According to the White House, China’s commerce with Russia is insufficient to counterbalance the impact of US and European sanctions on Moscow.

In the hours following Russia’s invasion of Ukraine on Thursday, the United States, United Kingdom, and European Union imposed additional sanctions aimed at isolating Moscow from the global economy. The broad measures did not include any restrictions on purchases of Russian oil and gas, which are important drivers of the local economy.

China’s foreign ministry said Thursday in Beijing that trade with Russia and Ukraine would remain “normal,” and that the attack would not be called a “invasion.” Meanwhile, Russia’s wheat imports have been authorised by the customs service.

China and Russia have a far smaller part of the global economy than the Group of Seven countries, which includes the United States and Germany. As a result, China “cannot hide” the impact of the penalties, according to US Press Secretary Jen Psaki, who spoke to reporters late Thursday in Washington.

According to World Bank figures, China accounted for 17.3 per cent of world GDP in 2020, compared to Russia’s 1.7 per cent and the G-7’s 45.8 per cent.

Russia and Ukraine’s major trading partner is China. Both nations are members of the Belt and Road Initiative, a regional infrastructure development plan largely regarded as Beijing’s attempt to expand its worldwide influence.

According to China’s customs office, trade between China and Russia hit a new high of $146.9 billion in 2021, up 35.8 per cent year on year. China’s imports from Russia outnumber its exports by more than $10 billion.

To attain Moscow and Beijing’s aim of $200 billion by 2024, trade would need to rise by an additional 37% from present levels.

According to customs figures, China’s commerce with Ukraine increased by 29.7 per cent last year to $19.31 billion, a new high, and was split fairly equally between imports and exports.

“China and Russia are comprehensive strategic partners. China and Ukraine are friendly partners,” Assistant Foreign Minister Hua Chunying said Thursday in Mandarin, according to a translation by the media.

“Thus China will conduct normal trade cooperation, on the basis of [China’s] Five Principles of Peaceful Coexistence [for international relations] and the basis of friendly relationship with both countries,” she said. “This of course includes cooperation on energy.”

According to Chinese customs data, energy goods accounted for little under two-thirds of China’s imports from Russia in 2021. According to the agency, Russia is China’s largest supply of power and second-largest source of crude oil.

“China’s lifting of restrictions on Russian wheat and barley imports are clearly intended to offset the impact of sanctions, but it remains to be seen if this will primarily be a symbolic gesture or if it will have meaningful economic impact,” said Stephen Olson, senior research fellow at the Hinrich Foundation, a nonprofit organization focused on trade issues.

“China’s ability to offset the impact of Western sanctions will be determined by the scale and scope of sanctions ultimately agreed to by the U.S. and its partners,” Olson said. “At this point, the West has not yet put all its cards on the table, leaving open the option of tightening the screws later, if need be.”

On Thursday, when the invasion of Ukraine began, the Russian ruble fell to historic lows against the US dollar.

Western sanctions on Russia have fallen short of isolating the Kremlin from the international financial network SWIFT. According to SWIFT, the Chinese yuan was the fourth most-used currency for global payments in January, up from sixth position two years earlier.

On Thursday, China’s Hua slammed the United States for giving military assistance to Ukraine, claiming that Russia does not require such help from Beijing or others.

Russian President Vladimir Putin and Chinese President Xi Jinping’s ties were reinforced earlier this month with a high-profile summit in Beijing shortly before the Winter Olympics.

The two countries need to “strengthen their strategic partnership on energy” and “advance cooperation on scientific and technological innovation,” the Chinese side said in an official readout.

On the same day, Russian energy conglomerates Gazprom and Rosneft agreed to supply oil and natural gas to China through the China National Petroleum Corporation.

“As long as China continues to implement its trading relationship, those measures would already be very helpful to Russia,” said Tong Zhao, a senior fellow in the nuclear policy program at the Carnegie Endowment for International Peace, based in Beijing.

Zhao, who stressed that he is not an expert on economic problems, stated that if China took extra efforts to help Russia, “such actions are likely to be done in a very low-profile manner in order to offset the provocations observed from European and other nations.”

(Adapted from CNBC.com)

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