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China Continuing Trade with Russia after Invasion

Within hours of Ukraine being invaded by Russia, the U.S., U.K, and EU all announced new sanctions in an unprecedented attempt to isolate Moscow from the global economy. The sanctions did not include restrictions on the purchase of Russian oil and gas, however, as these materials are significant drivers for the local economies of several EU members.  

China has stated that trade would continue as normal with both Russia and Ukraine, and does not regard the attack on Ukraine as an “invasion.” Russia is seen as a strategic partner of China, which forms the basis for its continued approval of Russian wheat imports, while Ukraine is considered a friendly partner. China currently plans to continue trade cooperation with Russia as normal in adherence to its Five Principles of Peaceful Coexistence, which state that international relations shall be retained unless China’s own sovereign borders are breached, or its own internal affairs interfered with.

In 2021, trade between Russia and China reached $146.9 billion, though Moscow and Beijing are currently trying to reach $200 billion by 2024. In order to meet this objective, both their imports and exports would have to increase by 37%, therefore any pause in economic cooperation would act as a deterrence towards this goal. China’s main import from Russia is energy, which has strengthened the ties between China and Russia over the past decade. A meeting that took place in February 2022 between Russia and China resulted in a series of deals that would increase the supply of gas, oil, and wheat from Russia.

China’s continued trade with Russia may not be enough to offset the impact of the sanctions that were put in place, however, and it is unclear whether its lift on wheat and barley imports will be a mere symbolic gesture, or if it will have a meaningful economic impact on Russia.

It is unclear what China’s next move will be, as their relationships with the U.S and the EU are also integral to the Chinese economy; in fact, the Western nations are much bigger export customers for China. Depending on how the sanctions play out, China may face a binary choice, resulting in a dilemma between maintaining ties with Western nations, or staying faithful to their strategic Russian partner.

With these events currently taking place, there may be updates on the horizon for trade compliance in imports and exports. If you have any questions about this developing situation, or if you would like any additional info, please call Allyn at 239-489-9900 or email us at sales@allynintl.com.

Contributor: Emmalee Crane


About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.

 

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