China's Economic "Attack" on Russia amidst Western Sanctions

China’s Economic “Attack” on Russia amidst Western Sanctions

In an unexpected turn of events, China has initiated what seems like an economic assault on Russia, diverging from the conventional military or weapon-based confrontations often seen in geopolitical tensions. Several major Chinese banks have opted to restrict their operations with Russia, as reported by US media outlet Newsweek.

This move coincides with Moscow facing a widespread economic embargo from Western nations due to its actions concerning Ukraine. The implications of this embargo have prompted Chinese entities to reassess their financial ties with Russia, leading to limitations in access to services or even severing ties altogether.

Among the notable actions, China UnionPay, a prominent payment system often touted as an alternative to MasterCard and Visa, has retracted to reduce its exposure to Russia. Additionally, the Commercial Bank of Zhejiang Chouzhou, a significant institution used by Russian exporters, has suspended all transactions for clients from Russia and Belarus.

Experts cited by Newsweek predict that the ramifications of these actions may become evident after the Chinese New Year period, which typically witnesses reduced economic activity in China. However, the Chinese Ministry of Foreign Affairs is yet to provide a response to these developments.

Contrary to these reports, Russian Deputy Foreign Minister Andrey Rudenko has vehemently denied any issues in the economic relations between Moscow and Beijing. Rudenko reassures that the economic ties between both nations remain robust and capable of resolving various challenges.

This sentiment echoes statements made by Kremlin spokesperson Dmitry Peskov, emphasizing ongoing dialogues between Moscow and Beijing to address emerging issues. The burgeoning trade relationship between Russia and China has grown tighter in the aftermath of Western sanctions against Russia.

Trade volume between the two nations surged to US$240.1 billion in 2023, marking a 26.3% increase from the previous year. Furthermore, both countries are actively pursuing de-dollarization efforts through the BRICS economic pact, aiming to reduce reliance on the US dollar.

Highlighting the gravity of the situation, Russia’s Central Bank revealed that over a third of Russia’s imports and exports with China are now settled in yuan. This signifies a significant shift in global economic dynamics and underscores the escalating pressure on Russia amidst Western sanctions.

As Russia navigates these challenges, it seeks to mitigate the impact of Western sanctions by strengthening its trade ties with China. However, experts caution that the restrictions imposed by Chinese banks could have significant long-term consequences, necessitating careful consideration of future actions.

The decisions made by Chinese banks underscore the severity of international pressure on Russia, prompting Moscow to explore solutions to address its increasingly challenging economic landscape. As geopolitical tensions persist, the dynamics between Russia, China, and the Western world continue to evolve, shaping the future of global economic relations.