit, big companies simply wouldn’t risk investing there, with such unreliable government and volatile geopolitical situation. Adding insult to the injury is the fact that “the big four” of audit companies have left Russia, meaning additional difficulty in doing business with parties abroad – as these four are basically the only acceptable ones for big corporations when it comes to reviewing large scale deals. In western world, no one trusts Putin's regime (apart from that dickhead Orban, maybe).

Furthermore, Russia is getting cut off from access to high tech. Forget getting new planes and service for existing ones. Forget getting server blades and service from giants like Cisco. Chips from AMD and Intel? Nah. This should be especially concerning seeing that domestic-developed chips perform so poorly that Sber (Russia’s biggest bank) deemed them to be unacceptable.

To highlight gravity of the situation, the MCST Elbrus-8C processor, based on proprietary architecture, is 2-3 times slower in benchmarks than industry standards and 23-26 times slower when it comes to response time when running Java code. It will take Elbrus years to match current server-grade AMD and Intel hardware. To make things worse, they take very long time to develop new iterations of their tech, meaning that by the time Elbrus CPUs catch up to current standards, the gap between them and AMD/Intel ones will most likely be even wider. Russia is, to put it simply, not capable of making high-tech components it needs for its financial sector, state and the military. Today, IBM has also announced that it won’t sell their tech to Russia and won’t supply and service their military clients.

To put it simply – Russia is f*cked.

Now, where all of this leaves China?

Let’s get back in time a bit. Up until recently, China and Russia formed a partnership, assuring everyone that it is a deep one. But it never looked like it from the outside. This cooperation was always rooted in pragmatism – both countries carry status of local superpowers, but none of them could quite go alone against western, in particular USA’s dominance on global markets. Thus, cooperation was a way to gain some additional leverage. But this doesn’t mean that they are not rivals themselves. In a race for top spot, one would aim to undercut another sooner than later.

Now, up until now, both tried to play it “smart” with western countries. They did business with them if it could help them achieve their goals, but still kept distance and would rather plan ahead between themselves. But this fragile balance required both parties to remain on equal footing. This has been disturbed now.

There are western intelligence reports are saying that China was fully aware of Russia’s plan to invade Ukraine. In fact, United States of America representatives have spoken with Chinese politicians back in November and tried to convince them to put pressure on Putin to back off. Instead, Xi Jinping’s office made an effort to delay the invasion to take place after Olympics. This has been one of the factors why Russian military operation has became so much of a disaster.

Starting invasion at the end of February meant that it will be rainy weather with temperatures a bit above 0C degrees in Ukraine. After winter, which wasn't that harsh to begin with, ground became soft and muddy very quickly. Thus, Russians needed to rely on roads when it comes to moving heavy equipment. This has slowed down their advancement significantly, as the army ended up constantly being stuck in traffic jams – if they would go in mid-winter, they would be able to roll their tanks and other vehicles through the fields, on ground frozen solid.

Furthermore, it gave additional time for Ukraine to improve their defensive capability and prepare for the invasion, as they were informed about it by US intelligence. It also gave time to US politicians to do something we wouldn’t normally see in international politics – acting as whistleblowers, speaking openly about Russia’s plans. They of course were also informing their partners with more details behind closed doors. Even if world has not believed about full scale invasion, Europeans were prepared to see some kind of a move from Russia when it comes to Donetsk territory. When the war has started, this allowed them to act swiftly, even though initially they've found themselves caught off-guard by scale of the invasion.

It is hard to believe that Xi Jinping and his cabinet weren’t aware of all of this. Reportedly, he gave Putin a “green light” to launch the invasion, saying that China won’t interfere. He did this knowing fully that it can be Russia’s downfall.

When sanctions rolled in, China gave Russia a first back-stab. Their largest banks have stopped issuing letters of credit backed in USD for Russian transactions, allowing only for CNY (yuan, renminbi) ones. Now, Russia does have some financial reserves in CNY, but not nearly as much as in USD and Euro. As per my understanding, Chinese banks weren’t using Euro to begin with. Then Russian reserves in USD got frozen. This means that efficiently, Russia now depends on CNY as their main currency to do international trade. They cannot convert their USD pile of cash to CNY. They cannot buy CNY using Rouble, because Rouble is worthless now. Furthermore, they are now getting their banks into Chinese financial system, after being exiled from western one.

See the problem here? Russia is now totally dependant on one foreign currency for trading (apart from their gold reserves, which they’ll need to sell first anyway), a currency of the very same country which hosts the financial systems they will be using. They’ll need CNY to do business. Also with China, the very same country which controls said currency.

And where to get the currency? Of course, trade.

China have incredibly strong position when it comes to forging deals with Russia now. Nobody wants to buy Russian crude oil. Russia find it hard to sell their wheat, coal and other resources, which is a grave situation considering that their economy is based on export of these goods. Their smaller trade partners won’t be able to absorb the surge and China is the only chance to make sale. Russia was already highly dependant on China, as it is their number one trade partner. In comparison, Russia doesn’t even make China’s top five.

All of this means that China can now negotiate very low prices for commodities supplied by Russia. Furthermore, Russia doesn’t just simply do not have alternative to whom they could sell their goods to. In fact, they need to strike deals with China to get CNY needed for doing business in Chinese state owned financial system. To make things worse for Putin, they’ll be paying fees for that, too.

