BEIJING – China-Russia trade is not enough to undo the impact of US and European sanctions on Moscow, according to the White House.
A few hours after Russia invaded Ukraine on Thursday, the US, UK and European Union announced new sanctions aimed at separating Moscow from the global economy. The sweeping measures did not impede the purchase of Russian oil and gas – a key driver of the local economy.
In Beijing, China’s Foreign Ministry said on Thursday that international trade with Russia and Ukraine would remain “normal” and declined to call the attack “an attack.” Meanwhile, the tax agency authorized the purchase of wheat from Russia.
China-Russia’s share of the world economy is much smaller than the Group of Seven countries – including the U.S. and Germany. That means China “will not be able to cover up” the impact of the sanctions, “American journalist Jen Psaki told reporters in Washington on Thursday.
China holds 17.3% of global GDP by 2020, compared to Russia’s 1.7% and G-7’s 45.8%, according to World Bank data.
China is a major trading partner of Russia and Ukraine. Both countries are part of the Belt and Road Initiative – a regional infrastructure development program that is widely recognized as Beijing’s attempt to increase global influence.
Trade between China and Russia reached a record high of $ 146.9 billion by 2021, an increase of 35.8 percent year-on-year, according to China’s real estate agency. China’s imports from Russia have surpassed foreign exchange demand of more than $ 10 billion.
From the current levels of exports and exports, trade will need to grow by 37 percent to reach the Moscow and Beijing target of $ 200 billion by 2024.
China-Ukraine trade increased by 29.7% last year to $ 19.31 billion, which is also a record high, and is equally divided between exports and exports, according to cultural data.
“China and Russia are strategic partners. China and Ukraine are friendly allies, “Foreign Minister Hua Chunying said Thursday in Mandarin, according to a CNBC version.
“China will therefore pursue common trade cooperation, on the basis of the [China] Principles of Peace [international relations] and on the basis of friendly relations with both countries,” he said. “This includes energy cooperation.”
The level of economic impact is still unclear
Less than two-thirds of China’s imports from Russia were energy products by 2021, according to Chinese cultural data. Russia is China’s largest energy source and the second largest crude oil resource, the agency said.
“China’s lifting of restrictions on the sale of Russian wheat and barley is clearly aimed at eliminating the impact of the sanctions, but it remains to be seen whether this will be a symbolic move or a positive impact on the economy,” said Stephen Olson, chief executive officer. researcher at the Hinrich Foundation, a nonprofit organization that focuses on trade issues.
“China’s ability to reduce the impact of Western sanctions will be determined by the size and scope of sanctions agreed upon by the US and its partners,” Olson said. “At the moment, the West has not put all of its cards on the table, which leaves the option to tighten the screws over time, if necessary.”
The Russian ruble plummeted to a record low against the US dollar on Thursday as the attack began.
Western sanctions in Russia have stopped cutting the Kremlin in SWIFT, a network of international payments. As of January, the Chinese yuan has been the fourth most widely used currency in international payments, up from sixth place two years ago, according to SWIFT.
China’s Hua on Thursday criticized the US for providing military aid to Ukraine and said Russia did not need such support from Beijing or others.
Relations between Russian President Vladimir Putin and Chinese President Xi Jinping were strengthened earlier this month with a high-level meeting of leaders in Beijing just before the Winter Olympics in the city.
In a formal study, the Chinese side said the two countries needed to “strengthen their power relations” and “develop cooperation in scientific and technological innovation.”
On the same day, the Russian superpowers Gazprom and Rosneft signed agreements with China National Petroleum Corporation to supply oil and natural gas to China.
“As long as China continues to use its trade relations, those measures will be of great benefit to Russia,” said Tong Zhao, chief of the nuclear policy program at the Carnegie Endowment for International Peace, based in Beijing.
Zhao, who emphasized that he was not an expert on economic issues, said that if China took more steps to support Russia, “it is likely that those measures will be done in a very subtle way to reduce the tensions seen in Europe and other countries.”