BBC Analysis: What Can China Offer Russia?

China has sought to keep a diplomatic distance from the conflict, choosing to abstain from a UN vote condemning Russia's invasion.

But if he decides to do so, how much can China help Russia by expanding its military and economic ties?

Can China supply Russia with fears?

Moscow has asked China for military equipment in support of its invasion in Ukraine, according to US officials quoted in media reports.

China says it's a lie and has called the reports “deformation”. In recent years most gun movements have been the opposite.

China has relied heavily on Russian military equipment to modernise its armed forces, which became increasingly necessary by imposing US and European arms embargoes after the 1989 Tiananmen Square struck.

About 80% of China's total arms imports were from Russia between 2017 and 2021, according to the Stockholm International Peace Research Institute (SIPRI). These Chinese purchases make up 21% of Russia's total arms exports, its second largest client in the world.

But China has gradually expanded its military production capabilities. Now it's the world's fourth largest arms exporter.

China's <x0... weapons are advancing now. Its Drons, for example, are an area Russia would be very interested in,” says Siemon Wezeman in SIPRI.

But, he says, “so far we've seen no evidence” that Russia has bought Chinese drugs.

China's Trade With Russia Has Been on the Rise

China represented about 18% of Russia's overall trade in 2021 ʹ almost $197 billion last year.

During President Putin's visit to Beijing in February for the Winter Olympics, the two countries said they would increase trade to 250 billion dollars by 2024.

China is a major importer of grain like wheat and barley, and one of its most important sources is Russia ʹ one of the largest producers in the world.

By the end of the day, China had imposed restrictions on imports of wheat and barley from Russia due to disease concerns. But all of this was removed on the day the Russian attack started in Ukraine.

However, as a bloc, the EU remains the largest general trade partner with Russia. In 2021, the total trade between the two was worth almost twice as much as China's trade with Russia.

“It is inevitable that EU-Russia trade will be reduced in light of sanctions”, says trade economist Dr Rebecca Harding. The current “The current crisis has just sharpened a focus within the EU on the need to diversise supply”.

Can China buy more Russian energy?

China is one of the biggest markets for Russian oil, gas and coal.

Just a week before Ukraine's invasion, the two countries agreed on a new Russian coal deal worth more than $20 billion. Putin also recently unveiled new Russian oil and gas deals with China, worth about $117.5 billion.

However, Russia's largest energy market so far has been the EU, and it supplies 40% of the bloc's gas and about 26% of its oil.

Russian oil and gas exports [in China] have increased at a rate of over 9% annually for the past five years”. Says Dr. Harding. “This is fast growth, but also so, China is half the EU market for Russian oil. ”

Financial sanctions are starting to bite.

China says it will continue to have normal trade co-operation” with Russia. But some Russian banks have been banned from the international Schift payment system.

This has already forced companies in China, like elsewhere, to cut purchases from Russia, while traders struggle to regulate financing. Both China and Russia have encouraged movements towards alternative methods of payment in recent years.

Russia has its own system for the transfer of financial messages (STFM), while China has the Interbankal Tax System (CIPS), both operating in their coins.

But Swift has continued to dominate financial transactions on the global trade network.

Currently only about 17% of trade between Russia and China uses the Chinese ywan (from 3.1% in 2014), according to media reports citing official Russian statistics.

Energy trade between the two countries is still mostly in US dollars.

Germany, Russia's main natural gas export destination, recently announced it would suspend the new Nord Stream 2 gas pipeline in response to Ukraine's Russian invasion.

According to one analysis, supplies through a new pipeline agreed on between Russia and China (The Power of Siberia 2) would have only one fifth of the capacity of the Nord Stream 2 gas pipeline.

Also, it is not clear when the new Siberian gas pipeline will go into circulation.

In the longer term, China may want to increase Russian gas imports in efforts to reduce its dependence on coal in order to meet targets for reducing greenhouse gases.

From Kai Wang and Wonyan Song, BBC