The recent move by a Chinese bank to pause all dealings with Russian exporters underscores the complex and often precarious nature of international relations. This decision, while ostensibly a reaction to the looming specter of additional U.S. sanctions, sends a potent message that reverberates far beyond the realms of finance and trade. It is a vivid demonstration of Chinese President Xi Jinping’s influence over Russian President Vladimir Putin, signaling that China holds the reins to Russia’s economic lifeline, and by extension, its geopolitical maneuverability.
ACZ analysts believe this is meant to be a stark warning to Russia: China can, at any moment, sever Moscow from the intricate web of the Chinese banking network, leaving it adrift in a sea of economic isolation. That means Russia would not be able to buy or sell goods internationally, perhaps a fatal blow to its economy. This message, articulated through the actions of Zhejiang Chouzhou Commercial Bank, echoes loudly within the corridors of power in Moscow, reflecting a reality where political alliances and economic partnerships are subject to the whims and strategic interests of dominant players on the global stage.
Moscow’s response to this development has been a mixture of dismissal and defiance. Andrey Rudenko, Russia’s Deputy Foreign Minister, insisted that Russian businesses faced no significant impediments in settling payments with China, even as certain Chinese banks have taken a cautious step back, fearing the ripple effects of Western sanctions. This stance aims to project confidence in the resilience of the Russo-Chinese economic relationship, emphasizing ongoing trade and financial transactions that sidestep traditional Western financial systems like SWIFT, in favor of alternatives such as the Financial Messaging System.
Despite the bank’s pause on transactions, the broader economic ties between Russia and China appear to remain robust, with trade between the two nations flourishing. The burgeoning trade figures, bolstered by energy and agricultural exchanges, underscore the economic interdependence that has developed between Russia and China, an interdependence that Russia leans on heavily amidst its growing isolation from Western markets.
However, the suspension of transactions by the Chinese bank, a move likely prompted by the recent expansion of U.S. financial controls, unveils the vulnerabilities in Russia’s economic front. It illustrates how swiftly and unexpectedly the tides can turn, subjecting nations to the strategic calculations and political prerogatives of their allies. This incident illustrates the evolving relationship that has pushed Russia into the sidekick role to Xi and his Chinese Communist Party that wants to be the dominant, not just in the region, but around the world.
Moscow’s rhetoric emphasizes the notion of overcoming such hurdles through closer dialogue and cooperation with Beijing. The emphasis on settling trade in the Russian ruble or Chinese yuan is touted as a testament to the resilience and adaptability of the Russo-Chinese economic partnership, a partnership that Russia deems crucial in the face of Western economic adversity. But China is sending the subtle reminder of the master/servant dynamic, firm, but hopefully without hurting Putin’s pride too much.
One wonders about the timing. Is China about to make a demand of Russia? What is the next move?