Helping Russia cope with impact of proposed US sanctions can benefit all parties

By Hu Weijia Source:Global Times Published: 2017/7/27 21:48:39

For China, it is worth considering providing assistance to Russia, which faces potential fresh sanctions from the US. Earlier this week, the US House of Representatives voted to impose further sanctions on Russia, a move that worsened the already poor bilateral relationship and added uncertainty to the global economy.

China has repeatedly indicated its opposition to unilateral sanctions that could increase tension. As for new US sanctions, China may need to provide support to Russia, both psychologically and materially, to prevent any further deterioration of the situation.

Over the past few years, the Russian ruble has tumbled against the US dollar as Western countries announced sanctions and penalties against Moscow, sparking a ripple effect among its trade partners. Beijing will most likely be willing to strengthen its financial cooperation with Russia to help Moscow stabilize the exchange rate. One possible option is to expand the currency swap between the ruble and the yuan.

The bill passed by the US House of Representatives, which targets Russian energy companies, banks, and individuals, is likely to reduce Russia's share in the global energy market, especially in the US and EU. Beijing has no obligation to support US sanctions on Russia. Actually, China is likely to continue to tap the potential of cooperation with Russia in the area of energy.

The energy sector is a strategic pillar of the Russian economy, which may take a new blow from the US sanctions. However, an economic breakdown in close proximity is not in line with the interests of China. If there is economic chaos in Russia, China may need to consider a financial bailout for Russia to help the country address its problems caused by the US sanctions. Economic chaos caused by the US sanctions is only a "worst-case scenario" with a very low probability. The political and economic realities of a multi-polar world have reduced US power over international affairs. The most likely outcome is that Russia will remain a superpower whose overall influence may wane but is never genuinely challenged.

In the context of worsening US-Russia relations, if Moscow wants to develop closer ties with Beijing, China needs not be ashamed to agree. Closer Sino-Russian relations will not target any third party including the US. China has no intention of coming into conflict with the US, but Sino-Russian cooperation can ease tensions between Russia and the US if it can buffer the negative impact of the US sanctions.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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