Introduction

February 24, 2024 marks the second anniversary of the outbreak of the Russia-Ukraine conflict. As the largest international event since the Cold War, the Russia-Ukraine conflict has and will have a profound impact on the evolution of the global landscape and changes in the global order. In the security field, more geopolitical conflicts have emerged following the Russia-Ukraine conflict, and the world has fallen into the most chaotic security situation it has seen since World War II. In the social field, the Russia-Ukraine conflict has caused a massive human tragedy and is the war with the highest number of casualties in Europe since the end of World War II. In the field of rules and regulations, the Russia-Ukraine conflict has promoted the trend of “the weaponization of everything” in trade and finance, and the world has seen the most intense wave of sanctions and counter-sanctions in history. In the political field, the Russia-Ukraine conflict has intensified the global confrontation between camps, and the world has experienced the largest division of national groups since the end of the Cold War. In the conceptual field, the Russia-Ukraine conflict has become a catalyst for further global division, leading to a major ideological divergence in the post-Cold War world. In the economic field, the Russia-Ukraine conflict has accelerated the restructuring of the global supply chain, which has experienced the greatest turmoil since the end of World War II. In the field of science and technology (S&T), the Russia-Ukraine conflict has highlighted the critical importance of advanced technology to national security, and set off the largest round of high-tech experimentation in human history. In the field of energy, the Russia-Ukraine conflict has fractured the global green transformation process, and climate governance faces the greatest delay since the 1970s. In the financial field, the Russia-Ukraine conflict has accelerated the accumulation of quantitative changes in the multipolarity of the international monetary landscape, and the global capital market has experienced the greatest turmoil since 2008. Finally, in terms of the global landscape, the Russia-Ukraine conflict has accelerated the “changes unseen in a century” and the international community has entered an “era of great contention” not seen since the end of World War II.

In the context of the above-mentioned influences, China must grasp the main characteristics and medium- and long-term trends of the changing times brought about by the Russia-Ukraine conflict and to be fully prepared to take appropriate responses both internationally and domestically. First, as the humanitarian crisis intensifies, China must actively participate in the construction of the international security order, and implement the Global Security Initiative on the premise of appropriate preparation for war. Second, with the world now divided into the Eastern and Western camps, China should adhere to true multilateralism and strengthen its flexibility in the diplomatic game. Third, victory in the “cognitive war” is intangible, and China must strengthen its ability to engage in “cognitive warfare” and improve its narrative capabilities. Fourth, the “Cold War-style economic structure” is emerging again, and China should take the initiative to formulate rules and an economic order to reshape economic globalization. Fifth, S&T strength has become a decisive factor in national security, and China must vigorously enhance the degree of independent S&T innovation, and promote S&T openness and cooperation. Sixth, the global green and low-carbon transformation will continue to be marginalized for a time, and China should enhance its energy resilience. Seventh, as the uncertainty facing the international financial market increases, China must accelerate the strengthening of its financial industry and build a financial superpower. Eighth, the confrontational, protracted, and cruel nature of the transformation of the international order has become increasingly apparent, and China must be prepared for a protracted war.

Part I:   Ten major effects of the Russia-Ukraine conflict

1.      In the security field, more geopolitical tensions have emerged following the Russia-Ukraine conflict, and the world has fallen into the most chaotic security situation it has seen since World War II

Currently, the war between Russia and Ukraine continues to rage, and there is still no end in sight. NATO, as an important Western force behind the Russia-Ukraine conflict, has also moved away from its original arrogance in this war, exposing its true face as a “paper tiger.” On the one hand, it provided weapons and military assistance to Ukraine, but on the other hand, it showed hesitation and indecision on the battlefield, causing the Russia-Ukraine conflict to evolve in the direction of a long-term and protracted conflict, which has already spilled over to the Middle East and other regions.

First, the number of regional conflicts in the world has reached the highest level in 30 years, and the risk of spillover from the Russia-Ukraine conflict has increased significantly. According to the latest statistics from the International Institute for Strategic Studies (IISS) of the UK, the number of conflicts worldwide reached 183 in 2023, the highest total in nearly 30 years. From the civil wars in Syria, Libya, and Yemen to the military standoff between Azerbaijan and Armenia; from the tense state of alert in Venezuela and Guyana to the expansion of joint military exercises between the United States and South Korea, global tensions continue to escalate. According to the press office of the Ukrainian Ministry of Defense, Georgia, which has long had tense relations with Russia, has participated in the training of Ukrainian soldiers. Ion Chicu, former Prime Minister of Moldova and Chairman of the Party of Development and Consolidation, said that since the outbreak of the Russia-Ukrainian conflict, Ukraine has been trying to drag Moldova into the conflict in various ways. In December 2023, the EU officially started accession negotiations with Moldova and granted Georgia the status of an EU candidate country. The Russia-Ukraine conflict confronts the problem of spillover risks.

Second, neutral countries have weakened or abandoned their neutrality, and military spending by major military powers and military blocs has hit record highs. After the outbreak of the Russia-Ukraine conflict, although Austria insisted on its neutrality, it agreed to join the EU’s “Strategic Compass” action plan and participate in the establishment of the EU’s 5,000-strong rapid reaction force. Finland and Sweden applied to join NATO, completely saying a final goodbye to “neutrality.” In addition, countries such as Switzerland and Ireland have also deviated from their traditional neutrality and participated in sanctions against Russia. In 2024, the United States once again raised its defense budget, this time to U.S. $886 billion, accounting for approximately 40% of global military spending and exceeding the total of the next nine countries behind the United States in defense spending. In 2024, NATO will also increase its military budget to €2.03 billion, an increase of 12% from 2023.

Third, the global nuclear security situation continues to deteriorate, with nuclear deterrence initiatives and nuclear blackmail becoming frequent occurrences. In terms of nuclear deterrence, as of January 2024, NATO has launched two large-scale nuclear deterrence military exercises. Since November 2009, the United States has deployed nuclear weapons to Belgium, Germany, Italy, the Netherlands, and other countries under the nuclear sharing program. To counter Russia, Poland stated in June 2023 that it was actively seeking to join the nuclear sharing program, and was attempting to deploy U.S. nuclear weapons in Poland. Regarding nuclear blackmail, in October 2022, the United States released the 2022 Nuclear Posture Review, which clearly identified nuclear weapons as a tool for advancing geopolitical goals. In October 2023, after Russia announced the withdrawal of its ratification of the Comprehensive Nuclear-Test-Ban Treaty, the United States immediately announced that it had conducted a high-explosive test at its nuclear test site in southern Nevada, sparking concerns about a new round of nuclear testing competition among the world’s nuclear powers.

