Seen from China, Russia is a 'supermarket' for raw materials where not to invest
This follows Putin's aggression against Ukraine. China is buying Russian oil and gas at discounted prices but not investing in Russia under its Belt and Road initiative. With its economy struggling, Beijing wants to avoid secondary sanctions from the West. No Chinese weapons and ammunition are being sold to Russia.
Beijing (AsiaNews) – For China, Russia after its aggression in Ukraine is a supermarket of raw materials where not to invest.
Beijing is helping the Kremlin, but carefully protecting its own interests, which do not coincide much with Moscow’s, despite joint declarations of “unlimited” anti-Western friendship.
China is buying more Russian gas, oil and coal at discounted prices, and is paying them with is own currency, to get around Western sanctions.
On Monday, the yuan became the most traded foreign currency on the Moscow Stock Exchange, surpassing the dollar.
However, this will certainly not challenge the dollar-based world financial system, one of the things at stakes in the power struggle between China and the United States.
Under the existing SWIFT international payments system, the yuan maintained is fifth position in global transactions with a 2.3 per cent share in August. As a reserve currency, it occupies a similar place with 2.9 per cent, this according to the International Monetary Fund.
This is still far from the dollar, which has never been so strong in decades. High inflation, favoured by rising energy prices, and the geopolitical chaos created by Vladimir Putin are driving big investors to take refuge in the US currency.
In the first eight months of 2022, Sino-Russian trade grew by 31.4 per cent on an annual basis, to reach US 117.2 billion (€118.65 billion).
However, for the Kremlin, this does not make up for the loss of European markets. In 2021, trade between Russia and the European Union stood at US$ 253.4 billion (€257.5 billion) compared to more than US$ 147 billion ((€148.4 billion) with China.
While more than 1,200 Western firms have left Russia or restricted their activities, at least 41 Chinese companies have remained in the country, reports Investment Monitor.
Some Chinese banks, such as the Commercial Bank of China, have had to shut down their activities in Russia after it was cut off from the world banking system.
China provides Russia raw materials, but is not supporting Putin with investments and credits.
Direct Chinese investments to Russia under the Belt and Road banner have dropped to zero this year, whereas they reached US 17 billion between 2013, the year xi Jinping launched the new Silk Roads, and December 2021.
The Chinese president does not like Putin's military adventurism. Beijing is lukewarm in its political support for the Kremlin's war while trying to avoid the limelight.
The Chinese fear secondary sanctions from the West, which would damage their struggling economy.
Beijing’s caution is also evident on the military level. The Russians have ammunition problems and it appears that they are not getting any supplies from China, as the United States pointed out several times.
To overcome this, the Russian military is resorting to Iranian drones and North Korean ammunition, as well as using old S-300 surface-to-air missile systems.
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