The United States and European Union have used Russia’s invasion of Ukraine that began on February 24 to try to isolate Moscow politically and strangle the country economically.
At the same time, Russia has strengthened its alliance with China, deepening the integration of their economies.
Washington and Brussels have created what is essentially a new iron curtain, imposing crushing sanctions aimed at devastating Russia’s economy and devaluing its currency, the ruble.
The US and European countries have pledged to ban Russian oil. Several Russian banks have been removed from the SWIFT system for financial transactions. And Western sanctions have even hit Russia’s central bank, freezing its foreign assets.
At the same time, the Joe Biden administration has sought China’s help in trying to enforce these new sanctions and pressure Russia to de-escalate – despite the fact that Washington has spent years waging a new cold war on Beijing, making unsubstantiated and politicized accusations of genocide while imposing sanctions on the East Asian giant.
The US strategy to use Ukraine as a wedge between Russia and China has not worked. Instead, the barrage of new sanctions on Moscow has had the impact of bolstering Eurasian integration of the Russian and Chinese economies.
Meanwhile, China has firmly stood with Russia. Its foreign minister, Wang Yi, referred to Moscow as Beijing’s “most important strategic partner.”
Wang denounced the United States for “acting irresponsibly on the international arena.”
China stressed that its “rock-solid” friendship with Russia is “free from interference or discord sown by third parties” – a clear rebuke of Washington’s attempt to divide them.
The U.S. met with China over three months to present intelligence showing Russia’s troop buildup near Ukraine and to urge Beijing to help avert war, U.S. officials said.
Chinese officials rebuffed the U.S. and shared the information with Moscow.https://t.co/Ngbuu9P3n1
— The New York Times (@nytimes) February 25, 2022
Russian and Chinese economies deepen integration
By making the decision to militarily intervene in Ukraine in February 2022, Russia made it clear that it is no longer concerned with trying to integrate with the West. Moscow recognizes that its future lies in Eurasian integration with China, Iran, and other Eastern powers.
Beijing has also helped Moscow weather the financial storm of Western sanctions and trade restrictions, and the two countries have strengthened their economic ties.
China lifted all restrictions on imports of Russian wheat on February 24. Russia is the world’s largest exporter of wheat, and China has gradually increased imports from its northern neighbor.
The South China Morning Post (SCMP) noted, “China could provide a lifeline to Russia’s economy after the United States and its allies imposed swift economic sanctions on Moscow.”
The newspaper added that China’s ambassador to Russia, Zhang Hanhui, said Beijing “was ‘pleased’ to see that its currency has been widely used in Russian trade, financial investments and foreign reserves, and was also looking forward to discussions about yuan settlements in bilateral energy deals.”
Russia’s state-owned bank VTB, the second-largest financial institution in the country, announced on March 9 that customers can open savings accounts in the Chinese currency, the yuan, with an interest rate of up to 8%.
VTB Bank is offering a Chinese yuan savings account with a maximum interest rate of 8%, as the Russian lender faces strict sanctions from the U.S. and U.K. https://t.co/33vqAu7Zpm
— Bloomberg Asia (@BloombergAsia) March 9, 2022
In a separate article, the SCMP reported that bilateral trade between China and Russia has increased during the Ukraine crisis, rising to US$26.4 billion in January and February, a 38.5% increase from the previous year, and the highest growth rate for these months since 2010. It did add, however, that export growth is slowing.
In response to Russia’s invasion of Ukraine, Visa and Mastercard announced they would be limiting operations in the country. So Russia is turning toward its own domestic payment system, while expanding use of a Chinese counterpart.
Moscow’s state news agency Tass published a report on March 6 revealing that various banks in Russia are already using China’s UnionPay system for financial transactions, including the state-owned Russian Agricultural Bank (Rosselkhozbank) and Promsvyazbank and the private Gazprombank and Sovcombank.
Reuters noted that more Russian banks plan to work with UnionPay, including the state-owned Sberbank, Russia’s biggest bank, as well as the private Alfa Bank and Tinkoff.
— Reuters (@Reuters) March 6, 2022
Russia has its own payment system, called Mir, which was created by the central bank in 2017, largely due to the effects of Western sanctions imposed on the country in 2014.
Tass said some national banks are considering combining these Russian and Chinese payment services, and “will possibly issue co-badged cards linking Russia’s Mir and China’s UnionPay systems that will provide the option of payment for purchases and cash withdrawals abroad.”
China’s foreign minister reaffirms ‘rock-solid’ friendship with Russia, ‘free from interference or discord sown by third parties’
The Joe Biden administration has sought to turn Ukraine into a wedge between China and Russia, and prominent Western media pundits like the New York Times’ Paul Krugman have argued that “China can’t bail out Putin’s economy.”
CNN declared that “China can’t do much to help Russia’s sanction-hit economy,” while Bloomberg prognosticated that Beijing made a “fateful choice on ties with Russia” that will supposedly come back to hurt it.
At the same time, the US government has publicly threatened to hit Chinese firms with financial punishments if they refuse to comply with Western sanctions on Russia and help Moscow get around these unilateral coercive measures.
Faced with this antagonistic strategy, China has doubled down on its support for Russia.
In a press conference on March 7, Beijing’s foreign minister, Wang Yi, declared that the Chinese-Russian partnership is “free from interference or discord sown by third parties.” This was a clear rejection of attempts by the United States and European Union to create divisions between them.
Wang said China and Russia are “each other’s most important close neighbors and strategic partners,” calling their relationship “one of the most crucial bilateral relations in the world.”
“China and Russia jointly oppose attempts to revive the Cold War mindset,” Wang stressed, warning about Washington’s drive toward a new cold war.
The Chinese foreign minister said Beijing and Moscow have a “shared commitment to ever-lasting friendship and mutually beneficial cooperation,” one that “is based on non-alliance, non-confrontation and non-targeting of any third party.”
“The China-Russia relationship is grounded in a clear logic of history and driven by strong internal dynamics, and the friendship between the Chinese and Russian peoples is rock-solid,” Wang added.
China and Russia have good energy cooperation and will continue to conduct normal trade cooperation including on oil & gas in the spirit of mutual respect, equality & mutual benefit.
— Spokesperson发言人办公室 (@MFA_China) March 9, 2022
Bejing has also forcefully condemned Western sanctions on Russia.
Foreign Ministry Spokesman Zhao Lijian stated, “China is definitely against unilateral sanctions that are not based on international law. Brandishing a sanctions baton will not bring peace and security. It will only lead to serious issues for the economy and the quality of life in the corresponding countries.”
Zhao warned, “In this situation, everyone loses. Sanctions will only intensify division and confrontation.”