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China takes advantage of the war in Ukraine to reinforce its commercial leadership

Date: March 30, 2023 Time: 11:59:08

On February 24, 2022, Putin will likely invade Ukraine as part of a “special operation” that sought to stop the Ukrainians’ rapprochement with the European Union and reverse the international defense order NATO prides itself on. One year later, the war continues to be waged and has become a strategic issue that arouses the interest of the main axes of the world economy: Russia, the United States, the European Union and China.

The Asian giant has been consolidating its position as a leader in world trade, adopting close relations with the aggressor country. In this way, China has become the country that has benefited the most from the rupture between “The West and the rest” (the West and the rest of the world), seeking to create a new international order, where the US loses its hegemony, without having to get involved in a military way beyond just showing off their ability.

The true power of China lies in its economy with the instrumentalization of industrial dependencies suffered by countries around the globe. It is not surprising then that the war between the greats has been relegated to the commercial sphere, considering that although the United States has managed to maintain itself as the world’s leading economy, China is closely following the position.

Is Ukraine a ‘proxy’ war?

Mira Milosevich, Principal Researcher for Russia, Eurasia and the Balkans at the Elcano Royal Institute, highlighted at the round table “The war in Ukraine one year later”, which had those who spoke of the Russo-Ukrainian war as a war against the West on Ukrainian territory . Starting from this base, it is impossible to ignore the important role that the US and China are playing in this conflict.

For its part, the US has managed to revitalize NATO and get closer to an EU that has become more cohesive than ever before the threat of a war that could spread across European territory. Under the Biden presidency, the country has dedicated more than 113,000 million dollars in aid to Ukraine, more than double the aid of the rest of the countries, as presented by Carlota Garcia Encina, principal investigator of the United States and Transatlantic Relations of the Real Elcano Institute, at the round table.

This money has been distributed in 4 blocks: in military aid (68,000 million dollars), in humanitarian aid, in economic aid, in internal costs of the country and in government operations. In this way, the conflict has also served the US to reinforce its role as a hegemonic power.

As for China, its role is completely at variance with that of US policy. Xi Jinping’s government has taken a much more stealthy path to gain ground as a world power against the US. Although China has not been directly involved in this war, it has shown its “excellent diplomatic and propaganda” support for Russia, as suggested by Mario Esteban, principal researcher at the Elcano Royal Institute in the report “The war in Ukraine one year later “.

Nor can economic support be ignored, since it has taken advantage of European sanctions to get hold of Russian exports at much lower prices. In this way, China and Russia have established an alliance against the democracies of the West, although in the long term they remain great rivals.

The strategic path that China is following in trade

As Esteban indicates in the RIE report, Beijing is playing its cards very intelligently, increasing its exchanges with Russia, but skillfully preventing those “actions that can be interpreted as a way of circumventing the sanctions imposed by the US and its allies,” he says. Thanks to his discretion, only six of his companies have been sanctioned with a very limited relevance.

In particular, there has been an increase in energy interest in the country under Xi Jinping’s mandate. The energy autonomy strategy that has been so expensive for the EU (which bought 40% of Russia’s gas), has allowed China to “absorb” this market at very low prices, thus softening the impact of Western sanctions on the economy of the Eurasian country.

With the measure of the West to impose an embargo on Russian crude by sea and the cap on the price of hydrocarbon and its derivatives of Russian origin, the country has found itself with a very small list of clients to whom it sells fuel. For this reason, Russian companies have been forced to offer discounts of up to 30 dollars per barrel of crude from the Urals.

China has been one of the main beneficiaries, along with India, due to its great dependence on this fuel. In this way, China imported daily up to 1.66 million barrels of crude and fuel oil last month in full economic recovery, according to data from Kpler.

How far can China go thanks to the war in Ukraine?

China has also taken the opportunity to strengthen its relationship with Russia in gas exports, specifically on February 9 the countries have signed an agreement for the supply of gas through the Far East. According to Gazprom, in the next 20 years the increase in gas consumption in China will absorb 40% of the expected global increase in this energy source.

Natural gas shipments to the Asian country exceeded daily contractual obligations by 18% last December. It should be noted that the gas pipeline “Power of Siberia”

Although the future of the war is still uncertain, China will continue to do everything possible to help Russia would imply the automatic victory of its main enemy: the United States.

Despite the outcome of the Russo-Ukrainian war, it is quite predictable that Beijing will continue to implement a circular trade strategy, reducing its dependence on the West by developing its own technological base and domestic market, while at the same time persuading other economic players. to increase the dependency of their goods with prices that leave them at a great disadvantage with the rest of the competitors.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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