“The war in Ukraine is actually showing the limits in the Russia-China relationship. The relationship with no limits actually has limits.” ~ Timothy Ash, a senior emerging market (EM) sovereign strategist at BlueBay Asset Management 🇺🇦💙💛🇺🇸
#Repost@kyivindependent_official with @use.repost . . . Chinese banks are shutting down transactions with Russia over worries about losing access to the U.S. dollar and being cut off from the international financial markets, experts told the Kyiv Independent.
The U.S. issued an executive order in December 2023 warning that it would sanction any foreign financial institution supporting companies supplying goods to the Russian military.
Washington didn’t initially follow through with its threats but has recently amped up its aggression towards secondary sanctions, leading to China scaling back its business with Russian parties.
“(The U.S.) is saying ‘you are going to have to choose – do you want access to the U.S. dollar and the international financial system, or do you want to do a small amount of business with Russia,” Tom Keatinge, director of the Center for Finance and Security, a London-based research group, told the Kyiv Independent.
Trade between Russia and China has surged since the start of Russia’s full-scale invasion of Ukraine as Beijing exploits Moscow’s vulnerabilities. China has been buying up cheap Russian commodities, like oil, and has also become the leading source of dual-use goods for Russia that feeds its defense industry.
“The war underlines Russia’s dependency on China,” said Timothy Ash, a senior emerging market (EM) sovereign strategist at BlueBay Asset Management.
But Beijing is keen not to rock the boat when it comes to its relationship with the U.S., its top trading partner, according to Ash. China is also careful that the war doesn’t impact global markets, he added.
Despite Beijing and Moscow announcing a “no limits” partnership at the Beijing Winter Olympics in February 2022, China is walking a tightrope between the U.S. and Russia. It is treading carefully not to let the war tip the balance.
“The war in Ukraine is actually showing the limits in the Russia-China relationship. The relationship with no limits actually has limits,” said Ash.
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