Russia’s Best Friend: Chinese Neutrality in War with Ukraine

Russia’s Best Friend: Chinese Neutrality in War with Ukraine

China says it does not supply weapons to russia. However, it continues to be the most important economic partner of the occupying country. 

China-russia relations have improved markedly since 2014. Then, due to the annexation of Crimea and the war in the east of Ukraine, the EU imposed economic sanctions on russia. That is why russia has announced its movement towards Asia.

And these were not empty words. The countries have signed several different agreements, mostly about Chinese investment in russian extractive resources, in particular, in the profitable oil and gas sector. Recently, China has begun to invest in high-tech industries and use russian territory to transport goods to and from Europe.

In 2019, at the moscow summit, Chinese leader Xi Jinping called the president of russia his “best friend.” And just in early February this year, putin and Xi Jinping met at the opening ceremony of the Beijing Winter Olympics. As a result of the negotiations, Beijing and moscow adopted a joint statement on their geopolitical positions and signed 15 more documents. The two leaders announced a new era in relations that would “know no boundaries” and “surpass the political and military alliances of the Cold War era.” In addition, they noted that NATO should “respect the sovereignty, security, and interests of other countries… and show a fair and objective attitude to the peaceful development of other states.”

On the day of the meeting, the Chinese state news agency “Xinhua” published an article signed by the name of Putin entitled “russia and China: a strategic partnership focused on the future.”

In a few weeks, russia attacked Ukraine. Since then, China has never publicly condemned russia’s armed aggression. And in early March, Chinese Foreign Minister Wang Yi called russia “Beijing’s most important strategic partner.” Wang Yi stated that ties with moscow were “some of the most important bilateral relations in the world”:

“No matter how dangerous the international landscape, we will maintain our strategic focus and promote the development of a comprehensive Sino-russian partnership in the new era.”

On March 18, Joe Biden held a video conversation with Chinese leader Xi Jinping. Subsequently, the Chinese Ministry of Foreign Affairs stated that Beijing had expressed support for a diplomatic solution to the russian aggression, but had not directly attributed responsibility for the full-scale war to moscow. Accordingly, China tries to hold a neutral political position. It appears that Beijing’s neutral position was also voiced following the results of the recent EU-China summit.

Largest share of imports

China is russia’s largest trading partner. In recent years, it has provided more than 23% of all russian imports. China’s exports to russia in 2020 and 2021 amounted to USD 54.9 bln and 72.6 bln, respectively. In January 2022, China exported USD 7.2 bln worth of goods to russia. At the same time, for China, russia is not so important — in 2020, it accounted for 2% of total Chinese exports.

The largest categories of imports from China in russia — as well as from Germany — coincide with what russia buys the most:

Machinery and equipment — 51%

In particular, 22.3% of this group of imports accounts for mobile phones and audio and video equipment.  Another 16% is personal computers, laptops, and components. 3.2% — water heaters and heat exchangers, 2.3% — pneumatic, hydraulic, and electric hand tools, 2.5% — monitors, projectors, 2.4% — pipeline control valves: cranes, valves, parts to them. More than 2% accounts for bulldozers, excavators, rollers, loaders. 1% accounts for vacuum cleaners and cameras/video cameras.

Metals and products from them — 7.5%

40% of this group falls on products made of ferrous metals; bolts, screws, nuts, washers, various metal structures, profile pipes. Almost 16% amounts for hand tools (hammers, saws, axes, planers) and kitchen utensils (spoons and forks). 13.6% — ferrous metals (steel, rolled steel), 9.5% — aluminum and products from it.

Textile — 7%

58% of this group accounts for clothing and textile, except knitwear. Another 18% is other finished products and sets of textiles (blankets, sheets, tablecloths, towels, curtains, tulle), used clothing, rags.

Chemical industry products — 6%. 

19.6% are heterocyclic compounds containing only nitrogen heteroatoms, 9.6% — poly carbon acids, 8.2% — antibiotics, 8.1% — amino compounds, including oxygen group.

Transport — 5.8%

More than 43% are spare parts for cars and motor vehicles: gearboxes, shock absorbers, bridges, radiators, brake systems, clutch, bumpers. Another 14% accounts for passenger cars and trucks. 5% — bicycles, 3.3% — motorcycles, mopeds.

In addition, russia purchases plastic, elastic gum and rubber, furniture, lighting, toys, sports goods, footwear and accessories, and medical equipment from China.

