Russia could become China’s ‘economic colony’

As many Western countries have have weaned of their dependence on Russian materials and imports since the invasion of Ukraine, China has remained Vladimir Putin’s closest major ally, continue to buy Russian fuel and widely refuse to join the international chorus of condemnation against his invasion of Ukraine. But with Russia struggling to gain ground in Ukrainea top U.S. intelligence chief called Putin’s efforts a “huge strategic failure for Russia” that helped cement a Western coalition in Ukraine’s favor and could eventually make Russia economically subordinate to another major power.

China toed the line between respect the sovereignty of Ukraine And refrain from criticizing Russia for starting the war over the past year. Chinese leaders have recently positioned themselves as peacemakers in the conflict, even deflect blame to the United States for prioritizing its own economic interests and aggravating the crisis through sanctions against Russia. But all of this could prove to support China’s economic interests.

“If you look at the reality, Russia is becoming more and more dependent on China, and in some ways it risks becoming an economic colony of China over time,” William Burns, director of Central Intelligence, said on Tuesday. Agency. an event at Rice University in Houston.

Between Western companies leave the country and multiple waves of unprecedented international sanctions, the war in Ukraine has dealt a severe blow to the Russian economy. Russian GDP fell by 2.2% to 5.9% last year, according to World Bank, IMF and OECD estimates. Its economy could contract by 2.5% extra this year in a scenario calculated by the OECD.

Russia’s situation was predicted to be much worse at the start of the war, but its economy was temporarily spared a spike in oil and natural gas prices, which had not yet been targeted by Western sanctions. Russia earned a record 93 billion euros, or $102 billion, in fossil fuel exports in the first 100 days of the war, according to a June study.

But 2023 promises to be a different story. With European embargoes on russian coal And refined petroleum products now in place and natural gas prices in Europe have fallen 86% from their peak last August, one of Russia’s last economic lifelines has been cut. China has stepped in over the past year to support Russia’s struggling energy export economy, which in 2021 accounted for 45% of the country’s federal budget. Skyrocketing purchase volumes for Russian fossil fuels were a boon for China, which was able to acquire oil at almost 40% discount And gas at 50%but keeping the relationship alive is quickly becoming a matter of survival for Russia.

Burns said Russia was becoming dependent on China for exports of “energy resources and raw materials”, in an alliance that is rapidly becoming unbalanced and a potential geopolitical concern for Putin, who risks becoming too dependent on a foreign actor. .

“It all adds up in my view to a huge focus for Putin’s Russia right now,” he said, with Putin’s faith in Chinese President Xi Jinping as an export partner representing a failure. strategy that will leave Russia with a short list of tenuous economic problems. allies for the foreseeable future.

In some ways, Russia’s dependence on China has been set in stone since the invasion more than a year ago. With Europe no longer a reliable gas export partner, Xi and Putin jointly announced plans in March to a new gas pipeline: The Power of Siberia 2, which will export natural gas to China via Mongolia, is expected to deliver at least 98 billion cubic meters of gas per year by 2030. Last year, Russia supplied China 15.5 billion cubic meters of gas.

Russia’s material dependence on Chinese buyers has not escaped Moscow officials, who see trade between the two countries as the cornerstone of Russian strategy to win the war in Ukraine and deal with the penalties, THE FinancialTimes reported last month, citing an anonymous source close to the Kremlin.

“The logic of events dictates that we fully become a Chinese resource colony,” the person said. “Our servers will be from Huawei. We will be the main suppliers of everything in China. They will get gas from Power of Siberia. At the end of 2023, the yuan [renminbi] will be our primary trading currency.

Of course, Russia’s war in Ukraine is not entirely in China’s political interest. While it’s an economically beneficial relationship, Russia may also have become a “burden” for China, Antonio Fatas, an economist and professor at France’s Insead business school, said CNBC on Monday, adding that China wants to be seen as “the leaders of the world, not the leaders of the world causing war in Europe.”

Xi continued to play peacemaker earlier this month, when top European leaders visited Beijing, and China is currently avoiding turning its economic alliance with Russia into a military alliance by supplying Putin with Chinese weapons, a move by US officials actively discouraged.

Weeks before Russia invaded Ukraine, Putin and Xi declared a Friendship without limits, but the long war put this relationship to the test. Burns said that while the partnership between Xi and Putin is “strong” today, overt military engagement with the West, or an escalation of Putin’s nuclear war rhetoric, could still represent a limit to the extent to which China is ready to go. “To the best of our information, Xi’s China has yet to supply arms and ammunition to Russia,” he said.

“It’s an important partnership. I think both leaders are attached to it. But so far, it’s not a limitless friendship.

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