China shores up Russia, Pakistan- two nations isolated by the West
3 min read . Updated: 02 Mar 2023, 10:07 PM IST
Premium- While Pakistan faces the risk of economic meltdown, Russia has been slapped with several sanctions owing to the war it has waged in Ukraine. Both have been shunned by the US.
In the year since Russia unleashed a ‘special military operation’ on Ukraine, it has been slapped with several sanction by the West, thereby isolating it from international trade and transactions.
One might think this would affect the Russian economy. But the Vladimir Putin-led country's economy had propped up since. Thanks to their ‘ally’ China, who is helping the nation from sinking completely.
The news is not only from Russia, but from Pakistan who received a $700 million loan from China Development Bank. This is set to boost Pakistan's foreign exchange reserves by 20%.
Here's taking a look at how China is supporting the two nations isloated by the West
Russia
The Russian economy has been slapped by several sanction by the West since the Ukraine-Russia war began. However, according to a CNN report, China seems to be propping up the treasury of Moscow in three different way
-Buying it energy: Embargo on oil sales, price cap on crude, denial of access to SWIFT, and freezing of assets in Central Bank had shrunk the Russian economy by 4.5% in 2022.
However, Moscow’s fiscal revenues increased, according to the Russian government. That’s mainly thanks to high energy prices and willing buyers, such as China and India, according to CNN.
Total trade between China and Russia hit a new record high in 2022, up 30% to $190 billion, according to Chinese customs figures.
China bought $50.6 billion worth of crude oil from Russia from March to December, up 45% from the same period the previous year. Coal imports surged 54% to $10 billion. Natural gas purchases including pipeline gas and LNG, skyrocketed 155% to $9.6 billion.
Western Supplies shunned: Russia has also been spending billions on buying machinery, electronics, base metals, vehicles, ships and aircraft from China, as detailed in a US Congressional Research Service report from last May.
Chinese car brands, including Havel, Chery, and Geely, have seen their market share surge from 10% to 38% in a year following the exit of Western brands. In consumer electronics China virtually took over the industry with 95% market share in 2022.
Alternative to the US dollar: After some Russian banks were cut off from SWIFT, Moscow has been dropping the dollar for the Chinese yuan.
Russian companies have been using more yuan to facilitate the increased trade with China.
The yuan’s share of the Russian foreign currency market jumped to 48% by November 2022 from less than 1% in January, according to Russian media, citing the head of the Moscow Exchange.
Russia’s financial ministry has also doubled the share of yuan reserves the country’s sovereign wealth fund can hold to 60%, after a big chunk of its savings were frozen by international sanctions, according to Reuters.
Pakistan
China is already Pakistan's largest creditor, owning approximately 30% of its external debt. Nonetheless, China still loaned a whopping $700 million to the debt-ridden country.
This will shore up forex reserves for the country thereby preventing s complete economic meltdown.
US shift in stance over Pakistan
In what is being understood as the clear demarcation of establishing the West vs East camp headed by United States and China respectively, US might have shown a shift in their stance over Pakistan. They have already been opposing Russia and its developments in Ukraine.
Nikki Haley in her campaign for the US Presidential Elections 2024, was quick enough to state that of she comes to power foreign aid for China and Pakistan would be cut off, pointing towards a hostility on their diplomatic ties with the China-Russia-Pakistan group.