06/30/2022, 09.39
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Beijing's pro-Russian neutrality

by Vladimir Rozanskij

The Chinese continue to buy Russian oil at discounted prices, financing Putin's war against Ukraine. There are doubts, however, that China will defy secondary sanctions from Europe and the U.S., its main trading partners. Russian expert: only "rhetoric" from Brics meeting.

Moscow (AsiaNews) - After four months of Russia's war in Ukraine, China has overtaken Germany as the largest buyer of energy products from Russian companies. In May, China and India bought 2.4 million barrels of crude oil per day, or half of all seaborne crude oil exports from Russia. The sale to the two Asian giants allowed Moscow to partly compensate for the gaps left by Europe, which was until yesterday Russia's main energy export market.

In this way Beijing has also become the main economic sponsor of the Russian war, thanks to its insatiable appetite for cheap Russian oil. Now the Kremlin expects further compensation in the supply of advanced chips and semiconductors. China has indeed been able to diversify its reserves, and India has also gained from re-exporting refined petroleum products, starting with gasoline and diesel. So far, Moscow's Asian friends have avoided secondary sanctions, although U.S. President Biden has sanctioned five Chinese firms in recent days.

Indeed, the EU ban on Russian oil purchases remains only partial for now, but further tightening of measures is expected by the end of the year. At the recent virtual meeting of Brics (Brazil, Russia, India, China and South Africa) leaders, Xi Jinping condemned Western sanctions, which he called "weaponizing" the world economy, and the group proposed itself as an alternative to the G7 meeting in Germany on the same days.

At the Brics summit, Russian President Putin proudly announced that "effective alternative mechanisms for international financial transactions will be worked out," and thus "the question of the creation of an international foreign exchange reserve on the basis of Brics currencies arises." This was, in fact, the main Russian goal in the "special operation."

To what extent Russia can actually rely on "non-Western" markets and partners, starting precisely with China and India, is the big question to be evaluated in the coming months and years. Maria Šagina, an associate at the International Institute for Strategic Research, explains that one continues to hear "that Russia and China have formed a borderless alliance, and in fact Xi has repeatedly reiterated support for bilateral cooperation with Moscow."

The expert points out, however, that Chinese words "often differ greatly from deeds." This was seen back in 2014 with the annexation of Crimea, when China made big promises, but only to gain from Russia's isolation. The same is happening now with the lowered oil prices; quite another thing will occur with the expansion of secondary sanctions.

The European embargo on Russian oil does not come into effect until December 5, and these months are therefore an opportunity for Beijing and Dehli to gain the maximum benefits; it will be difficult for China to maintain a neutral stance for long and at the same time one of solidarity with Russia, which expects far more support from Asia, especially in the financial and technology fields. "China's private sector is extremely guarded and tries to avoid any risk," Šagina confirms, "and is very dependent on the U.S. dollar, so it will try to keep as far away as possible from Russian companies under sanctions."

In 2014, the Export-Import Bank of China and the Chinese Development Bank had participated in financing some Russian projects, such as one with Novatek for natural gas production. However, cooperation has not developed in other fields. Šagina explains that the Brics summit was largely a "rhetorical summit," as was the G7 meeting to some extent: the real balances will be demonstrated over time.

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See also
Brics summit: Xi attacks the West (without little to show)
24/06/2022 12:42
Sanctions lead to collapse of Russian economy
09/03/2022 10:12
The cost of war for Moscow
01/03/2022 09:30
Jakarta sets up task force to fight energy mafia
Jakarta: Endless queues for cooking oil that Ukraine no longer exports
19/03/2022 12:53


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