Recently, a sudden change in the relationship between China and Russia has caused major disruptions in their economic ties. An anticipated natural gas pipeline agreement has hit a deadlock, and Chinese businesses, such as the Industrial and Commercial Bank of China (ICBC), Alibaba, and video surveillance system manufacturer Hikvision, have made decisions to distance themselves from Russia.
This unexpected shift comes shortly after Russian President Vladimir Putin’s visit to Beijing, where he faced a surprising coolness from Chinese President Xi Jinping. Reports and analysis suggest that historical lack of trust between China and Russia, coupled with pressure from Western countries, may have influenced China’s decisions to betray previous alliances with Russia.
The United States has also taken strong actions against any third-party financial institutions assisting Russia to circumvent sanctions. ICBC’s refusal to settle in Chinese Yuan with Russia has temporarily halted about 80% of trade settlement transactions, significantly impacting Russia’s wartime economy.
Chinese businesses are now redirecting their activities to other countries due to the implications of severed financial ties with Russia. This sudden financial distancing from Russia aligns with recent pressures from the US and the European Union.
The G7 countries and the EU are currently discussing strategies to pressure banks aiding Russia to evade sanctions at their upcoming summit. Additionally, concerns have been raised about China’s potential contributions to supporting Russia behind the scenes, particularly in providing military goods and financial assistance, which could pose a threat to European allies.
As tensions escalate between China, Russia, and the West, industries like e-commerce and surveillance technology are also affected. Alibaba’s international platform, AliExpress, has stopped accepting payments in the Russian ruble and halted shipments to Russia, while Hikvision abruptly exited the Russian market without prior notice, leaving customers and partners in disarray.
The stalled negotiations between China and Russia over the Power of Siberia 2 natural gas pipeline deal further highlight the complexities in their relationship. While both countries express political will to reach commercial agreements, significant disagreements on pricing and supply terms have hindered progress in vital energy cooperation.
Historically, the deep-rooted lack of trust between China and Russia has been evident in their interactions, with instances of betrayal and opportunism playing out repeatedly. Analysts and scholars in Japan also echo similar sentiments, describing the China-Russia relationship as one of mutual deceit and distrust.
From the Sino-Soviet split in the 1960s to the current geopolitical landscape, the dynamics between China and Russia have been influenced by ideological differences, strategic interests, and shifting international alliances. The intricacies of their relationship continue to shape global dynamics and strategic calculations, with recent events underscoring the complexities and uncertainties in this pivotal geopolitical landscape.