Beijing Wednesday also fully support the Chinese ambassador to Ukraine’s remarks earlier this week. “China will never attack Ukraine. We will offer help, especially in the economy,” said Fan Xianrong in Lviv regional government’s press release.
Concerns about Chinese companies may facing US sanctions because relations with Russia led to large-scale Chinese stock market sell-off in recent days. On Wednesday, when Beijing pledged to pursue policies to boost the sagging economy and maintain stability in financial markets, this decline was reversed.
Beijing and Moscow share a strategic interest in challenging the West. However, Chinese banks cannot afford to lose access to dollars, nor can many Chinese industries be stripped of American technology.
While China is Russia’s No. 1 trading partner, Beijing has other priorities. The trade volume between the two countries accounts for only 2% of China’s total trade volume. According to statistics from Chinese Customs last year, the EU and the US share is much greater.
The following are some of the measures taken by Beijing in the past few weeks, with the isolation and shaky Russian economy keep their distance.
depreciate the ruble
China’s currency RMB is not completely free trade, but moved within 中国人民银行 (PBOC) official set intervals. Last week, they will be among the ruble trading band has doubled, making Russia the currency fall faster.
Ukraine since the outbreak of the war, the ruble against the dollar and the euro exchange rate has depreciated by more than 20%. By allowing the devaluation of the Russian currency against the yuan, Beijing no benefit to Moscow.
Sitting on reserves
Alicia García-Herrero, chief economist for Asia Pacific at Natixis, wrote in a research note on Tuesday that the most important help China can offer Russia is the value held through Moscow USD 90 billion in RMB reserves.
Because Western countries prohibit dealings with the Russian Central Bank, sanctions froze about $ 315 billion of reserves in Russia – account for about half of the total reserves.
So far, 中国人民银行 not yet made any comment on its position on these reserves.
If China allows the yuan to Moscow reserves into dollars or euros, “This has clearly contributed to Russia’s current impasse,” Garcia – Herrero said. However, the “reputational risk may violate 中国人民银行 Western sanctions will be a big step, and therefore highly unlikely,” she said.
“The long-term benefits of being close to Russia may not be comparable to the impact of Western investors’ sudden loss of interest in China,” she added.
Seize aircraft parts
This means that Aeroflot might run out of parts within a few weeks, or fly a plane without replacing the equipment in accordance with the recommendations of security operations frequency.
Earlier this month, a senior Russian official said China’s refusal to transport aircraft parts to Russia, because Moscow is looking for alternative supplies.
Russian state news agency ITAR-TASS quoted Russian Air Transport Agency airworthiness director Valery Kudinuofu as saying that Russia will look for opportunities, but failed to get spare parts from China sourcing parts from countries including Turkey and India.
“As far as I know … China refused,” Kudinov was quoted as saying.
In response to CNN’s request for comment, China’s foreign ministry reiterated Beijing’s stance against sanctions and said China and Russia would maintain “normal economic and trade cooperation.”
Freeze infrastructure investment
After the invasion of Ukraine, the World Bank has stopped all projects in Russia and Belarus. Since 2014, it did not approve any new loans or investments in Russia since 2020, did not approve any new loans or investments in Belarus.
Even more surprising is that Beijing-based Asian Infrastructure Investment Bank also made the same decision. In a statement earlier this month, which means that all activities, “With the commencement of the war in Ukraine”, it will pause with Russia and Belarus related. It added that the move in line with the “best interests” of the bank.
— CNN Beijing and Sydney’s Hannah Ritchie contributed to this article.