As the war between Russia and Ukraine rages on, China is quietly distancing itself from Moscow as its economy faces sanctions from the US and its allies.
Last month, both countries announced that their friendship had “no borders.” That was before Russia started its war in Ukraine.
Beijing has refused to condemn Russia’s attack on Ukraine but wants to avoid being swayed by the sanctions, which it has repeatedly denounced as an ineffective way to resolve the crisis, CNN reported.
Fears that Chinese companies could face US sanctions over ties with Russia had contributed to an epic sell-off in Chinese stocks in recent days. That slump was reversed on Wednesday as Beijing vowed to pursue policies to boost its faltering economy and keep financial markets stable.
US officials told CNN that they have information that suggests China has expressed some openness to providing requested military and financial assistance to Russia. China dismissed this as “disinformation”.
Also Read | Putin to hold nuclear evacuation drill; Family move to Siberia: reports
Citing analysts, CNN reported that China is trying to strike “a delicate balance” between rhetorically supporting Russia without further angering the United States.
Chinese banks cannot afford to lose access to US dollars, and many Chinese industries cannot afford to be deprived of US technology.
The most significant help China could offer Russia is the $90 billion worth of reserves Moscow holds in Chinese yuan, Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, wrote in a research report, according to CNN .
It was further reported that Russia’s Finance Minister Anton Siluanov said this week that the country wants to use yuan reserves after Moscow was denied access to US dollars and euros.
After the invasion of Ukraine, the World Bank halted all of its programs in Russia and Belarus. It had not approved any new loans or investments to Russia since 2014 and none to Belarus since 2020.
Even more surprising, according to CNN, is the Beijing-based Asian Infrastructure Investment Bank’s decision to do the same. In a statement earlier this month, it said it would suspend all of its activities related to Russia and Belarus “while the war in Ukraine unfolds”. The move is “in the best interest” of the bank, she added.
The AIIB’s decision to suspend operations in Russia means $1.1 billion in approved or proposed loans to improve the country’s road and rail network are now on hold, CNN reported.
On Friday (local time), US President Joe Biden held a video call with his Chinese counterpart Xi Jinping and warned China of the implications and consequences if Beijing provides material support to Russia.
“President Biden detailed our efforts to prevent and respond to the invasion, including by imposing costs on Russia. He described the impact and consequences of China providing material support to Russia in its brutal attacks on Ukrainian cities and civilians,” a White House readout said.
Meanwhile, the two leaders agreed that a diplomatic solution to the current conflict in Ukraine is the most desirable outcome at this point.
Comments are closed.