2.      In the social field, the Russia-Ukraine conflict has caused a massive human tragedy and is the war with the highest number of casualties in Europe since the end of World War II.

The Russia-Ukraine conflict has exacerbated social divisions, deepened ethnic conflicts, and increased population loss and refugee flows. The conflict has led to social conservatism and greater ethnic and religious tensions in both societies, and even to a resurgence of fascism and neo-Nazism. This rejection of different ideas, cultural conditions, and national feeling has exacerbated tensions and divisions in society as a whole.

First, the Russia-Ukraine conflict is the war with the heaviest casualties on the European continent since World War II. According to Russian media, citing a statement by the former Ukrainian Prosecutor General: Since the outbreak of the war, the Ukrainian armed forces have suffered 500,000 casualties and 72,000 serious injuries, with 6,000 troops captured. According to the latest data on the casualties of Russian armed forces released by the Ukrainian Ministry of Defense, as of early January 2024, the Ukrainian armed forces had eliminated 365,100 enemies. Adding these figures together, the number of casualties on both sides of Russia and Ukraine has now exceeded 860,000. At the same time, the war has displaced millions of people, and the refugee crisis poses a significant threat to social stability in Europe. As of January 2024, the Russia-Ukraine conflict has displaced more than 10 million Ukrainians, who have become refugees. This caused the biggest refugee crisis in Europe since World War II. According to data from the United Nations High Commissioner for Refugees, more than 6 million Ukrainians are homeless within their own country, and more than 3 million Ukrainian refugees have fled to neighboring countries, including more than 2 million to Poland. In terms of civilian casualties, at least 10,000 civilians have been killed in the conflict, including more than 560 children. The Office of the United Nations High Commissioner for Human Rights reported that more than 18,500 civilians were injured.

Second, the Russia-Ukraine conflict has once again made ethnic issues a topic of concern in the international community. The two sides of the conflict are engaged in verbal accusations over whether “genocide” has been committed. The direct reason given for Russia’s military intervention is that the Ukrainian government committed the international crime of “genocide” in eastern Ukraine, seriously threatening the lives of Russians and pro-Russian Ukrainians in the region. However, internationally, Ukraine also accused Russia of violating international law and committing international crimes such as genocide. To this day, neither side has given sufficient evidence to prove their accusations. The intention behind these accusations is to compete for the high ground in public opinion. Especially in modern warfare, manipulating public opinion is a very important stage of mobilization. Whoever manipulates public opinion can control the “international attitude,” win more cooperation and allies, and even change voter sentiment, leading to changes at the level of war decision-making.

Third, the Russia-Ukraine conflict has a profound impact on the internal affairs and society of European countries. Whether to support Russia or Ukraine has basically become a choice of political stance. The Russia-Ukraine conflict is not only a direct military confrontation between the two countries, but also a focus of games of national interest and conflicts among European countries. The impact of this incident has highlighted Europe’s divisions. EU member states “failed to reach an agreement” on a ban of Russian energy. Simply as regards the Russia-Ukraine issue itself, there are many differences within Europe on a series of questions including “whether to decouple from Russia,” “whether to speed up Ukraine’s accession to the EU,” and “the allocation of EU strategic autonomy funds.” In the coming period, as the war progresses and U.S. sanctions on Russia escalate, conflicts and divisions within Europe will continue, and this will be a core factor affecting the European security structure.

3.      In the field of rules and regulations, the Russia-Ukraine conflict has promoted the trend of “the weaponization of everything” in trade and finance, and the world has seen the most intense wave of sanctions and counter-sanctions in history.

The two-year conflict between Russia and Ukraine has led to intensified confrontation among global blocs. The United States and the West have imposed comprehensive sanctions on Russia, weaponizing finance, trade, and science and technology. The polarization of the global landscape is accelerating, the confrontation between the Global South and the Global North is intensifying, and there is a clear trend of “rise of the East and decline of the West” between the Global East and the Global West. More and more developing countries are clamoring to join the BRICS. There is an increased confrontation between developed countries and developing countries.

The United States and Europe have imposed historically unprecedented sanctions on Russia, and the backlash to these sanctions and counter-sanctions has intensified. From February 24 to 28, 2022, the United States and Europe launched unprecedented sanctions against Russia, including a financial nuclear bomb. The sanctions were unprecedented in terms of intensity, breadth, and depth. All Russian banks with foreign operations were removed from the SWIFT system. The United States, Europe, and other Western countries have imposed about 20,000 sanctions on Russia, covering almost everything from economy to trade, from investment to finance, from S&T to military, and from Tchaikovsky to cats. They have imposed export controls, financial sanctions, and energy embargoes on Russia. However, the countries of the BRICS and Global South, including India and China, have not taken sanctions against Russia.

On the one hand, the weaponization of finance will result in the intensification of de-dollarization. The United States has not only imposed sanctions on Russia’s central bank, Ministry of Finance, and other sovereign institutions, but also on all Russian state-owned enterprises, and has placed almost complete sanctions on Putin, his children, senior officials, businessmen, and bankers, freezing their overseas funds and assets. Neutral Switzerland froze Russian funds. Russia was kicked out of SWIFT and subjected to long-arm jurisdiction. Russia imposed counter-sanctions, requiring natural gas imports by 48 unfriendly countries, including the United States, Europe, and Japan, to be settled in rubles. Global de-dollarization accelerated, with Russia sharply reducing reserves of dollars, pounds, and euros, while increasing holdings of gold and RMB.

