Concerned about maintaining ties with its main European and American trading partners, Beijing has so far shown no desire to help Russia circumvent Western sanctions.
China is on the phone. Since the start of the war in Ukraine, Beijing has really not rushed to save its Russian ally, which is subject to severe Western economic sanctions. At the UN on Wednesday, the second world power chose to abstain during a vote on a resolution calling on Moscow to “immediately stop using force” against its neighbor. Revealing silence about the ambiguous position of the Chinese regime in the current crisis.
Growing relationships
If he said he understood “Russia” and removed the term “invasion” from his vocabulary, in fact China has never shown explicit support for Moscow in this conflict. The two powers, often on the same wavelength, have nevertheless continued to strengthen ties for several years, with the common goal of challenging American hegemony and that of the dollar as the world’s currency.
The Beijing Olympics last month were an opportunity for both sides to reaffirm their desire to strengthen relations. Sino-Russian friendship is “an example of a dignified relationship in which everyone helps and supports the other in his development,” Vladimir Putin said.
In recent years, this “friendship” has taken various forms. Faced with the fall of the ruble during the annexation of Crimea in 2014, China has agreed to be paid in yuan to offset the increase in dollar imports. Today, Russia has become “a major investor in the Chinese bond market,” according to ANZ Bank, with assets in the yuan equivalent to about $ 140 billion.
The two countries are also working together on gas pipeline projects, the first of which went into operation in 2019. Last month, they signed a new agreement to supply 10 billion m3 of natural gas from the Far East. Rather, after the invasion of Ukraine, the lifting of restrictions on imports of Russian wheat from Beijing prompted the Asian giant to be taxed by Australia as a “lifeline” for Moscow.
Economic interests
This agreement, which allows wheat imports from all Russian regions, up from just seven before, has been known since early February. And its entry into force may be more a testament to China’s desire to secure supplies than to continued support for Russia.
Because beyond this trade gesture, Beijing seems to be distancing itself from Moscow in recent days. At least the Asian giant, visibly embarrassed by the situation in Ukraine, is keeping quiet. There is no way he can fly to help his neighbor at any cost. And in this case, the game is probably not worth the candle.
If China is Russia’s largest trading partner, the opposite is clearly not true. Last year, China made $ 79.3 billion in purchases from its neighbor, or 3% of its imports, according to ANZ Bank. Its sales to Moscow amounted to 67.6 billion dollars, or only 2% of total Chinese exports. This makes Russia the 18th trading partner of Beijing, far from the European Union and the United States.
Concerned about preserving its economic interests, China could lose everything by helping Moscow circumvent Western sanctions. And it is certain that if that were the case, the main Western partners would have sanctioned it at least as severely. In addition, Chinese banks did not take the risk of replacing the Swift messaging system, from which several Russian banks were excluded from the equivalent Chinese CIPS system to make transactions with their neighbors for fear that Westerners would react and deny them access to the dollar.
Thus, several Chinese public banks would refuse to finance the purchase of raw materials in Russia, according to Bloomberg. The Beijing-based Asian Infrastructure Investment Bank (AIIB), China’s response to the World Bank, suspended operations with Russia and Belarus on Thursday, also under sanctions.
China craves Ukrainian wheat
If China is really unwilling to help its ideological partner, it is also because it has strategic interests in Ukraine, one of its important trading partners on the famous new Silk Road, the expansion of which risks being hampered by the current conflict.
Beijing, which has become Kyiv’s leading trading partner with Russia, also relies on Ukraine for wheat supplies. The middle empire, which continues to lose arable land due to the country’s urbanization, has been sending businessmen to buy back grain from Europe’s granary for several years. In 2020, Ukraine exported 7 million tons of grain to China worth 1.9 billion euros.