Xi Jinping’s landmark BRI scheme crippled as friendly Putin relations take their toll

China should not support Russia’s actions in Ukraine says Truss

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Chinese President Xi Jinping’s decision to align China so closely with Russia now appears to have backfired following Russian President Vladimir Putin’s decision to invade Ukraine on February 24. Russia has been slapped with sanctions over the war by countries across the world from the US and the UK to Japan and Singapore. The close Sino-Russian relationship means the impact of sanctions against Russia extends to China, according to Andrew Small, a senior transatlantic fellow with German Marshall Fund’s Asia Program.

Last month he wrote that Beijing faces a “collision between the desire to keep its European ties in decent order and the complications of dealing with secondary sanctions”.

China is an important economic partner for Russia, with bilateral trade between the two nations worth around £112.69 billion.

Despite the sanctions, designed to cripple the Russian economy, its trade with China still surged in the first quarter of 2022.

From January to March, trade turnover increased 28.7percent compared with the same period last year, according to Chinese customs data.

Although Sino-Russian trade in the first quarter still grew, the war in Ukraine is still having an impact on the Chinese economy, according to experts.

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Mr Small said: “Foreign capital has started to price in a higher China risk, given the risk of its being caught up in sanctions, too — or even repeating the experience itself at some future date.”

The war in Ukraine has also had a major impact on China’s Belt and Road Initiative (BRI) to expand the country’s economic and political reach around the world.

One aspect of the huge project, unveiled by Xi in 2013, involves rail freight running from China to the EU via Kazakhstan, Russia, and Belarus on railway routes operated by the state-owned company Russian Railways.

However, Xi’s vision has been derailed by Putin’s war as foreign companies refuse to do business in Russia.

Journeys along Russian Railways lines are technically still possible, despite sanctions imposed by the US and EU.

However, trade along the routes has been hampered as foreign logistics companies have effectively suspended BRI operations in Russia.

On March 10, German logistics provider DB Schenker said it was temporarily halting land, sea and air transport to and from Russia.

The day before, logistics giant Hapag-Lloyd also announced it was no longer taking bookings involving Russia, Belarus, and Ukraine.

The chaos inflicted on China’s BRI over the Ukraine war has the potential to lose Beijing billions of dollars in trade.

However, some analysts have suggested that this is a mere blot on the landscape when compared with the reputational damage for Xi.

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Frederick Kempe, the head of the Atlantic Council, has suggested that Xi may be forced to continue his alliance with Putin in the future due to the amount of time and effort he has already put into their relationship.

He wrote last month: “Even a much-weakened Putin is better than no Putin at all for Xi, given how much the Chinese leader has invested in the relationship through more than three dozen meetings since 2014.

“The potential consequences for Xi of Putin’s ouster are so terrible that he’ll be more likely to support a peace deal at the last possible minute that would leave Putin far short of his maximalist Ukraine goals.”

Putin and Xi spoke of the strong bond between their nations at a meeting in Beijing on February 4 ahead of the Winter Olympics opening ceremony.

In a joint statement, they said: “Friendship between the two states has no limits, there are no ‘forbidden’ areas of cooperation.”

Mr Small claimed China could face severe consequences if Xi were to abandon Putin at this stage.

He said: “As a result, while the costs for China are likely to go up as the Russian invasion enters an even bloodier phase, Beijing is more likely to swallow them than to reverse position.”

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