Then comes in the tech part. China is currently the only country in the world which have any success in breaking off western tech when it comes to chip manufacturing, developing their own CPUs and network solutions. They are still not at the same level as AMD and Intel products, but the gap is much smaller than in case of Russian homebrew solutions. Plus, the Zhaoxin CPUs use x86 architecture, making them out of the box, natively compatible with existing software Russia uses. In addition, China is also making GPUs, which Russia does not.

To put it simply, Putin doesn’t have much choice in the longer run – he needs to strike a deal with Xi to use their tech.I think that all of you understand what this means, considering that Chinese-developed hardware was proven to contain backdoors deliberately put in place in the past. Imagine China being able to bring Russia to its knees using this.

Putin dreamt of empire, making Russia a global superpower, which will play equal role to US in global politics. Instead, his country is quickly getting reduced to being a little more than Chinese gas station and money-printing machine.

Furthermore, his efforts on disturbing unity among EU countries and NATO members have been cancelled overnight – the western countries rallied under one banner. He wanted to push NATO military presence to the west, gaining more influence in Eastern Europe, maybe even cause some countries like Poland and Hungary to break off from EU. Instead, more countries are now applying for EU membership and NATO is sending additional troops to its eastern border. Instead of buffer zone, he got a new iron curtain with thousands of troops put on alert on the other side. Medvedev got cocky a week ago and said that Russia may not need diplomacy with the west at all, that the two can simply watch themselves through binoculars and sniper rifle scopes through the border. I do not think that he believed this will become a reality. But it did and Russia is not any better because of this.

Russia is now at mercy of China. They are truly f*cked.

But there’s more - benefits do not end here for Xi Jinping’s office.

Russia’s weapons industry will suffer severe shortages of parts in the upcoming months, maybe even years. This affects another key player, India.

See, India is a major buyer of Russian weaponry. It is estimated that even 50% of their military equipment budget went to Russia. They had ongoing deals in place, deals that will most likely be put on hold now. This means that India’s defensive and offensive capabilities will suffer.

Now, the greatest threat to India is of course, China. Russia acted as a kind of balance point in this triad – they were doing business and trying to stay on good terms with both. But with Russia now falling more under Chinese influence, the latter may afford to make more aggressive moves against India.

Going back to US and Europe – the sanctions imposed on Russia are double-edged sword, of course. We will surely see a recession in the upcoming years. The cost of living will go up, more funds will need to be spent on both energy security and military, at the expense of other things. Western societies will get poorer. Furthermore, we now have to deal with greatest refugee crisis since world war II, which also will keep us occupied and will hurt our economy. It is over 1 million refugees in Poland as of today and new ones are still coming. Many of them want to stay here, hoping that war will end in foreseeable future and they'll be able to return to their homes. Our country's population is about 38 millions.

War in Ukraine means that food prices will go up, seeing that this country is a major wheat/grain producer. This is of course on top of ban on food supplies coming from Russia, a pretty significant import until now.

The western military focus, including US, will be on reinforcing countries bordering with Russia and Belarus, not waging wars abroad.

Furthermore, US and Europe cannot afford to sever ties with yet another player as big as Russia. This means that China can do business with Russia without any negative ramifications. No one would risk going against them now, let alone impose any sanctions for dealing with Putin. China is also effectively free to expand their influence in Asia. And it can now actually afford to invade Taiwan. The international response to this will be extremely weak.

I had an “epiphany” today – people were betting that world war III will use nuclear warheads as tools of warfare. But instead, the global capitalism and network of co-dependencies was weaponised to wreak havoc and cause a major shift in global balance of forces. The WWIII has already ended, even though fight in Ukraine goes on.

The winner is, of course, China - without firing a single bullet. It is even more ridiculous, when you consider that there was no need for China to get involved and get their hands dirty at all. All it took was Xi Jinping saying “go ahead, do it” to his delusional, megalomaniac “friend”. This should become a new definition of "butterfly effect".

Putin has played himself. But Jinping has played all of us. Brace yourselves - interesting times are ahead of us.

Two stars.

One for grammar, punctuation, and spelling.

One for imaginative creativity.

Otherwise, typically run-of-the-mill conspiracy nonsense.

Taiwan and Ukraine are independent stories though. Taiwan is, because of its microchip production, of importance to the West, while Ukraine merely has symbolic value. So China can't extrapolate anything from that.

While I don't think that this already qualifies as ww3 - mainly because as far as military confrontation goes, it's regionally contained - you do have a point that this situation basically delivered Russia to Xi's doorstep.
But the systemic war of this century is yet to come, and I'm guessing it won't be a big standoff, but at some point, as climate change progresses, there will be regional and civil wars everywhere.

The US has made commitments to defend Taiwan that it did not make for Ukraine. I also think such an assault would see a similar package of sanctions.

That being said, China might be better able to ride out sanctions than Russia, particularly as it has a better idea of what they would be and how it can prepare for them.

My opinion: No one won so far. WWIII is ongoing. Or rather WWIV, WWIII having been the Cold War.
China would love weakened Russia as their satellite. They will try to play towards this goal now.

I was expecting a new Iron Curtain since Crimea... it looks like the hegemony in the new Second World is going to be Chinese.