China will benefit from anti-Russian sanctions

Once Western sanctions take effect, trade flow from Moscow shifts to Chinese market

A wider range of sanctions against Russia should deepen non-dollar-denominated trade relations between Russia and China, according to Harry Broadman, a former US trade negotiator and World Bank official with experience in China and Russia. .

“The problem with sanctions, especially involving an oil producer, which is Russia, will be a leak in the system,” Broadman said quoted by Reuters.

“China can say, ‘We’re going to buy oil on the open market and if it’s Russian oil, so be it’.”

Since less severe punitive measures were introduced in 2014 following the reunification of the Crimean peninsula with Russia, China has reportedly become its main export destination.

Washington and Western countries are poised to impose a wider range of economic sanctions against Russia if Moscow escalates the ongoing conflict in the breakaway republics of Donetsk and Luhansk. The Kremlin recognized the independence of the two earlier this week.

By the follow-up decree, Putin ordered the Russian military to “ensure the peace” in the newly recognized republics, which were once considered part of Ukraine.

The recognition prompted the White House to release the “first installment” new sanctions against Russia. On Tuesday, US President Joe Biden signed an executive order meant to target “The Russian Elite and Family Members.” Biden also claimed the Nord Stream 2 pipeline project “will not advance” and that the sanctions would help”cut off the Russian government from Western funding » by prohibiting trading in its sovereign debt.

Under the decree, any institution in Russia’s financial services sector is the target of new sanctions, US officials said, saying more than 80% of Russia’s daily foreign exchange transactions and half of its trade are settled in dollars. Americans. Biden pledged to “take strong action to ensure that the pain of our sanctions is targeted at the Russian economy, not ours.”

The ruble booms, the Russian market collapses as Moscow recognizes the Donbass

However, several experts say that cutting off the $1.5 trillion economy from global trade is not an easy task since Russia is one of the world’s leading exporters of oil, natural gas, copper, aluminium, palladium and other vital products.

Biden’s announcements sent oil prices to highs not seen since 2014.

Russia accounted for almost 2% of world trade in 2020, up from 2.8% in 2013, according to World Bank data. The country’s GDP in 2020 was ranked 11th globally, between Brazil and South Korea.

According to the World Bank’s World International Trade Solution database, Russia’s reliance on trade has declined over the past 20 years. Meanwhile, its export destinations have also changed. The Netherlands was the top export destination a decade ago, due to the oil trade, but has been replaced by China. Germany’s and Britain’s purchases from Russia remained largely flat, while imports from Belarus increased.

China remains Russia’s top import supplier, with mobile phones, computers, telecommunications equipment, toys, textiles, clothing and electronic parts among the main categories. Its share of Russian imports has increased since 2014, while those from Germany have fallen sharply.

For more stories on economics and finance, visit RT’s business section


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