The Chinese continue to buy Russian oil, and at discount prices. In short, they are financing Putin’s war against Ukraine. However, there are doubts that China will defy secondary sanctions from Europe and the United States, its main trading partners. Russian expert: the BRICS had a merely “rhetorical” summit
Moscow () – After four months of Russia’s war in Ukraine, China has overtaken Germany and is now the main buyer of energy products from Russian companies. In May, China and India bought 2.4 million barrels of crude oil a day, that is, half of all crude oil exports that Russia makes sea. With sales to the two Asian giants, Moscow was able to compensate, at least in part, for the void left by Europe -until yesterday, the main energy export market from Russia.
In this way, Beijing has also become the main economic sponsor of the Russian war, thanks to its insatiable appetite for cheaper oil. Now the Kremlin expects further compensation in the supply of advanced chips and semiconductors. China has been able to diversify its reserves, and India has also gained from the re-export of refined oil products, starting with gasoline and diesel. So far, Moscow’s Asian friends have avoided secondary sanctions. However, it should be remembered that US President Biden has sanctioned five Chinese companies in recent days.
For the time being, the EU ban on buying Russian oil remains partial, but the measures are expected to tighten towards the end of the year. At the recent virtual meeting of the leaders of the BRICS (Brazil, Russia, India, China and South Africa), Xi Jinping condemned Western sanctions, which he described as “weapons” of the world economy, and the group proposed itself as an alternative to G7, whose meeting took place in Germany on the same days.
At the summit of the BRICS countries, Russian President Putin proudly announced that “effective alternative mechanisms for international financial transactions will be developed.” Therefore, he said, “the question arises of the creation of an international monetary reserve on the basis of BRICS currencies” – indeed, this is the main Russian objective in the “special operation”.
To what extent Russia can really trust “non-Western” markets and partners, starting with China and India, is the big question to be assessed in the coming months and years. Maria Šagina, a collaborator at the International Institute for Strategic Research, explains that it is still said “that Russia and China have formed an alliance without borders, and in fact, on several occasions, Xi has reiterated his support for bilateral cooperation with Moscow”.
The expert points out, however, that the words of the Chinese “are far from the facts.” This was already seen in 2014 with the annexation of Crimea, when China made big promises, but only to win by isolating Russia. The same thing is happening now, as it buys oil at lower prices; but the situation will be different in case of an extension of secondary sanctions.
The European embargo on Russian oil will only go into effect on December 5, so Beijing and Delhi can seize the opportunity in the coming months. For China, it promises to be difficult to maintain a neutral position and at the same time solidarity with Russia, which expects much more support from Asia, especially in the financial and technological fields. “The Chinese private sector is extremely cautious and tries to avoid any risk,” confirms Šagina. In addition, she says, “it is very dependent on the US dollar, so it will try to stay as far away from Russian companies under sanctions as possible.”
In 2014, the Export-Import Bank of China and the Chinese Development Bank (China Development Bank) had participated in the financing of some Russian projects, such as that of Novatek for the production of natural gas. However, cooperation did not develop in other areas. Šagina explains that the BRICS meeting was very much a “rhetorical summit”, as was the G7 meeting to some extent. Time will show what the real balances are.
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