Daily Management Review

China Apparently Prefers Commercial Relations With West Than Russia Over Ukraine War


China's President Xi Jinping may be forced to decide to choose between a long-standing lucrative trading relationship with the West and a developing strategic connection with Moscow, following a warning from the US President Joe Biden to China of "consequences" if any aid to Russia is provided by China to facilitate Russia's invasion of Ukraine.
Following Biden's nearly two-hour video conference with Xi on Friday, the White House confirmed that sanctions against China were an option, Beijing had a lot at stake based on trade flows alone.
Reuters examined trade statistics and found that, despite developing trade links with Southeast Asia and an economy that is less reliant on trade over the last decade, China's economic interests remain significantly tilted toward Western democracies.
According to commentators, aligning with political ally Russia would make minimal economic sense for China because the US and EU still account for more than a third of total exports of China. 
"On the pure economic question, if China were to have to make the choice - Russia versus everyone else - I mean, it's a no-brainer for China because it's so integrated with all of these Western economies," said Chad Bown, a senior fellow at the Washington-based Peterson Institute for International Economics think tank who tracks China trade closely.
Qin Gang, China's ambassador to the United States, stressed on China's close ties with Russia on Sunday.
"China has normal trade, economic, financial, energy cooperations with Russia," Qin told the CBS program "Face the Nation" when asked if Beijing would provide financial support to Moscow. "These are normal business between two sovereign countries, based on international laws, including WTO (World Trade Organization) rules."
Given that China is the world's second-biggest economy and greatest exporter, targeting Beijing with the same sweeping economic penalties that have been placed on Russia may have major ramifications for the US and the rest of the globe. China's economic dependency on trade with foreign countries has dwindled as the country's economy has grown to $16 trillion in the last 20 years.
Domestic consumption and services are becoming more important in China's economy as Chinese residents become wealthier.
China, however, is still more reliant on trade than the United States, which accounts for around 35 per cent of GDP, and Japan, which accounts for 31 per cent.
Following last month's invasion of Ukraine, the affluent G7 countries formed the heart of an anti-Russia alliance, yet they still purchase more than a third of Chinese exports. That's down from over half of China's exports almost two decades ago, but it's been largely stable since Russia acquired Ukraine's Crimea area in 2014.
China's exports to the Association of Southeast Asian Nations (ASEAN) countries, with which it just signed new trade deals, have risen to nearly 15 per cent, surpassing Japan in importance. However, according to China's trade figures for January-February 2022, exports to the European Union climbed the greatest, by 24 per cent.
Since the West put sanctions on Russia in reaction to its invasion of Crimea, Russia's overall commerce with China has increased.
However, for the past 20 years, China's exports to Russia have remained between 1% and 2 per cent.
Imports from China are similar to those from many other countries, with electronics and consumer products such as telephones, computers, clothes, toys, and footwear dominating the list.
Electronics and clothes are among Russia's main imports from China. Electronics and clothes are among Russia's main imports from China.
According to UN Comtrade data, China exported 10 times as many cellphones to the United States alone in 2020, valued at $32.4 billion.
Oil dominates China's imports from Russia. Crude oil and other petroleum imports from Russia will be worth $27 billion in 2020, dwarfing all other imports from Russia, which will mostly consist of commodities such as copper, softwood lumber, liquefied natural gas, coal, metals, and ores.
Despite the fact that the US has prohibited import of Russian oil and gas, Western sanctions have not directly addressed exports of Russian oil and gas. However, China's capacity to provide trade finance for Russian oil cargoes has been limited by US-led sanctions on Russian banks that prevent dollar transactions.