Xi Jinping’s meetings in Moscow with Vladimir Putin have put the Biden administration on the sidelines as two adversaries discuss a Ukrainian peace proposal that the United States has deemed unacceptable. US officials have publicly expressed deep skepticism about the Chinese idea, arguing that its call for a ceasefire would reward Moscow’s invasion by cementing its territorial gains.

In private, however, the meetings and proposal have stirred unease within the administration, raising questions about the US’s broader approach to both countries. The debate over the Chinese version of a peace plan highlights one of many uncomfortable realities: the convergence of a partnership undermines all Western efforts to strangle Moscow economically. This reality could lead some allies, particularly those in Europe, to reconsider their position and seek an amicable solution to a conflict they see no end, and are the primary collateral victims. 

Even as Xi and Putin draw closer, China is finding a receptive audience to its wider diplomatic efforts worldwide. The Biden administration has tried to keep China on the sidelines since the beginning of the Ukraine invasion, but the opposite appears to have happened. China has ignored US sanctions over its partnership with Russia, purchased oil from the Iranian regime in defiance of Western demands, and helped orchestrate a diplomatic detente between Saudi Arabia and Iran, a significant blow to US diplomacy. Major world economies such as India and Brazil refuse to choose between China and the West, arguing they don’t want a new Cold War. And last week, Honduras began severing its diplomatic ties with Taiwan in favor of economic relations with China. 

The US’s ties with China continue to worsen. This was highlighted by the furor over the alleged Chinese spy balloon that sparked a national uproar in the US and recriminations of anger between Washington and Beijing. This episode eroded an attempted stabilization of relations late last year with an in-person summit between President Joe Biden and Xi in Indonesia. This led to a tense meeting between US Secretary of State Antony Blinken and top Chinese diplomat Wang Yi in Munich. 

Economic realities are catching up to a conflict the Westen world presented as one between good and evil. An economic slowdown associated with inflation likely to remain high, with no prospects for peace, could change the position and drive Europeans to review their view. Such a shift would lessen pressure on commodity prices and inflation expectations. This could lead to a significant asset’s reallocation.