politics

Take China and Russia's ‘No Limits' Relationship With a ‘Grain of Salt,' Says Former PBOC Advisor

Alexei Druzhinin | AFP | Getty Images
  • China and Russia's so-called "no limits" partnership is "situational" and should be taken "with a grain of salt," according to Li Daokui, former advisor to the People's Bank of China, the country's central bank.
  • Beijing is expected to continue doing business with Russia but unlikely to support Moscow militarily, Li told CNBC.
  • Li also predicted that China will be "very proactive" in pushing Moscow and Kyiv to come to an agreement.

China and Russia's so-called "no limits" partnership is "situational" and should be taken "with a grain of salt," according to Li Daokui, former advisor to the country's central bank, known as the People's Bank of China.

Before Russia invaded Ukraine in late February, Beijing and Moscow announced a "no limits" strategic partnership they said was meant to counter U.S. influence. In a joint statement, both countries said there were no "forbidden areas" of cooperation, but they did not mention Ukraine even though Russian troops were building up on the Ukrainian border at that time.

"I choose to believe that China will not support Russia in a military way," Li, currently Mansfield Freeman professor of economics at Tsinghua University, told CNBC's "Squawk Box Asia" on Wednesday. "[The] no limit relationship should be read with a grain of salt."

"However, China will keep on doing business with Russia based on humanitarian principles. That is, to help Russian residents to tough through this very difficult period of time," he said.

Since Russia's invasion of Ukraine on Feb. 24, Beijing's official stance has been to blame the conflict on NATO's eastward expansion. Chinese authorities have so far refused to fully condemn Moscow's invasion of its neighbor.

It stands in sharp contrast to much of the developed world, where multiple countries have slapped unprecedented sanctions against Russian businesses, banks and individuals that left Moscow with serious consequences for its unprovoked invasion.

The Russian economy is expected to fall into a deep recession this year, with the Institute of International Finance predicting a contraction of up to 15% as a result of the war.

Li predicted that Beijing, in the meantime, will be "very proactive" in pushing for both Russia and Ukraine to "come to a speedy agreement."

"Let's keep in mind: both Russia and Ukraine before this conflict have been good friends with China," he said. "People tend to forget — Ukraine is actually wonderful, wonderful friend of China also, besides Russia."

Taiwan: A 'fundamentally different' issue

On the subject of Taiwan, Li said the issue was of a "totally different nature" compared with Ukraine, a stance that echoes sentiment from Beijing.

Beijing has repeatedly declared its intention to reunify with Taiwan, an island off the coast of mainland China that is democratically self-governed but claimed by the People's Republic of China.

"The overwhelming number of nations in the world do not recognize Taiwan as a independent country," Li pointed out. Globally, only 14 countries are listed as diplomatic allies of Taiwan, according to the island's Ministry of Foreign Affairs.

Ukraine, on the other hand, has largely been recognized as an independent country, he said.

"What [Russia] has been doing, its whatever war or special military operation against Ukraine … is violation of recognition of many other nations," Li said. The issue of Taiwan, on the other hand, is recognized by most countries in the world as an "internal issue of Chinese politics."

"This is fundamentally different," he said.

— CNBC's Evelyn Cheng and Holly Ellyatt contributed to this report.

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