China’s Xi Calls Ukraine’s Zelensky. Geopolitics Is Still Unsettling Economics.

China’s ambassador to France made waves last week when he told an interviewer that the former Soviet republics have “no effective status in international law.” China’s Foreign Ministry later distanced itself from the remarks. Then today Xi called Zelensky and stressed China’s “respect for sovereignty,” according to the Chinese readout of the call. It was the first call between the two heads of state since Russia’s full-scale invasion began last year.

The Chinese said that Ukraine requested the conversation. Even China’s notoriously aloof leader apparently isn’t immune to Zelensky’s relentless charm.

The call comes as the world’s big powers rethink how they fit national-security issues into their global economic strategies. Russia’s Vladimir Putin may be willing to blatantly break the world’s written and unwritten rules in the pursuit of power, but both the U.S. and China still see value in at least saying there are limits. China has been floating a peace plan for Ukraine in recent months, fresh off brokering a diplomatic deal between arch rivals Iran and Saudi Arabia. 

The challenge for the global economy is that the big powers’ visions of peace and prosperity remain miles apart, and there’s no obvious mechanism to reconcile them. China remains an enormous diversified economy and, unlike Russia, how it chooses to engage with the rest of the world matters greatly for investors.

U.S. Treasury Secretary Janet Yellen said in a speech last week that ending Russia’s war in Ukraine was a moral imperative and would be “the single best thing we can do for the global economy.” The war has worsened inflation, made energy more expensive, and sparked a hunger crisis in poorer countries. The war is also exacerbating a fragmentation of global finance, according to the International Monetary Fund. 

China would seem to agree, said Edward Price, a principal at geopolitics-analysis firm Ergo. But the peace plan China is pushing for Ukraine would effectively reward Russian aggression. There is little sign that Ukraine is interested. Ukrainians, from Zelensky on down, seem determined to fight Russia tooth and claw whether or not anyone else in the world backs their cause. A political settlement remains a far-off possibility without a serious shift in Ukraine’s thinking about the conflict, let alone Putin’s. 

“Ending Russia’s war on Russia’s terms would be the single worst thing we can do for the global economy,” Price said. It would lock in those global divisions and raise the chances that another revisionist nuclear power will follow in Putin’s footsteps in trying to expand his territory.

“Beijing fully understands the unlikelihood of a peace deal, but talking about it is cheap and easy,” Yun Sun of the Stimson Center think tank wrote in Barron’s recently. Chinese officials can talk about something palatable, even if they continue to tacitly support Russia. 

It’s surely a good thing that world leaders are at least talking about peace. Yellen’s speech last week showed the U.S. attempting to agree to disagree with China on how the world should be run. Her message was that it’s possible to have healthy economic competition even as the two sides fence off sensitive national-security questions, like whether advanced semiconductor technology can be shared. 

But the war in Ukraine shows how easily questions of national security can take over the entire conversation. Putin’s decision to launch the invasion showed that one man’s vision of security can instantly endanger the millions of individual economic relationships that have driven rising living standards in the East and West. China’s late support for Ukrainian “sovereignty” does little to resolve that fundamental disagreement about power and security. 

Write to Matt Peterson at matt.peterson@dowjones.com