Wagner mutiny exposes risks for China's deep Russian ties

As news broke on Saturday that mercenary Wagner troops were careering towards Moscow in a short-lived rebellion, several businessmen from southern China began frantically calling factories 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 - quickly faded, some of these exporters are now left questioning their future dependence on Beijing's closest ally.

"We thought there was going to be a big problem," Shen Muhui, the head of the trade body for the firms in China's southern Fujian province said, recalling the scramble among its members exporting auto parts, machinery and garments to Russia.

Though the crisis has eased, "some people remain on the sidelines, as they're not sure what will happen later," he added, 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 invaded Ukraine in what Moscow calls a "special military operation".

But a top US official on Monday said the weekend uprising had unsettled Beijing's cloistered leadership, and some analysts inside and outside China have started 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 aborted mutiny as Russia's "internal affairs" 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 has fought some of Russia's bloodiest battles in the Ukraine war, led the armed revolt after he alleged a huge number of his fighters had been killed in friendly fire.

But the mercenary leader abruptly called the uprising off on Saturday evening as his fighters approached Moscow while facing virtually no resistance during a dash of nearly 800 km (500 miles).

China did not comment as the crisis unfolded, but released a statement on Sunday when Foreign Minister Qin Gang hosted a surprise meeting with 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 United States and the expansion of the NATO military alliance that threatens their security.

After securing an unprecedented third term as president earlier this year, Chinese President Xi Jinping made his first overseas trip to Moscow to meet his "dear friend" Putin.

While nationalistic commentators in state-run Chinese tabloids cheered Putin's swift efforts to stamp out the rebellion, even some in China - where critical speech is tightly controlled - have 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 have gone even further.

Yang Jun, a professor at Beijing's China University of Political Science and Law, wrote a commentary published on Saturday that called 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 and he did not respond to requests for an interview from Reuters.

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, with Beijing exporting everything from automobiles to smartphones and receiving cheap Russian crude oil that faces sanctions in much of the rest of the world.

But even in the energy sector, which fuelled a 40% jump in trade between Russia and China in the first five months of this year, there are some signs of caution in China.

Top company executives at Chinese state energy companies have routinely said it was too early to comment or sidestepped questions on new investments 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 Chinese government also seemed to be exercising caution, pointing out 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 United States, the European Union and Japan - among the fiercest critics of Moscow's war in Ukraine - dwarfs its dealings with Russia.

"Beijing now has more reasons 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."