On the other hand, the weaponization of trade has resulted in high inflation, high debt, and low growth in the United States and Europe. Not only did U.S. and European companies withdraw from Russia, but they also restricted the import and export of Russian products, especially oil and gas products, which are the lifeline of Russia’s economy, going so far as to blow up several Nord Stream pipelines. Europe was forced to buy U.S. liquefied natural gas (LNG) at twice the price. The United States imposed a 200% tariff on Russian aluminum and all its derivatives. All U.S. and Western multinational corporations have withdrawn from Russia. The sanctions have formed an encirclement against Russia, while tariff and non-tariff barriers against Russia have increased. However, this did not affect Russia’s exports to other countries. Instead, it pushed up inflation in Europe and the United States, to levels not seen in 40 years. Inflation in the U.S. soared to 9.1%, and Europe saw double-digit inflation.

In short, the sanctions imposed by the United States, Europe, and Japan on Russia did not achieve the expected results, but instead brought a backlash and counter-sanctions. The world is in disorder, with security, finance, and S&T in complete disarray. Trade is in disorder, inflation is rampant, with inflation and debt at highs not seen in 40 years, and supply chains are broken or disrupted.

4.      In the political field, the Russia-Ukraine conflict has exacerbated the confrontation between global blocs, with the world experiencing the most widespread division into groups of countries since the end of the Cold War.

The primary impact of the Russia-Ukraine conflict on world politics has been the return of realist “hard politics,” and the zero-sum security dilemma will plague all countries for a long time to come. In an exclusive interview with the British magazine The Spectator in 2022, former U.S. Secretary of State Henry Kissinger said, “the issue of war aims needed to be faced before the momentum of war made it politically unmanageable.” However, it is obvious that the current world political situation has been “led astray” by the momentum of the war, and the world is now seeing the most widespread division into groups of countries since the end of the Cold War. According to the voting results of the six resolutions adopted by the 11th Emergency Special Session of the United Nations General Assembly, the overall rate of support for Russia was 29% and the rate of opposition was 65%. This shows a preliminary trend toward division into groups of countries has already formed.

On the one hand, America’s “small circle” and alliance politics are tearing the world apart. The world is still in the “Leviathan era” dominated by realist power politics, and the “law of the jungle” is still the underlying logic of the operation of international politics. The Russia-Ukraine conflict is essentially a confrontation between Russia on the one hand and the United States and NATO on the other over the European security order and geostrategic interests. At the same time, the United States has strengthened its strategic deployment of allies around China through NATO’s eastward expansion and Asia-Pacific orientation, and has also initiated a trend of comprehensive competition with China. A trend of confrontation between the blocs of the Global East and West has reared its head.

On the other hand, a new situation of confrontation between blocs is taking shape. According to the vote totals of the six UN resolutions (Table 1), the most votes cast against Russia was 143, accounting for 74% of the total number of UN member states. However, this level of opposition was not unchanging across all resolutions, and the range of votes against Russia was wide. This situation shows that the global blocs are changing. The new blocs are different from the “capitalist-socialist binary opposition” during the Cold War. Instead, the groups are undergoing a “dynamic transformation” based on a certain degree of strategic autonomy among countries. This trend adds uncertainty and unpredictability to the international political situation.

Table 1    Voting results for the six resolutions of the 11th Emergency Special Session of the UN General Assembly

5.      In the conceptual field, the Russia-Ukraine conflict has become a catalyst for further global division, leading to a major ideological divergence in the post-Cold War world

The great changes unseen in a century are accelerating, and the game among major powers has entered an era with core values as the fulcrum. The most significant feature of the game in the conceptual field is that it involves politics internally and manifests itself through culture externally. The Russia-Ukraine conflict has intensified the game of values between major powers, making the confrontation in the conceptual field even more intense. It has also become a catalyst for further global division.

Since the outbreak of the Russia-Ukraine conflict, the United States and the West have imposed comprehensive sanctions on Russia in various fields, including politics, military, economy, culture, and sports. This removed all masks and disguises, breaking a series of so-called “golden rules” of Western democratic countries: The sanctions imposed by the United States and the West on the private property of Russian citizens violate the principle of the “inviolability of private property” established in the Declaration of Human Rights and Western constitutions. Google, which has always flaunted its “don’t be evil” mantra, terminated all services in Russia and provided high-definition maps of Russian military deployments to Ukraine. Traditionally neutral countries such as Sweden and Finland are no longer neutral and have joined the NATO camp… This series of nakedly confrontational behaviors has spurred people to rethink the Western concepts that go by the names “human rights,” “democracy,” and “freedom.” Global ideological trends have experienced the most significant divergence since the end of the Cold War.

At the same time, influenced by the return of Cold War thinking and the reemergence of political blocks, an unprecedented ideological struggle is taking place on a global scale. Whether in European and North American countries, or in emerging market countries such as China, India, and Vietnam, or Latin American countries such as Argentina, the rise of conservatism, nationalism, populism, protectionism, and unilateralism, is confronting countries with a major split in social thought, with some becoming more conservative and others more open. Governments, social groups, and ordinary people are all thinking deeply about future development paths. On the one hand, to a certain extent, conservatism and nationalism have safeguarded national interests and national dignity; but on the other hand, the energy and food crises resulting from the Russia-Ukraine conflict have led to higher levels of global inflation. The economies of European countries have been hit especially hard, and the political tendency of a “rightward turn” in various countries has intensified. Society has become more divided due to issues such as refugees and immigration, people’s livelihood and employment, and gun violence. Right-wing populism has also exacerbated tensions in international relations and the difficulties of global cooperation.

6.      In the economic field, the Russia-Ukraine conflict has accelerated the restructuring of the global supply chain, and the global supply chain has experienced the greatest turmoil since the end of World War II

The disruption of supply chains for a variety of products such as food, energy, and semiconductors resulting from the Russia-Ukraine conflict has affected many countries, prompting an accelerated reorganization of the global industrial division of labor. Shortened supply chains, decentralization, localization, regionalization, and the emergence of blocs in line with security requirements have become the trends in the adjustments to global production chains and supply chains.

