Russia and China Won't Let West's 'Blackmail' Block Business Ties — Expert

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping adopted a joint statement on deepening the comprehensive partnership and strategic cooperation between their countries. The two agreed to boost the level of bilateral investment cooperation while resisting any attempts to limit their economic potential.

Russia and China will not allow the West's schemes to disrupt their trade ties, says a Chinese academic.

Key agreements concluded during President Vladimir Putin’s state visit can be seen as a “resounding statement” that Russia and China won’t let business relations between them be the subject of "blackmail or coercion from a third country,” Dr John Gong, professor of economics at the University of International Business and Economics in Beijing told Sputnik.

The identity of the unspoken “third country,” was obvious to all, said the China Forum expert, in a nod to Washington's habitual use of weaponized sanctions.

Trade between China and Russia growing very fast, with the trend set to continue, he noted.

“At the end of the day, I think China and Russia's economies are very complementary towards each other," Gong said. "And there should be a growth of economic relationship between the two sides. Not just in trade, but also in all other areas."

He added that this was shown during the current visit, when several agreements were signed by the two sides in front of President Putin and his Chinese host.

Bilateral trade between China and Russia rose to $240 billion in 2023, setting a new record, Chinese customs data showed. Trade turnover between the countries in January-March 2024 surged by 5.2 percent compared to the same period in 2023, amounting to $56.68 billion, according to General Administration of Customs China (GACC).

Ensuring that the mutual business investments between China and Russia are protected from dependency on third parties is a “tricky question,” the pundit acknowledged.

He pointed to difficulties experienced by several banks in China when dealing with Russian businesses, stressing that this was “out of the practical concern that these banks have operations in the United States as well as in the European Union countries.”

Back in April, reports indicated that the US was drafting sanctions that threatened to cut some Chinese banks off from the global financial system over Russia-related transactions.

Acknowledging that this was a “difficult problem,” Gong hoped that the new agreements reached between Russia and China could offer “a way of getting around this.”

He recalled how Iran has been subject to a raft of sanctions by Washington for over a decade.

“But that doesn't prevent the trade between China and Iran from conducting, from growing. So there are actually mechanisms to get around that,” Gong pointed out.

❗️ Vladimir Putin's statements at meeting with his Chinese counterpart Xi Jinping:

▪️ Trade turnover between Russia and China in 2023 increased by a quarter and reached $227 billion

▪️ Russia and China have accumulated a significant record of practical cooperation.

▪️ China… pic.twitter.com/ZXp6Fj6hVH

— Sputnik (@SputnikInt) May 16, 2024

Looking ahead to the changes expected in the banking sector, the China Forum expert singled out the global trend of a ditching the US dollar in trade.

Putin stressed during his meeting with Xi that today that already 90 percent of trade between the two countries is settled in their two currencies.

“I think this is not just between China and Russia. I think it's an overall trend,” the academic remarked.

“I think it is especially the case for trade between China and developing countries," Gong said. "In particular, countries that are subject to Western sanctions, including Russia, Iran, North Korea.”

“A lot of other countries are looking at this and are gradually starting to believe that a world of trade dispensable with the dollar is indeed possible,” continued the expert.

“This is particularly important for trade in oil... We all know this concept called petrodollar," he continued. "But I think we're starting to see this dam show signs of cracking. Saudi Arabia is starting to use other currencies with China in trading oil.”

The de-dollarization process is gradual, but coming from “several angles,” stressed the economist.

“There are countries who have the imperative to trade in other currencies. And also, from China's perspective, we have an additional agenda of trying to push the internationalization of the Chinese RMB, of the Chinese yuan," said Gong. "That provides additional incentive for China to use its own currency to the extent possible.”

A working group within BRICS is exploring the technical aspects of trading in other currencies, he noted. “In this case it's going to be a synthetic currency. There are interesting ideas.”

As another example, Gong mentioned that the "Hong Kong Monetary Authority is experimenting with some kind of a mechanism with a digital currency in collaboration with the Thailand Monetary Authority, with... United Arab Emirates Monetary authority, to explore mechanisms of trade settlement using digital currency among sovereign countries.”

Russia and China are leading de-dollarization efforts within the BRICS group, which unites the world's largest developing economies including Brazil, Russia, India, China and South Africa. Egypt, Ethiopia, Iran and the United Arab Emirates joined the bloc on January 1, 2024, while Saudi Arabia and 15 other countries have applied for membership.

As work continues towards trading in other currencies and bypassing the Western-based SWIFT bank transfer system, the expert ventured that the dollar's share of international trade settlements was definitely falling.

A joint statement by Putin and Xi stressed that Russia and China condemn the initiatives to seize the assets and property held in foreign states, and asserted their right to take retaliatory measures.

The West has been eyeing Russia’s assets, illegally frozen over the Ukraine conflict, for months. On a visit to Kiev this week, US Secretary of State Antony Blinken said the US was set to use powers newly granted by Congress to seize those assets and transfer them to Ukraine.

Western threats to confiscate assets stand in a stark contrast to realities on the battlefield in Ukraine, Gong suggested.

“Clearly, Kiev is not doing so well,” he pointed out. “The additional urgency of doing something about it, and the political constraints in European countries, in the United States, where the administrations are running out of money,” has led them to take extreme measures.

“It just adds a lot of doubt about the credibility of the so-called rules-based international order," Gong said. "People are going to wonder whether they should be putting their... sovereign assets into dollar assets or into euro assets. And they have to fathom the prospect that something similar could happen to them.”

Russia has warned that if such a dangerous precedent was created, it will be “a solid nail in the future coffin of the entire Western economic system of coordinates.”

Foreign Ministry spokeswoman Maria Zakharova said European Unions plans to sequester the interest on seized Russian assets for Ukraine was an "escalation of economic aggression" and warned that Russia would respond in kind.