Advertisement
China-Russia relations
OpinionComment
Danil Bochkov
Danil Bochkov

Opinion | How China and Russia are growing even closer, economically and militarily

  • Not only is trade expanding between the two economies, they are moving to reduce US dollar exposure, as Russia continues to combat Western sanctions
  • The recent Vostok 2022 drills and the remarks of Beijing’s No 3 official on his visit to Russia are also signs of closer ties

Reading Time:4 minutes
Why you can trust SCMP
37
Illustration: Craig Stephens
Danil Bochkov
The G7 finally forged ahead and agreed to impose a cap on the price of Russian oil on September 2. Moscow rushed to retaliate by warning it would halt oil deliveries to the states implementing the measure. To reinforce the message, Russia on September 5 vowed not to resume gas deliveries to Europe – originally stopped owing to technical issues with the Nord Stream 1 pipeline – unless the sanctions are lifted.
Advertisement
As I argued earlier, geopolitics now trumps economics. However, this does not seem to apply to Russia’s relations with friendly states such as China and India, which have been eagerly stepping up energy imports from Moscow.

As the most recent customs data indicates, for the first eight months of 2022, Russian exports to China grew by 50 per cent to US$72.9 billion (energy commodities traditionally constitute more than 75 per cent of Russian deliveries to China), while imports from China increased by 8.5 per cent to US$44.2 billion; clearly, Russian energy deliveries are a key factor in the record increase in bilateral trade. China accounted for 25 per cent of Russia’s total imports in 2021, while in 2002 it had just a 5 per cent share.

Along with expanding trade, Moscow and Beijing are seeing closer relations in other areas. On September 1, it was reported that Moscow is considering purchasing US$70 billion in yuan and other “friendly” currencies to prevent the rouble from surging further. Such a plan marks a shift from the decades-long economic policy of accumulating savings in US dollars and euros, which proved ineffective for Russia when US$300 billion of its foreign reserves was frozen around late February.

Months after Russia’s expulsion from the Swift payments alliance for banks, leading Russian banks have recently bounced back, with one of them, VTB, launching money transfers in yuan. Last week, Russian energy giant Gazprom announced that it would move its gas contract with China to yuan and roubles, in a move that is believed will help reduce US dollar exposure, and therefore vulnerability to American manipulation, for both economies.
A gas treatment facility at Gazprom’s Chayanda oil and gas field on May 12. Photo: Tass/Abaca Press/TNS
A gas treatment facility at Gazprom’s Chayanda oil and gas field on May 12. Photo: Tass/Abaca Press/TNS

During a plenary session of the Eastern Economic Forum in Russia’s eastern city of Vladivostok last week, President Vladimir Putin made a point of highlighting the independence of Sino-Russian relations from the West. Specifically, he noted that China would pay Gazprom half in roubles and half in yuan.

Advertisement
Advertisement