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China Russia: 4 ways China is quietly making life harder for Russia

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China Russia: 4 ways China is quietly making life harder for Russia

Now, with Russia’s economy under sanctions from around the world, evidence is mounting that China’s willingness and ability to aid its northern neighbor may be limited. Beijing has refused to condemn Russia’s attack on Ukraine but wants to avoid the impact of sanctions, which it has repeatedly denounced as an ineffective way to resolve the crisis.
“China is not [Ukraine] Crisis, I don’t want sanctions to affect China,” Foreign Minister Wang Yi said in a phone call with his Spanish counterpart on Tuesday.

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.

US officials told CNN on Monday that they master the information indicates that China expressed some openness to provide the required information to the Russian military and financial assistance. China will be dismissed as “false information.”
Analysts say China is trying to strike a “delicate balance” between verbally supporting Russia without further angering the United States.

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.

Russian ruble will have to pay more for smart phones and cars and other Chinese imports.Millet, Huawei and other Chinese mobile phone brands popular in Russia, and with Apple (Apple) and Samsung (SSNLF) Leadership in pre-war market.
Chinese carmakers such as Geely and Great Wall Motor, accounting for 7% of the Russian market last year, sold more than 115,000 vehicles. Due to exchange rate fluctuations, Great Wall Motor has stopped the supply of new cars to dealers in Russia.
The wider trading band would allow the yuan to keep up with the rouble’s wild swings, allowing Chinese companies to “better grasp the magnitude or trend of future exchange rate fluctuations and reduce exchange risk by using hedging methods such as derivatives.” The affiliated China Business Network Weekly Report.
According to Chinese state media, about $25 billion of Sino-Russian trade is currently conducted in yuan.

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.

Russian Finance Minister Anton Siluanov said this week that the country wanted to tap its yuan reserves after Moscow was banned from using dollars and euros, according to Russian state media.

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

U.S. and EU sanctions mean the world’s two largest aircraft makers, Boeing (Bachelor of Arts) and Airbus (EADSF)No longer able to provide spare parts or provide maintenance support for the Russian airline. Jet engine manufacturers as well.

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.

Why China won't put its economy at risk to save Putin

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.”

China and Russia formed a civil aviation joint venture in 2017 to build a new long-range wide-body airliner in a bid to compete with the Boeing and Airbus duopoly. Production of the CR929 has begun, but disagreements with suppliers have led to delays. The aircraft was initially expected to be available to customers in 2024. But Russia pushed back the timetable to 2028-2029.

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.

As the World Bank (headquartered in Washington, DC) and the Asian Development Bank (Japan is the main force) the relative lack of influence, China launched the Asian investment bank in 2016. In addition to being the headquarters, the Chinese president also provide the banks with the votes of 26.5%. India and Russia accounted for 7.6% and 6%.
The AIIB’s decision to suspend its activities in Russia means that $1.1 billion in approved or proposed loans aimed at improving the country’s road and rail network are now on hold.

— CNN Beijing and Sydney’s Hannah Ritchie contributed to this article.

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