China’s exposure to the Russia sanctions — Editor’s Note for Friday, March 4, 2022
A note for readers from Jeremy Goldkorn.
Dear reader,
As Russia’s economy teeters under the West’s surprisingly unified and brutal sanctions regime, the effects are rippling out to China. Russian firms are rushing to open Chinese bank accounts and sanctions are even hitting Shenzhen’s online merchants.
Chinese banks and businesses appear reluctant to transact with Russia for fear of secondary sanctions. According to Bloomberg, two of China’s biggest commercial banks just restricted financing or purchases of Russian commodities.
So far, China’s direct exposure is limited as Russia is still a small portion of China’s total trade. But in the mid-to-long term, expect two things:
- A more tightly linked Russia-China economic/technological axis as China buys more Russian energy/resources and Chinese tech fills the void left by departing Apple and Google.
- Even more signals of urgency for China’s self-sufficiency campaign.
For more on the economic implications for China, click through to this article by our business editor Chang Che, or see this thread from him on Twitter.
Our phrase of the week is: Try anything when in a desperate situation (病急乱投医 bìng jí luàn tóu yī), which some observers have used to describe electric car company NIO’s announcement that it would begin making mobile phones.
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