April 13, 2024

In the year since Russia’s full-scale invasion of Ukraine began, Moscow has been hit by unprecedented Western sanctions and shut out of much of the global economy.

But China, which has declared “no limits” to its friendship with its northern neighbor, has thrown the Kremlin an economic lifeline, tempering the impact of its banishment from the global financial system.

Here are three ways China has been propping up the Russian economy:

  1. Buying Russian energy: Total trade between China and Russia hit a new record high in 2022, up 30% to $190 billion, according to Chinese customs figures. In particular, the energy trade has risen markedly since the onset of the war. China bought $50.6 billion worth of crude oil from Russia from March to December, up 45% from the same period the previous year. Coal imports surged 54% to $10 billion. Natural gas purchases, including pipeline gas and LNG, skyrocketed 155% to $9.6 billion.
  2. Replacing Western suppliers: Russia has also been spending billions on buying machinery, electronics, base metals, vehicles, ships and aircraft from China, as detailed in a US Congressional Research Service report from last May. Chinese car brands, including Havel, Chery, and Geely, have seen their market share surge from 10% to 38% in a year following the exit of Western brands, according to most recent data from Russian research firm Autostat. In consumer electronics, Chinese brands accounted for about 40% of the smartphone market at the end of 2021. A year later, they’ve virtually taken over the industry with 95% market share, according to market research firm Counterpoint.
  3. Providing an alternative to the US dollar: After some Russian banks were cut off from SWIFT — the international messaging system that enables bank transactions — Moscow has been dropping the dollar for the Chinese yuan. Russian companies have been using more yuan to facilitate the increased trade with China. The yuan’s share of the Russian foreign currency market jumped to 48% by November 2022 from less than 1% in January, according to Russian media, citing the head of the Moscow Exchange.

 

 

Source: From CNN’s Laura He in Hong Kong

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