First, the least developed countries have suffered from food shocks. Since both Russia and Ukraine are important exporters of grain and cooking oil products such as wheat, barley, corn, and vegetable oil, the export disruptions caused by the Russia-Ukraine conflict have further exacerbated the problem of hunger in countries that are highly dependent on wheat imports, such as Afghanistan, Ethiopia, and Syria. In particular, Ukraine’s exports plummeted by 30% in 2022. The region’s cereal exports are critical to the food security of African economies such as Ethiopia, and a 14.9% drop in cereal exports has forced these economies to adjust their purchasing patterns. Data from the United Nations World Food Programme shows that 60% of all people at risk of hunger live in areas affected by the Russia-Ukraine conflict. At the same time, the Russia-Ukraine conflict has caused all countries to worry about their food supplies. Sixteen countries including India have begun to impose export restrictions on food, further exacerbating the global food crisis.

Second, energy prices are fluctuating dramatically, the supply structure has been impacted, and the demand structure is changing dramatically. After the outbreak of the Russia-Ukraine conflict, allies including Europe, the United States, Britain, and Japan jointly imposed multiple rounds of sanctions on Russia, including in the energy sector. This caused Europe’s energy shortfall to gradually grow and energy prices to soar. The backlash effect in response to sanctions has overwhelmed the European economy. Specifically, in the month when the Nord Stream pipeline was bombed, the U.S. natural gas exports to Europe accounted for 70% of its total natural gas exports, and the average price of natural gas in Europe was more than seven times higher than the spot price of natural gas in the United States. Other data showed that the EU’s natural gas imports from Russia in 2022 decreased by nearly 25% year-on-year, and European electricity contract prices nearly tripled at one point.

Third, the manufacturing supply system has been disrupted and global trade has suffered. Rare metals such as nickel, titanium, and palladium are essential and critical upstream materials for manufacturing production in industries such as aviation, automotive, chemical, and equipment. The Russia-Ukraine conflict has led to an imbalance in the supply of relevant metal raw materials, and prices have continued to rise. Nickel provides a good example. In early March 2022, the price of metallic nickel exceeded U.S. $100,000 per ton, a record high. This had a severe impact on multinational companies that rely on cross-border supply chains. For example, Volkswagen, BMW, Mercedes, Boeing, and Airbus had to shutter and move out of their factories in the two countries. As a result, trade growth around the world has slowed somewhat. According to the Asian Development Bank’s estimates, if 10% to 20% of overseas supply chains are transferred and repatriated, global trade is estimated to shrink by 13% to 22%. Even more worrying, with the advent of an era of great contention, the United States, Europe, and other Western countries will weaponize strategic materials such as food, energy, and precious metals, and other powerful countries will inevitably follow suit, which will further undermine the global supply system.

7.      In the field of S&T, the Russia-Ukraine conflict has highlighted the vital importance of advanced technology to national security, and set off the largest round of high-tech experimentation in human history

At present, global S&T development has left the previous era of cooperation to enter an era of competition. The Russia-Ukraine conflict has caused the West to accelerate its “small yard, high fence” strategy. The United States has quickly implemented “scientific research decoupling” from Russia, attempting to use its technological advantages to exclude Russia from the core global scientific research system. More importantly, the Russia-Ukraine conflict has further strengthened the application of cutting-edge technology in new types of warfare. Military strength has become a key area of S&T competition. The development of military S&T has also further highlighted the impact of technology on the safeguarding of national security.

First, advanced S&T has ushered in a new period of military change, causing turmoil in the global landscape. A new generation of technologies, exemplified by AI and quantum technology, have been more widely used in modern warfare, bringing about fundamental changes in military offensive and defensive capabilities. In the context of the informatization and intelligentization of warfare, the combat features of “miniaturization” and “concealment” have enhanced offensive power to a certain extent, becoming a potentially disruptive factor for the global security situation. Traditional national security strategies are expected to receive a more in-depth implementation under the impetus of advanced S&T.

Second, private technology institutions have opened up new battlefields and become an important force for maintaining national security. On the high-tech battlefield of the Russia-Ukraine conflict, it is no longer just a confrontation of the actions of the governments of different countries, but also a comprehensive confrontation of technological strength involving private institutions. During the Russia-Ukraine conflict, many U.S. and even Western high-tech companies have become combat tools of the U.S. government and military, directly participating in the war “on the ground.” For example, the Starlink project developed by SpaceX is an important means by which Ukraine obtains combat intelligence information and carries out precision combat strikes. Several American Internet giants have stopped providing services to Russian users. Civilian UAVs are directly used in combat and have become an important supplementary force in combat operations. At present, OpenAI has removed its ban on “military and war” applications, which means that the United States’ attitude towards the application of ChatGPT in the military field is changing.

As Mark Leonard, director of the European Council on Foreign Relations, put it, “Power is now defined by control over flows of people, goods, money, and data, and via the connections they establish.” The Russia-Ukraine conflict highlights the nationalistic nature of technology. The development of advanced S&T and the behavior of high-tech companies in war will profoundly affect the world’s geopolitical trends. This will become a key variable in reshaping the world order in the context of changes unseen in a century, and will also become an important force in maintaining national security.

8.      In the field of energy, the Russia-Ukraine conflict has fractured the global green transformation process, and climate governance faces the greatest delays since the 1970s

After the Russia-Ukraine conflict, the world lacked the motivation to jointly address climate change. In the 18 months after the conflict, a total of 150 million tons of carbon dioxide emissions were generated. Russia is one of the world’s most important energy exporters, and Ukraine is one of the key channels for natural gas pipelines. As tensions escalate, the world’s, and especially Europe’s, dependence on fossil fuels makes the promotion of clean energy more difficult.

In the first half of 2022, the world faced a global energy supply shortage. At that time, 38% of the EU’s natural gas and 27% of its oil supplies came from Russia. Oil prices broke through historical highs, causing Europe to quickly fall into an energy supply crisis. This imposed huge costs on global energy consumers and quickly triggered a series of chain reactions in international finance, cross-border trade, and international relations. The market pessimism caused by the energy crisis triggered by the Russia-Ukraine conflict disrupted the EU’s pace of emission reduction. Some European countries pushed back their renewable energy development targets for a time and were unable to break away from their dependence on fossil fuels. This, in turn, directly affected the global green development landscape and progress toward sustainable development, slowing down the normal progress to the target of carbon neutrality by the middle of the 21st century. In 2023, UN Secretary-General Guterres repeatedly stated: “Humanity has opened the gates to hell, and climate action is urgent,” and warned that “world leaders must break the vicious cycle of global warming.”

