China Russia: In 4 ways China is quietly making life difficult for Russia

Now, while Russia’s economy is being decimated by sanctions from around the world, China’s Willingness and ability to help its northern neighbors May be limited. Beijing has refused to condemn Russia’s attack on Ukraine, but wants to avoid being hit by sanctions, which it has repeatedly denounced as an ineffective way to resolve the crisis.
“China is not a party [Ukraine] Crisis and sanctions do not want to hurt China, “said Foreign Minister Wang Yi Said During a phone call with his Spanish partner on Tuesday.

Beijing on Wednesday gave its full support to the comments made by the Chinese ambassador to Ukraine earlier this week. “China will never attack Ukraine. We will help, especially economically,” Fan Xiang was quoted as saying in a statement from the Lviv regional government.

Fears that Chinese companies could face US sanctions over ties with Russia led to a sell-off in Chinese stocks. Recent days. The downturn was reversed on Wednesday when Beijing promised to pursue policies to boost its economy and keep financial markets stable.

U.S. officials told CNN on Monday that they had information that China had Expressed some transparency Providing requested military and financial assistance to Russia. China dismissed it as “misinformation”.
Analysts Word China seeks to strike a “subtle balance” between supporting Russia, but without further hostility to the United States.

Beijing and Moscow share a strategic interest in challenging the West. However, Chinese banks cannot afford to lose access to US dollars and cannot be bought by many Chinese industries American technology must be lost.

Although China is Russia’s No. 1 trading partner, Beijing has other priorities. Trade between the two countries accounts for just 2% of China’s total trade. According to Chinese customs figures last year, the European Union and the United States held the largest stakes.

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Here are some of the steps Beijing has taken over the past few weeks to distance itself From Isolated and Collapses Russian economy.

Letting the ruble drop

The yuan, China’s currency, does not trade completely freely, but instead moves into bands set up by officials of the People’s Bank of China (PBOC). Last week, they doubled the size of the ruble trading limit, allowing the Russian currency to fall sharply.

The ruble has already lost more than 20% Its value against both the dollar and the euro since the start of the war in Ukraine. By allowing the Russian currency to fall against the yuan, Beijing did nothing to help Moscow.

The Russians have to pay higher fees in rubles for Chinese imports, such as smartphones and cars. Chinese phone brands like Xiaomi and Huawei are very popular in Russia and they are competing Apple (APL) And Samsung (SSNLF) To market leadership before the war.
Chinese carmakers, such as the Great Wall Motor and the Jelly Auto Occupies 7% of the Russian market, Sold more than 115,000 vehicles last year. Great Wall Motor has stopped delivering new cars to dealers in Russia because of exchange rate fluctuations.
Expansion of the trading band will allow the yuan ruble to continue to fluctuate wildly so that Chinese companies can “better understand the magnitude or trend of future exchange rate fluctuations and reduce transaction risks using hedging methods such as derivatives.” State-owned Chinese business network Reported last week.
Currently, about $ 25 billion worth of trade between China and Russia takes place in the yuan. Chinese state media Reported.

Sitting in reserves

Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Natixis, wrote in a research report on Tuesday that China’s $ 90 billion in reserves in Moscow’s yuan is the most important aid China can provide.

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About $ 315 billion – or half of the total – of Russia’s reserves have been frozen as Western countries have banned Russia from dealing with the central bank.

Russia’s Finance Minister Anton Silvanov said this week that the country wanted to use the yuan’s reserves after Moscow blocked access to the U.S. dollar and euro. Russia’s state media.

The PBOC has not yet commented on its position on the reserves.

Garcia-Herrero noted that if China allowed Moscow to convert its yuan reserves into US dollars or euros, “it would clearly help Russia’s current stalemate.” However he acknowledged that their numbers were not enough to defeat PBOC’s reputation for violating Western sanctions.

“Long-term gains moving closer to Russia do not match the impact of the sudden loss of interest in China by Western investors,” he added.

Parking of aircraft parts

Sanctions imposed by the United States and the European Union Two of the world’s largest aircraft manufacturers, Boeing (B.A.) And Airbus (EADSF), Can no longer provide spare parts or maintenance support to Russian airlines. The same is true for jet engine makers.

That is, Russian airlines may fly out of aircraft within a few weeks without frequent replacement of equipment or equipment recommended for safe operation.

Why hasn't China restrained its economy to rescue Putin?

Earlier this month, a top Russian official said that China had refused to send aircraft parts to Russia while Moscow was looking for alternatives.

Valery Gudinov, head of aviation qualification at Russia’s aviation agency, quoted Russia’s state news agency DOS as saying that Russia was looking for opportunities to acquire parts from China, including Turkey and India.

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“As far as I know … China has refused,” Goodinov was quoted as saying.

In response to CNN’s request for comment, China’s Foreign Ministry reiterated its emphasis on Beijing. In opposition to the sanctions, China and Russia will maintain “normal economic and trade cooperation.”

China and Russia formed a civil aviation joint venture in 2017 to develop a new long-range, wide-passenger aircraft to compete with Boeing and Airbus. Production of CR929 Has begun, But disagreements over suppliers caused delays. The aircraft was initially expected to be delivered to customers in 2024. But Russia has postponed the timeline from 2028 to 2029.

Freeze Infrastructure Investment

The World Bank has suspended all its plans in Russia and Belarus following the invasion of Ukraine. It has not approved any new loans or investments to Russia since 2014 and nothing to Belarus since 2020.

It is even more surprising that the Beijing-based Asian Infrastructure Investment Bank has decided to do the same. In a statement earlier this month, it said all activities related to Russia and Belarus would be suspended “due to the outbreak of war in Ukraine.” It added that the move was in the “best interests” of the bank.

Frustrated by China’s relative lack of influence over the World Bank (Washington, DC) and the Asian Development Bank (Japan will be a major power) AIIP In 2016. China also operates the headquarters and provides the head of the bank. 26.5% of the vote. India and Russia are 7.6% and 6%, respectively.
AIIB decides to suspend operations in Russia $ 1.1 billion approved or proposed loan It is now suspended with a view to improving the country’s road and rail networks.

– Hannah Richie of CNN’s Beijing Bureau and Sydney contributed to this article.

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