Russia's deepening dependence on China is emerging as a double-edged sword for the country, particularly in the context of the ongoing war in Ukraine. As Western sanctions continue to isolate Russia economically, President Vladimir Putin is increasingly turning to China for support. However, this reliance is gradually weakening Russia's negotiating position and could have long-term detrimental effects on its economy.
The extent of Russia's dependence on China is evident in the recent discussions surrounding the 'Power of Siberia 2 Pipeline' project, aimed at exporting Russian gas to China. Despite the urgency, negotiations have stalled due to disagreements over the sales price, highlighting China's upper hand in the situation. If Russia fails to secure China as a buyer, it could face a further collapse in gas revenues, exacerbating its economic woes.
The EU's latest sanctions, which target Russian LNG and prohibit its transshipment within the EU, are adding to Putin's concerns. These sanctions are likely to lead to longer transport times and lower export volumes for Russian freighters, further straining the country's economy.
China's support extends beyond the energy sector to the financial realm, where it has been a crucial ally for Putin. However, recent months have seen Chinese credit institutions restricting payment transactions with Russia, driven by fears of potential sanctions from the US. This development is particularly troubling for Russia, given the significant role of the Chinese yuan in its economy. Over 80 percent of trade transactions between Russia and China are conducted in rubles and yuan.
Despite the apparent friendship between Beijing and Moscow, the sanctions are causing unease in China. The future of this economic cooperation will depend on China's willingness to deepen its support. With limited options, Putin is also seeking assistance from North Korea and Iran, but these countries, themselves under severe economic sanctions, are unlikely to provide sufficient support.
On the battlefield, Russia continues to make slow advances, with its forces recently capturing the village of Sokil in eastern Ukraine's Donetsk region. This development comes as the Ukrainian army faces difficulties in replenishing its ranks and securing more arms and ammunition from the West. The worst fighting is currently reported in the Donetsk region, where Russia has been nibbling away for months.