Since the first United Nations Conference on the Human Environment in 1972, global climate governance has achieved many stage-by-stage results, such as the United Nations Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement. However, the Russia-Ukraine conflict has not only slowed down the energy transition process, but has also intensified the lack of trust in climate cooperation between countries. Developing countries are increasingly wary that some developed countries in Europe and the United States are luring China and other developing countries into a new transition trap by accelerating the phasing-out of fossil fuels. Developed countries are also unwilling to assume climate governance responsibilities and are attempting to coerce developing countries into assuming greater responsibilities. The global greening process and green sustainable development goals have encountered serious challenges. Geopolitical tensions may also lead some countries to prioritize economics and security over environmental concerns, reducing their investment in and commitment to green transformation.

9.      In the financial field, the Russia-Ukraine conflict has accelerated the accumulation of quantitative changes in the multipolarity of the international monetary landscape, and the global capital market has experienced the greatest turmoil since 2008

First, the accumulation of quantitative changes in the multipolarization of the international monetary structure is accelerating, and the competition among secondary currencies below the U.S. dollar is accelerating. The Russia-Ukraine conflict has accelerated the formation of global blocs and economic decoupling. This, accompanied by the United States’ intensification of the weaponization of economic and financial sanctions, is increasing the motivation for global emerging markets to de-dollarize. To date, at least 70 countries have begun efforts to de-dollarize, including accelerating the construction of cross-border payment systems, exploring regional currency alliances, settling cross-border trade in local currencies, and vigorously developing central bank digital currencies. Some people have calculated that, currently, about 30% of countries face the potential threat of sanctions from the West, far higher than the 10% in the 1990s. However, the United States’ strong level of financial development, S&T innovation, military strength, and governance capacities mean that the foundation of the dollar’s hegemony remains solid. The Russia-Ukraine conflict has not yet had a fundamental impact on the competitive landscape in the international monetary system. From 2021 to 2023, the U.S. dollar’s share of global reserves remained stable at nearly 60%, and the international status of the U.S. dollar as the world’s main currency remained stable. Although there has yet been no qualitative change, the speed of quantitative changes is accelerating. Competition has accelerated among the secondary currencies below the dollar. The share of the euro and some other traditional second-tier currencies in the Euro system has declined, with the euro’s share of global reserves falling by about 1 percentage point, mainly replaced by third-tier small mature economies and emerging market currencies. The challenges faced by traditional secondary currencies have increased.

Second, the Russia-Ukraine conflict has exacerbated turbulence in international financial markets. The Russia-Ukraine conflict has increased uncertainty in the international economic and political outlook. The conflict directly caused a surge in energy and food prices. The U.S. CPI in June 2022 reached 9.1%, a 40-year high, forcing the United States to sharply raise interest rates, which became one of the causes of the European and U.S. banking crisis in 2023. Global investors regard geopolitical risk as an important risk source. Geopolitical risks are hard to predict and can have catastrophic effects on financial markets, leading to a sharp rise in risk aversion in global financial markets and exacerbating turbulence in international financial markets. In 2022, the three major U.S. stock indexes all recorded their largest full-year declines since the global financial crisis in 2008. At the same time, the high interest rates on the U.S. dollar attracted global capital to flow back to the United States, increasing the pressure of capital outflows on emerging economies and exacerbating debt crises in middle- and low-income developing countries.

10.  In terms of the global landscape, the Russia-Ukraine conflict has accelerated the “changes unseen in a century” and the international community has entered an “era of great contention” not seen since the end of World War II

The Russia-Ukraine conflict, as the most significant international event since the Cold War, has become the most important “fuse” and “catalyst” for the evolution of the global landscape and world order in the 21st century, triggering regional conflicts in multiple places, hot wars in the Middle East, civil unrest in Africa, and the emergence of hot spots in the Asia-Pacific and Latin America. It has lifted the curtain on an “era of great contention.”

First, after the outbreak of the Russia-Ukraine conflict, international governance mechanisms such as the United Nations and the G20 have fallen into an unprecedented state of disorder. Some multilateral mechanisms have even been reduced to the status of “existing in name only” and have basically become a forum for playing games with public opinion rather than a platform for governance. The mechanisms for the unified and coordinated handling of international issues have failed, and the ability of various parties to resolve regional conflicts through diplomatic means has been greatly reduced. This has led to international chaos in the context of the loosening, disintegration, and disorder of the international order. The checks and balances mechanisms and power vacuum also make regional forces more willing to take action to resolve issues through force.

Second, in addition to widening the gap between the Global North and Global South in the short term, the Russia-Ukraine conflict has also brought about a “strategic awakening” in the Global South, becoming a stepping stone for the evolution of the global landscape. The United States has once again “reaped the world’s harvest” by taking advantage of the Ukrainian crisis, becoming the biggest winner in the conflict. Under the influence of the Ukrainian crisis, trade ties between Russia and Europe have rapidly decreased, and Europe has been forced to increase its dependence on the United States, which is beneficial to the U.S. economy. First, U.S. energy exports to Europe have surged, with U.S. liquefied natural gas exports to Europe rising from 2 million tons in 2018 to 50 million tons in 2023. Second, military groups such as NATO have increased needs for military defense, generating considerable profits for the U.S. military-industrial complex. U.S. arms sales to foreign countries in 2023 increased by 16% compared to 2022, with direct government-negotiated sales surging by 56%. Third, the United States bought up Ukrainian assets in the name of military aid, allowing U.S. financial interest groups to expand. These factors have offset the negative economic impact caused by interest rate hikes in the United States, forming a potential driving force for U.S. economic growth and reversing the U.S. economic downturn to a certain extent in the short term. Although this conflict has widened the gap between the Global North and Global South, making the United States the biggest winner from the crisis in the short term, the Ukrainian crisis has also prompted more countries to seek strategic autonomy and independence. The collective rise of the Global South and the awakening of a consciousness of independence will constitute an important driving force for the “rise of the East and decline of the West” in the context of changes unseen in a century. The post-Cold War international order dominated by the United States is undergoing a comprehensive restructuring, and the world is transforming from a strongly unipolar world to a multipolar world. After the outbreak of the Russia-Ukraine conflict, German Chancellor Scholz used the term “turning point of history” (Zeitenwende) to summarize the great changes in the global landscape, and proposed that “in this new multipolar world, different countries and governments are fighting for power and influence,” and that avoiding a “new Cold War” has become a top priority.

