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Will China Fund Moscow’s War Chest And Provide Banking Services To Its Businesses?
Beijing still wants to count on Moscow as a long-term strategic partner to fend off America's global influence | Alexei Druzhinin/Sputnik/AFP
Politico: Will China fund Moscow’s war chest as Western sanctions bite?
Beijing has limited policy options to deal with a partner at war. China is the only major economy that still has a direct line to a fast-isolated Russia — but the pressure is increasing on Beijing to change that.
Just weeks after the two countries signed a "no limits" partnership agreement, China now has no choice but to recalibrate its position on bilateral trade and macroeconomics with Moscow, after President Vladimir Putin launched an unprovoked war on Ukraine.
While Beijing still wants to count on Moscow as a long-term strategic partner to fend off America's global influence, it will no doubt be wary of the international reaction if it opts for measures that could be interpreted as an endorsement of Putin's aggression, according to experts.
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WNU Editor: I put a post about a month ago that Moscow was warning all businesses to transfer their assets out from the West as tensions and threats were increasing. China was one of the places that was recommended to shift their monies/business. I suspect that this Russia - China arrangement was arranged a few months ago, and I know many Russian businesses followed these recommendations in the past month. Many also did not, but that is another story.
As for what is China's position. They are studying the situation very closely, and not in a good way. They saw the US basically seize/steal $650 billion in Russian assets this weekend. That Russia sold natural gas, oil, and other resources in good faith, and in return received treasury bills and other financial instruments as payment. But on one US Presidential signature, those funds are now owned and controlled by the U.S..
China has about 3 trillion in such funds abroad. If this can happen to Russia, it is a given that this can happen to China. Some in the U.S. already want this to happen because they blame China for the Covid pandemic, and they want compensation.
So what is next?
China and Russia have been talking for a few years about working together to provide an alternative to the U.S. dollar as the world's reserve currency. When the Russia-Ukraine war is over I expect both countries will be making a major push them to make this happen sooner rather than later. Here is a good read on what may happen next .... Fiat Currency Zero Hour: Russia And China Might Collectively Challenge The Dollar's Reserve Status.
Update: The Chinese are being careful. They regard having good ties with Russia a national security priority, but they are not ready for Western sanctions .... China says it 'deeply regrets' Russia’s war in Ukraine in latest sign Beijing's support of Putin is cracking (Daily Mail).
Update #2: He is right. There will be many ways for Russian banks and businesses to circumvent sanctions .... Jamie Dimon Warns SWIFT Sanctions May Bring Unintended Consequences, Can Be Circumvented (Zero Hedge).
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