Chinese withdraw from Russian investments in sanctioned sectors, but increased Russian oil imports

After four months of the war in Ukraine, the Chinese government’s position remains unchanged. Xi Jinping gave Moscow unequivocal political and propaganda support in his talks with Vladimir Putin, but Beijing is avoiding actions that could expose Chinese companies to sanctions, expert of the Centre for Eastern Studies (OSW) Dr Michał Bogusz assessed in an interview with PAP.

– The Chinese are very cautious and withdraw from Russian investments in sanctioned sectors, but they have increased imports of Russian oil and are taking over assets in Russia, which were sold off by Western companies withdrawing from this market, Bogusz noted.

Before the invasion, the leaders of China and Russia declared friendship “without borders”, and even after the invasion began, Chinese diplomacy praised the broad prospects for cooperation between the two countries. Even in the face of reports of atrocities against Ukrainian civilians, Beijing has not condemned the aggression, it describes the sanctions imposed on Moscow as illegal, and the Chinese media mainly report the Russian narrative.

– Above all, political and propaganda support for Moscow has not changed. The emerging contradictions and disputes in the West about the further strategy and fate of the war are even an indication for the PRC leadership that the Western coalition is beginning to feel war fatigue and Russia can still resolve the conflict in its favour. And not only militarily in Ukraine, but also to force the West to make concessions in the sphere of security in Europe, OSW expert believes.

According to observers, the Chinese authorities are so far not trying to help Russia circumvent the restrictions, and according to sources in the US daily Washington Post, Beijing has at least twice denied Moscow economic support for fear of sanctions.

– We understand the difficult position (of Moscow), but in this dialogue we cannot ignore our own situation. China will always act in the best interests of the Chinese people,” a Chinese official with knowledge of the Sino-Russian talks told the newspaper. The “WP” interlocutors did not reveal what specific assistance Russia was asking for.

– The PRC is avoiding actions that could expose Chinese companies to sanctions, but at the same time, as far as conditions and economic calculus allow, Russian oil imports have increased and Chinese companies are taking over assets in Russia, Bogusz assessed.

– Certainly in sectors covered by sanctions the Chinese are very cautious and have withdrawn from several investments, but in other sectors they take advantage of the opportunity and take over the market from Western companies,” the expert noted, giving as an example the sale to a Chinese consortium of Russian RE Trading OOO, previously owned by Polish clothing chain LPP, which closed its shops in Russia after the outbreak of war.

In his opinion, such actions by Chinese companies can mitigate the effects of sanctions in Russia, while at the same time bringing it even closer to China and helping the Chinese get richer by acquiring investments at a reduced price.

– It can be assumed that the longer Russia’s war and isolation continues, the more its dependence on China will grow. However, we are only at the beginning of this process – stressed the OSW analyst.


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