Beijing also lent its full support on Wednesday to comments made earlier this week by the Chinese ambassador to Ukraine. “China will never attack Ukraine. We will help, especially economically,” Fan Xianrong said in a press release from the Lviv regional government.
Fears that Chinese companies could face US sanctions over ties to Russia contributed to an epic sale of Chinese shares last days. That crisis was reversed Wednesday when Beijing promised it would pursue policies to bolster its stuttering economy and keep financial markets stable.
Beijing and Moscow share a strategic interest in challenging the West. However, Chinese banks cannot afford to lose access to US dollars, and many Chinese industries cannot afford it be deprived of US technology.
While China is Russia’s number 1 trading partner, Beijing has other priorities. Trade between the two countries accounted for only 2% of China’s total trade volume. The European Union and the United States have much larger quotas, according to Chinese customs statistics from last year.
Here are some measures that Beijing has taken in recent weeks to distance itself from the isolated e collapse Russian economy.
dropping the ruble
The Chinese currency, the yuan, does not trade completely freely, instead moving within bands established by officials of the People’s Bank of China (PBOC). Last week, they doubled the size of the ruble’s trading range, allowing the Russian currency to drop faster.
The ruble has already lost more than 20% of its value against both the dollar and the euro since the beginning of the war in Ukraine. By allowing the Russian currency to fall against the yuan, Beijing is not doing Moscow any favors.
Sitting by reservation
The most significant help China could offer Russia is through the $ 90 billion of reserves Moscow holds in yuan, wrote Alicia García-Herrero, chief economist for Asia Pacific at Natixis, in a research report. Tuesday.
The sanctions have frozen about $ 315 billion of Russian reserves – or about half of the total – as Western countries have banned dealing with Russia’s central bank.
The PBOC has so far made no comment on its position on these reservations.
If China allowed Moscow to convert its yuan reserves into US dollars or euros, “this would clearly help Russia’s current impasse,” García-Herrero noted. However, “the reputational risk of a potential violation of Western sanctions would be a huge step for the PBOC to take and thus makes it highly unlikely,” she said.
“The long-term gains from moving closer to Russia may not match the impact of Western investors who suddenly lose interest in China,” he added.
Suspension of aircraft parts
This means that Russian airlines could run out of components within weeks or fly planes without equipment being replaced as often as recommended to operate safely.
Earlier this month, a senior Russian official said China refused to send aircraft parts to Russia as Moscow searches for alternative supplies.
Valery Kudinov, chief airworthiness of the aircraft at the Russian air transport agency, was quoted by the Russian state news agency Tass as saying that Russia will seek opportunities to procure parts from countries including Turkey and India after a failed attempt. to get them from China.
“As far as I know … China refused,” Kudinov said.
In response to CNN’s request for comment, the Chinese Foreign Ministry reiterated that of Beijing opposition to the sanctions adding that China and Russia will maintain “normal economic and trade cooperation”.
Freezing of infrastructure investments
The World Bank stopped all its programs in Russia and Belarus after the invasion of Ukraine. It had not approved any new loans or investments to Russia since 2014 and none to Belarus since 2020.
More surprising, perhaps, is the decision of the Beijing-based Asian Infrastructure Investment Bank to do the same. In a statement earlier this month, he said he would suspend all his Russian and Belarus-related activities “while the war in Ukraine unfolds.” The move was “in the bank’s” best interest, “he added.
– CNN’s Beijing office and Hannah Ritchie in Sydney contributed to this article.