How China profits from Western sanctions targeting Russia

Western sanctions Push Russia and China closer together. While European states are struggling to cope with ongoing inflation and increased energy prices following the Russia-Ukraine war. Opportunity for external influence is hence prevalent as China has grown to become a vital partner for the Russian economy. Under the Chinese strategy of careful balancing, which is focused primarily on its global Belt and Road Initiative, there is indeed an interest in the ongoing conflict. As Europe is struggling economically and seeking independence from Russian energy, an opportunity opens for increased Chinese influence in Russia and the West.

KJ1: It is highly likely that there will be an increase in Russian dependency towards China in the next 12 months.

  • The bilateral trade with Russia increased by 50% since 2014 making China the biggest export destination of Russia [source].
  • Export from Russia to China grew by 37,8% between January and April 2022 [source].
  • Russia is now the biggest oil supplier to China since the Spring of 2022 [source].
  • Russia is currently dependent on Chinese technology and electronic components for the aerospace industry [source].
  • Russian demand for Chinese currency provides China with the tools to cope with domestic inflation [source].
  • Vladimir Putin and Xi Jinping met at the Shanghai Cooperation Organization (SCO) summit in Samarkand, Uzbekistan on September 15th. The leaders discussed prospects for future cooperation and strengthened bilateral ties [source].

KJ2: It is highly likely that China will remain passive in the Russia-Ukraine war in the next 12 months.

  • On December 30th, the EU and China concluded negotiations on The Comprehensive Agreement on Investment (CAI) which grants EU members extended access to Chinese markets [source].
  • On September 15th, Vladimir Putin expressed his gratitude to Xi Jinping for China’s balanced stance in the Russia-Ukraine war [source].
  • China has a broad range of economic interests in European states. Currently, 18 members of the EU are taking part in China’s Belt and Road Initiative [source; source].
  • China seems to be determined to allocate its military resources mostly to the Pacific and Africa. [source; source].

KJ3: It is highly likely that Europe’s economic deficit and aim for independence from Russian energy will enhance European/Chinese interdependence in the next 12 months.

  • Inflation in the eurozone reached a new all-time high of 9,1% in August 2022 [source].
  • Food prices within the EU rose by 13,99% in August 2022 compared to the same month in 2021 [source].
  • China is a considerable exporter of food and agricultural products to the EU. In 2021 Chinese exports of goods accounted for 22,4% of EU imports making China its largest partner [source].
  • The EU is determined to continue its transition to renewable energy sources. Since 2020, 17 member states have increased their plans towards a green transition [source; source].
  • On May 4th 2022, Ursula von der Leyen announced a proposal to gradually phase out Russian oil and gas over a six month period to run in the latter half of 2022 [source].
  • In 2018, Solar and wind sectors accounted for 80% of Chinese investments in the renewable energy sector in the EU [source].
  • In 2022, China is controlling the wind and solar energy supply chain. The majority of the components needed to manufacture wind turbines and solar panels are produced in China [source].
  • On September 28th, the EU executive proposed a new package of sanctions targeting Russia [source].

Intelligence Cut-Off date: October 13, 2022

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