As international companies are withdrawing from Russia, the Chinese ambassador to Russia openly encourages small and medium-sized Chinese companies to fill the gaps in the Russian market.
According to a recent news release from the Russian Confucius Culture Promotion Association on its WeChat account, Zhang Hanhui, Chinese ambassador to Russia, convened a meeting in Moscow on March 20, telling the attendees, who were executives of Chinese companies in Russia, that they should seize the current “major opportunity in a time of crisis” and take over the market that others have left behind.
Russia is currently under unprecedented sanctions by the international community because of its aggression toward Ukraine. Major Russian banks have been kicked out of the SWIFT international payment system. As a result, international buyers avoid doing business with Russian companies, international shipping giants refuse to transport commodities made in Russia, and many international companies have withdrawn from Russia under the pressure of public opinion.
Zhang, however, urged Chinese companies in Russia “don’t wait” and adapt to the “new situation” as soon as possible.
The current international situation is complicated. Large-scale enterprises are prone to encountering great difficulties due to payment methods and supply chain disruptions. This is precisely the time for private companies as well as small and medium-sized enterprises (SMEs) to play a role, Zhang said.
Mike Sun, a senior investment consultant in North America, told The Epoch Time that after the outbreak of the Russia-Ukraine war, the Biden administration has repeatedly warned Beijing that China will be sanctioned if it helps Russia. As large Chinese enterprises, usually state-owned, can easily become the target of U.S. sanction, the Chinese regime is now encouraging SMEs to do business with Russia and occupy the Russian market.
Zhang also mentioned at the meeting that Chinese authorities are planning to build a new platform to help resolve such issues as payment, logistics, and others.
There are two methods of payment for China-Russian trade. One is the exchange of RMB and rubles, a method that has been used for years; the other is barter trade.
According to Sun, Russia’s economic structure is relatively simple and uniform. Its fiscal revenue mainly relies on mining, but much less on light industry. In the years before and after the fall of the former Soviet Union, Russia needed everything, and barter was very active. China’s Nande Group shipped thousands of train cars of canned food and light industrial products to Russia in exchange for four Tu-154 aircrafts in the late 1980s. If the blockade on Russia continues, we will likely see this type of transaction again.
In terms of logistics, the China-Europe Railway Express, that runs through Russia, connects more than 50 cities in China with 168 cities in 23 countries, many of which are participants in China’s Belt and Road Initiative (BRI). The sanctions on Russia have caused the suspension of European trains, which means China’s BRI that took years to build was cut off, and a major transportation line between Russia and China was also cut off.
“This is an important achievement that the West has gained this time,” Sun said.
China is one of Russia’s largest trading partners. According to data from China Customs, China-Russia’s bilateral trade was close to $147 billion in 2021, an increase of about 36 percent from 2020.
Sun said that that the United States is trying to prevent China from helping Russia, and sanctions against Russia are likely to be long term. However, the border between Russia and China is very long, the two countries may still find ways to continue bilateral trade.