Pressed to choose sides on Ukraine, Chinese trade favors the West

WASHINGTON, March 21 (Reuters) – U.S. President Joe Biden’s warning of the “consequences” of any aid China might give to Russia’s war effort in Ukraine is aimed at forcing Chinese President Xi Jinping to choose a long-standing, lucrative trade relationship with the West rather than a growing strategic partnership with Moscow.

Based on trade flows alone, China and the United States have a lot at stake after Biden’s nearly two-hour video call with Xi on Friday, with the White House confirming that sanctions against Beijing were an option. Read more

Despite growing trade ties with Southeast Asia and an economy less dependent on trade over the past decade, China’s economic interests remain heavily skewed in favor of Western democracies, according to trade data reviewed by Reuters.

Siding with political ally Russia would make little economic sense for China, analysts say, as the United States and the European Union still consume more than a third of China’s exports.

“On the pure economic issue, if China had to make the choice – Russia versus everyone else – I mean, it’s a no-brainer for China because it’s so integrated into all of these western economies,” Chad Bown said. , a senior fellow at the Washington-based Peterson Institute for International Economics think tank that closely follows Chinese trade.

Chinese Ambassador to the United States Qin Gang on Sunday stressed the close relations between China and Russia.

“China has normal trade, economic, financial and energy cooperations with Russia,” Qin told CBS’s “Face the Nation” program when asked if Beijing would provide financial support to Moscow. “This is normal business between two sovereign countries, based on international laws, including WTO (World Trade Organization) rules.”

Targeting Beijing with the kind of broad economic sanctions that have been imposed on Russia would have potentially serious consequences for the United States and around the world, given that China is the world’s second largest economy and largest exporter. As China’s economy has grown to $16 trillion over the past 20 years, its reliance on trade with other countries for its economic well-being has declined.

As Chinese citizens get richer, domestic consumption and services play a bigger part in the Chinese economy.

However, China is still more dependent on trade, at around 35% of GDP, than the United States at 23% or Japan at 31%.

Wealthy G7 countries that form the core of an anti-Russian alliance after last month’s invasion of Ukraine still consume more than a third of China’s exports. That’s down from almost half of China’s exports nearly two decades ago, but a relatively stable share since 2014, when Russia annexed Ukraine’s Crimea region.

The share of Chinese exports to the countries of the Association of Southeast Asian Nations (ASEAN), with which China has recently concluded new trade agreements, has doubled to about 15%, eclipsing Japan in importance. But trade data from China from January to February 2022 showed that exports to the European Union increased the most, at 24%. Read more

CELL PHONE OIL

Russia’s overall trade with China has increased since the West first imposed sanctions on Moscow in response to its annexation of Crimea. Read more

But China’s exports to Russia have hovered between 1% and 2% over the past 20 years.

Russian imports from China follow those from many other countries, with electronics and consumer goods including cellphones, computers, clothing, toys and shoes topping the list.

China exported 10 times more cellphones, by value, to the United States alone, at $32.4 billion in 2020, according to data from UN Comtrade.

Chinese imports from Russia are dominated by oil. At $27 billion in 2020, crude oil and other petroleum products dwarf all other imports from Russia, mostly commodities such as copper, softwood lumber, liquefied natural gas, coal , metals and ores.

Overturning Western sanctions on China would cause significant hardship for the United States, which relies heavily on China for imports of key consumer goods, from computers and cellphones to toys and textiles.

“In America, we don’t depend on the Russian economy — almost for nothing,” Bonnie Glick, director of Purdue University’s Center for Tech Diplomacy, said Monday at a Commerce Department forum.

“But an economic or trade war with China would have huge impacts,” Glick said, adding that it was important for the United States to reduce its trade dependence on China.

Reporting by David Lawder; Editing by Will Dunham and Heather Timmons

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