Ukraine crisis: Beijing unlikely to ‘save’ Moscow from Western sanctions
Like in the case of Crimea, China will not recognise the two breakaway republics in Ukraine’s Donbass region. It cannot make up for Russian gas supplies to Europe. Beijing is still reluctant to follow the Kremlin in its de-dollarisation efforts. For the Chinese, the rich markets of the United States and Europe are too important.
Rome (AsiaNews) – It seems quite improbable that China can save Russia from the impact of tough Western sanctions imposed over Moscow's aggressive actions against Ukraine. This is not evident for now. The soft punitive steps taken yesterday by the United States, the European Union, the United Kingdom and other Western powers against Russia after its recognition of the separatist republics (Donetsk and Luhansk) in the Ukrainian Donbass are not worrying the Kremlin.
Things would change if Russia engaged in military action on Ukrainian territory. As announced, the Western bloc is ready to respond with tougher sanctions such as excluding Russia from the dollar and the US-controlled Swift international payment system. Bans on Russian banks from operating in Western financial markets are also being considered, as are restrictions on the sale of high-tech products, especially microchips. But the most powerful weapon would be blocking Russian gas and oil, Moscow's main source of revenue.
Vladimir Putin's latest move has created some embarrassment in Beijing. Like in the case of Russia’s annexation of Crimea in 2014, the Chinese government will not recognise the breakaway republics in Ukraine’s Donbass region.
According to several analysts, China is also not likely to challenge Western sanctions against the Kremlin, but will seek to help its Russian "quasi-ally" indirectly; one example is the deal signed last Friday for China to buy coal from Russia.
For Beijing, help in the energy field appears to be the most effective way to mitigate the impact of Western restrictions on Russia. In early February, on the eve of the Beijing Winter Olympics, the two countries agreed to add 10 billion cubic metres (bcm) of Russian gas sales per year to China for 10 years.
However, in the event that Russian gas sales to Europe are cut off, China will not be able to make up the difference and Russia will suffer losses, at least in the short and medium terms. In 2021, European countries bought 168 bcm of gas from Russia compared to China’s 16.5 bcm.
Heavy dependence on the sale of raw materials to China threatens to frustrate Moscow's attempts to modernise its economy, which largely resembles that of a developing country. Despite statements of closeness and strategic cooperation between the two countries (in opposition to the US and the West), Russia is unable to diversify trade with its Chinese partner.
As the South China Morning Post points out, for instance last year Russian agricultural exports to China amounted only to US$ 3.5 billion, far below US$ 52.8 billion in energy sales.
The Russians and the Chinese have inked new energy contracts in euros, a way to reduce their trading relationship's dependence on the dollar. However, this move could expose Moscow to European sanctions. As much as the Kremlin has reduced the use of the US currency in transactions with China in recent years, it still remains vulnerable.
According to the Atlantic Council, 65.3 per cent of Russian exports to China in 2020 were paid in euros and 22.7 per cent in dollars; however, 60 per cent of Chinese exports to Russia were in dollars.
Beijing is urging the parties to find a diplomatic solution to the Russian-Ukrainian crisis. It is clear that Chinese leaders find it hard to choose between Putin and the rich markets in the US and Europe. In 2020, the first year of the pandemic, trade between China and the EU topped US$ 646 billion and US$ 583,7 billion with the US. Trade with Russia was just over US$ 102 billion.
In light of this, one may wonder what strategic advantage could lead Beijing to accept immediate painful losses in order to openly side with Putin against the West.