China Keeps Russian Economy Afloat: CNN

There are three ways in which China, the world’s biggest buyer of commodities and a financial and technological powerhouse, has been propping up the Russian economy: Buying its energy; replacing Western suppliers, and; providing an alternative to the US dollar.

Photo Insert: Coal imports surged 54% to $10 billion. Natural gas purchases including pipeline gas and LNG, skyrocketed 155% to $9.6 billion.

Laura He and Michelle Toh reported for CNN Business on Feb. 26, 2023 that sanctions and Russia’s ouster from the global SWIFT banking messaging system have had an impact as Russia’s economy slid into recession in 2022, shrinking by 4.5%, according to the most recent estimate by the World Bank (WB).

Total trade between China and Russia hit a new record high in 2022, up 30% to $190 billion. Energy trade has risen markedly since the onset of the war. China bought $50.6 billion worth of crude oil from Russia from March to December, up 45% from the same period in 2021.

Coal imports surged 54% to $10 billion. Natural gas purchases including pipeline gas and LNG, skyrocketed 155% to $9.6 billion.

Russia also needs to find substitutes for its imports from Western markets, such as cars and electronics. Chinese car brands, including Havel, Chery, and Geely, have seen their market share surge from 10% to 38% in a year following the exit of Western brands.

In consumer electronics, Chinese brands accounted for about 40% of the smartphone market at the end of 2021. A year later, they’ve virtually taken over the industry with 95% market share, according to market research firm Counterpoint.

After Russian banks were cut off from SWIFT, Moscow has been dropping the dollar for the Chinese yuan.

Russian companies have been using more yuan to facilitate trade with China. Russian banks have also conducted more transactions in yuan to protect them from sanction risks.

The yuan’s share of the Russian foreign currency market jumped to 48% by November 2022 from less than 1% in January, according to Russian media, citing the head of the Moscow Exchange.

Russia briefly became the world’s third largest offshore trading hub for the yuan last July, behind Hong Kong and the United Kingdom, according to figures released by SWIFT. Since then, it has remained one of the top six markets for trading yuan — it wasn’t even in the top 15 before the Ukraine war.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic