When they last met, in February in Beijing during the Winter Olympics, they declared their friendship “without limits.” Since then, Russia has sought ever closer ties with China as Europe and the United States responded to the invasion with waves of sanctions.
Beijing has been careful to avoid violating Western sanctions or providing direct military support to Moscow. According to experts, this balancing act is a sign that Xi will not sacrifice China’s economic interests to rescue Putin, who came to the summit of the Shanghai Cooperation Organization in Uzbekistan. this week as his troops retreated from large swaths of Ukrainian territory.
However, the trade relationship is exploding, in the wrong direction, as Russia desperately seeks new markets and China – an economy 10 times the size – jostles for cheap goods.
Record transaction
China’s spending on Russian goods rose 60% in August from a year ago to $11.2 billion, according to Chinese customs statistics, surpassing July’s 49% increase.
Meanwhile, their shipments to Russia rose 26% to $8 billion in August, also accelerating from the previous month.
In the first eight months of this year, total merchandise trade between China and Russia increased by 31 percent to $117.2 billion. That was 80% of last year’s total sales – a record $147 billion.
“Russia needs China more than China needs Russia,” said Keith Krach, former US Secretary of State for Economic Growth, Energy and the Environment.
“As the war in Ukraine dragged on, Putin lost friends quickly and became more and more dependent on China, whose economy is 10 times larger than Russia’s,” he added.
As for China, Russia now accounts for 2.8% of its total trade, slightly higher than 2.5% at the end of last year. The European Union and the United States have a much larger stake.
Russia’s central bank stopped publishing detailed trade data as the war in Ukraine began. But Bruegel, a European economic consultant, analyzed statistics from 34 of Russia’s top trading partners recently and estimated that China accounted for about 24% of Russia’s exports in June.
“China-Russia trade is booming because China is taking advantage of the Ukraine crisis to buy Russian energy at a discount and replace it,” said Neil Thomas, senior China analyst at Eurasia Group. Western companies have left the market.”
New dollar yuan in Russia?
Russian companies and banks are also increasingly turning to the renminbi for international payments.
For Beijing, it is the driving force behind its ambitions to make the yuan a global currency.
“Russia’s increased use of the yuan also helps advance China’s long-term goals of making the redback a global currency, to insulate itself from sanctions,” said Thomas from Eurasia Group. finance of the West and strengthen its institutional power in the field of international finance”.
For Russia, this partnership with China was “born of despair,” Krach said.
He added: “Because Russia has been severely weakened, partly due to sanctions, Putin is willing to make a deal with a predatory power, as long as it can access capital. .
Chinese companies fill the void
Chinese companies are also taking advantage of the exodus of Western brands from Russia.
Chinese cars have also flooded into Russia.
Limited in ‘no limits’ partnership
But there are also significant limits to the Sino-Russian partnership, analysts say.
Thomas at Eurasia Group said China’s failure to provide military, commercial or technological support could pose a “risk of substantial US sanctions on China”.
“Beijing will not sacrifice its own economic interests to support Moscow,” he said.
Craig Singleton, senior fellow for China at the DC-based Foundation for Defense of Democracies, said that fearing a US backlash, China has so far “steadily” refused to violate the laws. international sanctions against Russia, forcing Moscow to request military assistance from North Korea.
“Beijing’s refusal to violate U.S. and international sanctions reflects its reluctance to accept that China remains dependent on Western capital and technology to sustain its relentless development, although Xi personally tends to support Putin’s war effort,” he said.
Moreover, China’s rapid economic downturn This year will further limit Xi’s willingness to help Putin. China’s president won’t want to risk anything further destabilizing the economy just a few weeks before he ready to secure a historic third term at the Communist Party Congress.
What are the future goals?
Future relationships will likely remain strained, and China will want to keep its options open, analysts said.
“There is always distrust between the two regimes, which already see each other as rivals,” Krach notes.
The current Sino-Russian partnership is largely a “defensive” relationship, bolstered by the shared view of Beijing and Washington, said Susan Thornton, a senior fellow and visiting faculty member at Yale Law School. Moscow that NATO and the United States are a visible national security threat.”
“Russia’s war in Ukraine is not in China’s interest, but with the hostility of the West, China will not oppose Russia,” she added.