Under such a global trend, the disputes among major powers and the game for the dominance of the world order have gradually moved from a “secret struggle” to an “open fight.” With the failure of existing international coordination and governance mechanisms, the era of multipolarization in a world full of uncertainty has begun. This situation presents both challenges and opportunities.

Part II: Eight major lessons from the Russia-Ukraine conflict

1.      As the humanitarian crisis intensifies, China must actively participate in the construction of the international security order and implement the Global Security Initiative on the premise of appropriate preparation for war

In the context of the Russia-Ukraine conflict, China must not only make an appropriate show of strength and make clear the one-China principle and bottom line to the international community, but also avoid falling into the trap of war and the quagmire of an arms race. At the same time, China will continue to implement the Global Security Initiatives and make its due contribution to maintaining world peace.

We must demonstrate military strength in an appropriate manner and oppose bundling and hyping up the Russia-Ukraine conflict and the Taiwan issue. After the outbreak of the Russia-Ukraine conflict, public opinion began to talk about “Ukraine today, Taiwan tomorrow”. However, the Taiwan issue is China’s internal affair and is not comparable to the Russia-Ukraine conflict. Faced with constant external provocation and hyping up of the Taiwan issue by means of the Russia-Ukraine conflict, China must not only prevent itself from becoming entangled in an endless arms race, but also appropriately enhance its combat capabilities and concretely express China’s position and national red lines.

We must actively work to reshape a reasonable, strong, and fair international collective security order and build a communication and exchange platform for all parties involved in the conflict. China’s Global Security Initiative, China’s Position on the Political Settlement of the Ukraine Crisis, and other propositions have received wide recognition. China should actively leverage its advantages as an international power for the purpose of ending war and promoting peace, implement the Global Security Initiative, build a platform for communication and exchange for all parties involved in the conflict, and jointly promote lasting peace and security in the world.

2.      With the world now divided into the Eastern and Western camps, China should adhere to true multilateralism and increase its flexibility in the diplomatic game

The Russia-Ukraine conflict has once again pushed the confrontation between global political camps to a climax. China must enhance its strategic flexibility in the diplomatic game, both safeguarding its own interests and seeking room for cooperation, both responding to challenges and creating opportunities, both adhering to principles and flexibly adopting a variety of means.

In relations between major powers, we must adhere to mutually beneficial cooperation and avoid confrontation and conflict. In its relations with major powers such as the United States, Russia, and the European Union, China should insist on expanding common interests, resolving differences and conflicts, and maintaining strategic stability. China is not afraid of U.S. suppression, nor does it seek all-out confrontation with the U.S. Instead, it advocates exploring the correct path for China and the U.S. to get along. China should continue to deepen its comprehensive strategic cooperative partnership with Russia, manage relations with individual countries in the European Union in a phased, focused, and flexible manner, and strengthen cooperation in areas of consensus.

As regards relations with neighboring countries, we must adhere to the principles of amity, sincerity, mutual benefit, and inclusiveness and promote common development. China should continue to promote the joint construction of the “Belt and Road” and build a community with a shared future among its neighbors. China should continue to strengthen its relations with ASEAN countries and make efforts to promote the entry into force of the Regional Comprehensive Economic Partnership (RCEP) and the consultations on the Code of Conduct (COC) for the South China Sea. China should also closely cooperate with countries in South Asia, Central Asia, West Asia, and other regions in terms of regional security.

In relations with developing countries, we must uphold sincere friendship and strengthen unity and cooperation. China should continue to support developing countries in strengthening their own capacity building and improving their level of development. China should continue to deepen its relations with Africa, Latin America, Pacific island countries, and other countries, and expand the space for cooperation in fields such as politics, economy, security, and culture. Using regional cooperation mechanisms such as the Group of Twenty (G20), the Asia-Pacific Economic Cooperation (APEC), and the BRICS as platforms, China should unite emerging market countries and developing countries, enhance South-South cooperation, and contribute China’s strength to safeguarding the common interests of developing countries.

3.      Victory in the “cognitive war” is an intangible, and China must strengthen its ability to engage in “cognitive warfare” and improve its ability to shape narratives

The mapping of ideological struggle to the cognitive field is cognitive warfare. As an important battlefield in ideological struggle, the cognitive domain has become critical in the confrontation between Russia and the Western camp led by the United States. In the Russia-Ukraine conflict, all parties demonstrate their legitimacy and rationality through discursive narratives, while questioning and counterattacking the other side’s motives and behaviors, “disparaging” the other side as “unjust” in the court of international public opinion. Cognitive offense and defense, and discursive narratives have become the forward position in the game between major powers.

Victory or defeat in the “cognitive war” has become the main factor affecting the reshaping of the international landscape. In order to fully compete in the court of international public opinion and for discursive power, both sides have come up with new tricks and are conducting games across multiple fields at the social, national, government, organizational, and even individual levels. Specifically, cognitive confrontation runs through the entire process of military warfare, and is deeply integrated with tactics such as S&T warfare, cyber warfare, and intelligence warfare. This has created new innovations in hybrid warfare and brought about new features in cognitive warfare such as the leader effect (首脑效应), total war (全民战争), and S&T empowerment.

As a world power, China must dare to speak out, dare to answer the call, and dare to engage in dialogue. First, in the court of international public opinion, China should actively advocate the concepts of peace, cooperation, and mutual benefit and emphasize respect for national sovereignty, maintenance of international rule of law, and the advocacy of fairness and justice. At the same time, China must refute various extreme remarks, such as the “clash of civilizations” and “new Cold War” theories, to prevent the international situation from deteriorating. Secondly, in terms of cognitive offense and defense, China must fully understand the positions and interests of all parties, have a good insight into the evolution of the international situation, be good at capturing key nodes, and put forward our positions and propositions in a targeted manner. Third, in terms of discourse and narrative, we must give full play to China’s cultural heritage and communication advantages, and innovate the discursive system to increase our persuasiveness and influence.

