Trade relations between the Russian Federation and China have become complicated due to a special operation to protect the civilian population of Donbass. On Sunday, March 20, the agency reports Bloomberg.
It is noted that after the start of the special operation, Chinese buyers and creditors financing their purchases avoided the supply of coal, LNG, and crude oil from the Russian Federation. The agency believes that this may reflect the concern of Chinese companies that they may fall into the “sanction trap”.
Bloomberg recalled that on February 28, Chinese Foreign Ministry spokesman Wang Wenbin said that China does not support the use of sanctions pressure to resolve conflicts and will continue trade relations with Russia.
However, banks have since suspended funding for purchases, and traders are facing logistical problems.
According to the agency, the biggest trading opportunities may be related to energy, as Russia is the second largest supplier of coal to China after Indonesia. In addition, its gas exports have grown significantly since the Power of Siberia pipeline began operating in 2019.
“For any Chinese firm with significant overseas operations, continued access to the US financial system is more valuable than any deals it might make with Russia, although some smaller firms may be willing to take the risk,” Capital Economics said in a statement.
Rising transport costs are also a likely drag on expanding grain exports, Bloomberg reports. Russia sells wheat to more than 100 countries, but China was one of the few major markets it tried to conquer. Until recently, supplies have been limited as most Russian wheat has been banned due to fungal concerns.
Even though wheat imports were allowed again in February, it is expected that China will continue to buy from the same suppliers.
“I don’t think it’s possible to import huge volumes from new sources like Russia. They will have to pay more,” said Darin Friedrichs, co-founder and director of market research at Sitonia Consulting in Shanghai.
In addition, Bloomberg believes that for some metals, China’s dependence on Russia has only weakened in recent years, as Indonesia has become the main supplier of nickel.
The day before, Pentagon chief Lloyd Austin said that the United States had made it clear to the Chinese authorities that it was a “bad choice” to support the Russian special operation to protect the civilian population of Donbass.
On March 18, US President Joe Biden, in a telephone conversation with Xi Jinping, spoke about the consequences of possible Chinese material assistance in relation to Russia. At the same time, Chinese President Xi Jinping told the US President that he considers “collisions and confrontation” not beneficial to “any person.” According to him, interstate relations “should not develop into a situation where the parties begin to use weapons against each other.”
At the same time, the official representative of the Ministry of Commerce of China, Gao Feng, said that China opposed US sanctions against Russia. He noted that China is against unilateral sanctions that do not take into account international law, which destabilize the global market. He also stressed that the PRC will definitely take the necessary measures and protect the legal rights, as well as the interests of its companies engaged in ordinary trading activities.
On February 24, Russian President Vladimir Putin announced the start of an operation to protect civilians in the Donbass. As his press secretary Dmitry Peskov clarified then, the special operation has two goals – the demilitarization and denazification of Ukraine.
According to him, both of these aspects pose a threat to the Russian state and people. The Russian side also emphasized that it does not hatch plans for the occupation of Ukrainian territory, and strikes are carried out only on the military infrastructure of the Armed Forces of Ukraine.
For more up-to-date videos and details about the situation in Donbass, watch the Izvestia TV channel.
#Bloomberg #announced #complication #trade #relations #China #Russia