China will consider its own interests when deciding whether to help Russia deal with the impact of Western sanctions following the war in Ukraine, says a former deputy US State Department sanctions coordinator .
“The US government will see China as very important here,” Richard Nephew told CNBC on Monday, in response to a question about the importance of China’s role in ensuring the effectiveness of US sanctions. He added that the Chinese have the capacity to offer “some degree” of support to Russia as Moscow bears the fallout from these sanctions.
Following Russia’s invasion of Ukraine, the United States and the European Union intervened with sanctions against the banks, the central bank and the assets of its Russian oligarchs. Last week, the United States again imposed bans on Russian oil.
Investors are watching closely what China will do as these sanctions hit the Russian economy. Moscow is counting on help from Beijing to deal with the blow to its economy, the Financial Times reported. However, the United States warns China not to support the rogue country.
“The Chinese are always going to consider their national interests, and they always have a substantial interest in being able to do business in Europe, do business in the United States,” Nephew told CNBC’s “Street Signs Asia.”
“The extent to which China is perceived to be undermining the sanctions campaign led by the United States or Europe can potentially have a negative effect on this. I think the Chinese are going to take this very seriously.”
Since Russia’s attack on Ukraine, Beijing has refused to call it an invasion and has said China will maintain normal trade with the two countries. China has not joined the sanctions of the United States, the EU and other countries against Russia. Last week, however, Prime Minister Li Keqiang said China was “deeply” concerned about the crisis in Ukraine and warned that sanctions would hurt global growth.
But if Washington were to “arm hard” Beijing not to support Russia, it’s “unlikely to do wonders,” said Nephew, currently a senior fellow at Columbia University.
“But at the same time, I think they’re even going to put that aside and the frustration, the irritation, and that aside, to make sure their own interests are taken care of,” he said. he stated in reference to China.
That could mean not quietly cooperating with Russia, “but certainly not blatantly violating US and European sanctions against Russia,” he added.
US National Security Advisor Jake Sullivan is due to meet with China’s top foreign policy official Yang Jiechi on Monday to discuss the invasion of Ukraine.
The White House has previously said China’s trade with Russia is not enough to offset the impact of US and EU sanctions on Moscow. He said China and Russia’s share of the global economy was much lower than that of the Group of Seven countries, which includes the United States and Germany.
China is Russia and Ukraine’s largest trading partner, and trade between China and Russia hit a record high of $146.9 billion in 2021, up 35.8% year-on-year annually, according to the Chinese customs agency. Chinese imports from Russia exceeded exports by more than $10 billion last year.
Alexander Gabuev, senior researcher and Russian president of the Carnegie Moscow Center think tank, said he expects China to be “religious about complying” with US and EU sanctions. But Beijing “will do everything possible” outside the scope of sanctions, he added.
One possibility is that once the war situation stabilizes, China could seize opportunities to buy cheap Russian oil and gas, Gabuev told CNBC’s “Capital Connection” on Monday.
“There will be no formal violation of US and European sanctions, but it will be an important material lifeline for the regime,” he said.
– CNBC’s Evelyn Cheng contributed to this report.