In addition, in the process of cognitive confrontation, the new methods and new tactics adopted by Russia and Ukraine can serve as lessons and inspirations: We must be good at using international laws and rules and position ourselves on the international moral high ground. We must also be good at using innovative technological means such as big data, machine learning, artificial intelligence generated content (AIGC), virtual reality (VR), and augmented reality (AR) to help us gradually improve our cognitive defense capabilities, effectively build a psychological line of defense, respond to the intrusion of Western ideology, and win international moral support.

4.      The “Cold War-style economic structure” is emerging again, and China should take the initiative to formulate rules and an economic order to reshape economic globalization

The destructive nature of the Russia-Ukraine conflict has reshaped the balance of global economic power and fundamentally undermined the foundations that support economic globalization. However, in the long run, because it violates the objective fact that the global economy is deeply intertwined due to the development of productivity, this situation cannot give full play to the advantages of various economies and will inevitably go bankrupt under the impact of the objective law that productive forces determine production relations. In other words, the Russia-Ukraine conflict has exposed the fragility and risks of the global manufacturing supply chain, showing that manufacturing supply chains that rely on external supplies are unsustainable.

From an international perspective, China must actively participate in the formulation of relevant rules in the field of international economics and trade in the process of reshaping economic globalization. In a new round of the restructuring of global economic and trade governance, we must be more proactive in seeking an international status that is consistent with our own economic strength, safeguard the due status of the multilateral trading system, and build a global production chain and supply chain governance system guided by the concept of a community with a shared future for mankind.

From a domestic perspective, China must adhere to an independently controllable, secure and reliable economy, promote the optimization and diversification of production and supply chains in different industries and stages. We must firmly hold key and core technologies in our own hands, form reserve production capacity in key areas, strive to achieve independent controllability in important fields and critical nodes, and build a production and supply chain with ourselves at the center to cope with external shocks and uncertainties.

What is particularly important is that, in key strategic areas of great power competition, such as high-end chips, basic software, and biomedicine, China must accelerate the compensation of our shortcomings in advanced technology, basic components, and key materials, make efforts to overcome the “chokepoint” problems affecting key core and technologies, and raise the level of upgrading the industrial base and modernizing production chains. At the same time, in fields where we have an advantage such as intelligentization, digitalization, and the Internet of Things, we must accelerate the promotion and application of new technologies, accelerate the digital transformation of industries, and ensure that the development of related industries always stands at the forefront of the global digital production chain and supply chain.

5.      S&T strength has become a decisive factor in national security, and China must vigorously improve its level of independent S&T innovation and promote S&T openness and cooperation

The Russia-Ukraine conflict has highlighted the vital importance of S&T to national security. Currently, the S&T competition between China and the United States is in a state of asymmetric competition. Overall, there is still a definite gap between China’s S&T strength and that of the United States. China should make use of little things to achieve great results, take an inward-looking and enterprising path in the context of asymmetric competition, change the international competitive landscape through independent domestic innovation, and ultimately return to a situation where global S&T cooperation outweighs competition.

We must clarify the main goals of S&T development and promote the transformation and upgrading of the economic structure. At present, China and the United States are at different stages of S&T development. The United States has the status of an established S&T power, while China is in the position of an emerging country in terms of S&T. This leads to different emphases in the respective S&T development goals of China and the United States. The United States is now using technology more as a tool for military offense and warfare. China should first use technology to serve industrial progress and the transformation and upgrade of its domestic economy. Therefore, China should maintain its strategic determination, continue to focus on the standard of economic construction, increase efforts to cultivate new, high-quality productive forces, and form new potential growth points. At the same time, we should guide more private sector entities to participate in S&T innovation, smooth out the road for the conversion of S&T achievements into practical applications through industrialization and technological innovation, improve total factor productivity and the per capita output ratio, and provide medium- and long-term support for China’s rise as an S&T power.

We must expand opening up to the outside world on the basis of independent innovation. The independent controllability of S&T and open cooperation are the two wings that allow S&T development to fly. The two promote each other and move forward in the same direction. Historical experience shows that no advanced technology can be attracted from outside, and this is especially true of military technology. Independent innovation in S&T is increasingly becoming a fundamental factor in the ability of a country to achieve strategic independence. On the basis of promoting strategic independence in S&T, China should also promote further openness, exchanges, and cooperation in S&T and continue to climb to the top of the S&T value chain. Today, advanced S&T cannot be separated from globalized R&D that takes place across countries and regions. China should vigorously encourage its S&T companies to go global and participate in international competition, so as to better carry out cooperation and gain competitive advantages in the process of their globalized expansion.

6.      The global green and low-carbon transformation will continue to be marginalized for a time, and China should enhance its energy resilience

The Russia-Ukraine conflict has posed some difficulties and challenges to the global low-carbon energy transition. First, the sharp fluctuations in energy prices have imposed immense costs and pressures on the economies and societies of various countries, affecting their investment in and support for low-carbon energy. Second, the instability and insufficiency of their energy supplies have caused some countries to temporarily restart or extend the use of high-carbon energy such as coal and oil to meet their energy needs, thereby increasing greenhouse gas emissions. Finally, the speed and degree of the energy transformation of different countries vary due to factors such as national conditions, economic situations, and policy-making, which may lead to difficulties and complexity in global low-carbon energy cooperation. It can be seen that the energy crisis caused by the Russia-Ukraine conflict and the slowdown of progress in green development indicate that China should enhance the resilience of its energy development and strengthen its energy independence and policy autonomy.

To this end, China must firmly seize the initiative as a major power in energy development. As the world’s largest energy consumer, how to effectively ensure national energy security and effectively safeguard national economic and social development have always been the main questions that China must answer in the field of energy development. Only by holding the energy rice bowl in our own hands and fully ensuring our national energy security can we seize the initiative in future development and firmly maintain our bottom line of security in the new development landscape. At the same time, in terms of energy endowments, China is a country with abundant coal resources, but it is relatively lacking in oil and natural gas reserves. Energy security is tied to development security and national security, and we must not lose it. At this stage, China’s industrialization and urbanization are advancing in an in-depth manner, and energy demands will inevitably continue to grow. Under the impact of the energy production structure, fossil fuels such as coal, oil, and natural gas account for the vast majority of total energy consumption in China’s energy consumption structure. Considering energy security, the environment, and the economy, China should develop a diversified energy structure. From a short-, medium-, or long-term perspective, developing clean energy on the basis of ensuring energy security is an important strategy and successful practice that allows China to ensure our energy security.