What China buys in russia

The largest share of russia’s exports — more than 14% — also falls on China. In 2020 and 2021, russia sold goods worth USD 49.1 bln and USD 64.8 bln, respectively, to the PRC. In January 2022 — another USD 5.8 bln.

More than half of exports (67%) from russia to China accounts for oil and petroleum products. About 6% accounts for metals and metal products: 57% — copper and copper products, 28% — ferrous metals, 11% — aluminum and aluminum products.

More than 5% of exports accounts for timber and timber products. 3% each account for the group “machinery, equipment, and hardware” and the hidden section. Part of this hidden section consists of weapons, ammunition, and aircraft. However, detailed data on the distribution of the category is not available in the public domain. The rf sells the most goods from the hidden section to Germany and Turkey.

China’s position on russia’s war in Ukraine

The EU’s more severe sanctions are heavily affecting russia’s economy, and the Kremlin itself has undergone previously unheard-of pressure from the international community. Beijing began to be less willing to provide political and economic support to moscow. However, this did not prevent China from diplomatically covering its partner and promoting in the state and foreign media russia’s narratives regarding its invasion of Ukraine.

Ukraine met the so-called “pro-russian neutrality” of Beijing with little enthusiasm. At the moment, we are grateful for the fact that China does not provide direct support to russia, in particular to the military. In mid-March, russia asked China for military and economic assistance in the war with Ukraine. However, Beijing denied providing weapons to moscow.

At the same time, the russian military uses Chinese DJI drones. Various sources have reported that DJI is blocking the work of Ukrainian AeroScope complexes, while those same complexes purchased by the russian side continue to work, helping the occupiers kill Ukrainians. The Chinese company refused to comply with the request of the Ukrainian government to block all DJI products used by Russian troops until the end of the war against Ukraine.

Chinese companies in the rf

Likewise, the position of Chinese companies is ambiguous. They mostly remain in russia. The largest Chinese manufacturers of Huawei and Xiaomi smartphones continue to operate in the russian federation, although they have halved the number of products shipped there.

China automotive company Geely assesses the risks of working in russia. The manufacturer is not sure that the business will be successful even with less competition in this economically backward country. Geely has suspended its operations at a factory in Belarus, from which it exports products to russia.

The structure of the Geely Holding Group includes, among others, Geely Auto, Volvo Car Corporation, Drivetrain Systems International (DSI) — one of the world’s largest manufacturers of transmissions, London Taxi — manufacturer of famous London cabs. In February, Volvo announced the suspension of car supplies to the russian market.

Chinese Internet giant Alibaba not only simply ignores russia’s war against Ukraine (continues to operate in the aggressor country), but, according to Protocol, the company is also resorting to censorship. The profile of Ukrainian streamer Dmytro Romashko, who had more than 268,000 followers on AliExpress, was blocked for 30 days for publishing information about aggression against Ukraine.

Alibaba founder Jack Ma met regularly with putin and during his visit in 2018 announced the launch of a separate russian branch in partnership with local companies. Joint venture AliExpress Russia was opened together with VK Group, USM International, and the Russian Direct Investment Fund (RDIF).

At the beginning of 2022, russian Forbes estimated the most visited marketplace of the country “AliExpress russia” at USD 1.9 bln. In 2021, AliExpress russia sold goods worth RUB 306 bln and took 10% of the entire e-commerce market.

According to the Ukrainian Forbes, all russian partners of Alibaba have become a source of problems. The RDIF was sanctioned by the United States and Canada, Volodymyr Kyriyenko, the head of VK Group, the son of the first deputy head of the administration of russia’s president, was sanctioned by the United States. As for USM, the owner of the company, billionaire Alisher Usmanov, was included in the sanctions lists of the United States, the EU, and England.

Despite its politically neutral stance now, China remains one of the most important geopolitical players in this war. If it does decide to condemn russia’s military aggression against Ukraine, it will have the greatest impact on the occupying country because the PRC remains the largest trading partner of the rf. The loss of this connection is likely to hit russia more than all the sanctions of the West.

Valerii Pekar believes that China should not be expected to accept any of the parties to this conflict. However, the sanctions that the world imposes on russia make the rf an increasingly less attractive and risky partner. We see this, in particular, by the reaction of Chinese businesses. One conclusion to be drawn from this situation is that Ukraine should develop diplomatic relations with China, as this may become an important bargaining chip in possible conflicts with the rf in the future.