Finally, China should objectively analyze the context of international green development from an international perspective, rationally plan out the clean energy industry in accordance with its own energy industry layout and carbon neutrality goals, take into account the characteristics needed to prevent the impact of the international energy crises and the risks of domestic energy transformation, and gradually embark on a path of green development with Chinese characteristics so as to cope with a new round of international energy crises and competition.

7.      As the uncertainty facing the international financial market increases, China must accelerate the strengthening of its financial industry and build a financial superpower

The Russia-Ukraine conflict has increased the uncertainty risks facing the international financial market. Research shows that countries affected by war tend to be isolated in the global stock market network. In addition, given the high dependence of the Chinese economy on global resources and global trade, the impact of the war on the Chinese financial market may be even more serious. As China is at the center of geopolitical conflicts, it faces greater pressure from international capital outflows, and our risk of volatility in financial assets and the real estate market has also increased. To this end, China’s financial industry should accelerate efforts to strengthen its foundation and build a financial superpower.

We must strengthen financial infrastructure and systems construction. The escalation of financial sanctions by the United States and Europe has prompted emerging markets such as China, India, and Russia to pay more attention to building independent cross-border payment and settlement systems, but the number of banks participating in these systems remains limited. As of the end of 2023, China’s Cross-Border Interbank Payment System (CIPS) has attracted participants from 111 countries and regions, but the vast majority are indirect participants, and most of the direct participants are also overseas branches of Chinese banks. China should continue to improve the functions of CIPS, improve the cross-border payment experience, and push it to better assume the role of the main channel for cross-border RMB payments and clearing. China should also optimize bilateral swap agreements between central banks to make them more transparent and promote their increased use in trade-related activities. We should strengthen exchanges and cooperation with international multilateral organizations and improve the design of cross-border investment and financing mechanisms. In international financial hub cities that are a construction priority, we can promote the smooth flow of cross-border funds and investment and financing pilot projects as well as align with the highest international standards. At the same time, in terms of the financial order, the United States has a dominant position in the IMF and is weaponizing finance. China needs to leverage the BRICS mechanism to promote the internationalization of our currency and improve the international monetary system through digital currencies and common currencies.

We must enhance the breadth, depth, and resilience of financial markets. The weakness of the investment and financing functions of the RMB has, to a considerable extent, constrained China’s capital account opening process and obstructed the scope of utilization of China’s cross-border financial infrastructure and the upgrade of the RMB from a trade currency to an investment and reserve currency. China has taken a unique path to currency internationalization. Specifically, we are striving to build an offshore RMB financial asset infrastructure platform while remaining cautious about capital account opening. Research has shown that, in terms of the ratio of global reserves of currencies to trade volume, the RMB is already close to the euro, indicating that this model has achieved certain results. However, the development of the offshore RMB market remains dependent on the central bank’s U.S. dollar reserves, which further increases dependence on the U.S. dollar. At the end of 2022, the balance of RMB deposits in major offshore markets was about RMB 1.5 trillion, accounting for a very low proportion of RMB deposits. As the scale of the offshore market grows, the limitations of this model will become increasingly pronounced. Therefore, significantly increasing the breadth and depth of China’s domestic financial markets, especially the capital market, will provide the basis for China to promote the high-level opening-up of the financial industry in an orderly manner. This is also the foundation for enhancing international capital’s confidence in RMB assets from a financial perspective and improving the ability of China’s financial industry to cope with external shocks. To this end, we must take the rule of law and marketization construction as our fundamental orientation, promote reforms to the registration system based on institution building, and accelerate the development of the RMB bond market.

8.      The confrontational, protracted, and cruel nature of the transformation of the international order has become increasingly apparent, and China must be prepared for a protracted war

Taking a global view, in recent years countries around the world have expressed dissatisfaction with the post-Cold War global structure and international order. Both the “beneficiaries” and “victims” of the old order have expressed their hopes for change. Under Trump’s leadership, the United States has returned to isolationism and abandoned international multilateral mechanisms and treaties. The Global South is now even more skeptical about the fairness and legitimacy of the post-Cold War order and urgently demands a new structure to promote development. We can see that the Russia-Ukraine conflict is both a trigger for the future reorganization of the global landscape and a product and manifestation of the strategic game in the evolving post-Cold War global landscape. The old order has begun to disintegrate, but the new structure remains unclear. How China can continue to rise amid this uncertainty and turmoil has become the question of the century.

At the same time, the Russia-Ukraine conflict reflects the conflicts of interest and value differences among major powers in the transformation of the international order. Its impact on the global landscape and order will be manifested through medium- and long-term spillover effects. However, the current military conflict involving nuclear powers poses the risk of escalation and spread at any time. International and regional affairs have entered a protracted and unpredictable passage through a hazardous zone of deep waters. The Russia-Ukraine conflict has gradually become a triggering factor for conflicts in other regions. Some local forces have taken advantage of the chaos to take action, and the fragmentation and intensification brought about by the conflict have continued to increase. “Instability” has become synonymous with the decade of the 2020s. The external environment no longer continuously progresses and improves. Instead, we have a situation of great changes and great struggles that are confrontational, protracted, and cruel.

On the one hand, China must be prepared to fight a protracted war, and on the other hand, we must also highlight Chinese values in the process of reorganizing the international landscape and rebuilding the international order. Tracking, analyzing, and assessing the global situation calmly, coolly, and objectively has become an everyday necessity of major powers. At the same time, in an unstable environment, China needs to become the world’s largest “stabilizer.” With a sense of responsibility for human civilization and a broad perspective, China seeks to become a “world connecting country” and a strong voice for “advocating peace rather than adding fuel to the fire, connecting rather than dividing, and opening up rather than closing down” during this turbulent period of the reshaping the global landscape and order.