For China and Russia, yuan and oil provide little synergy against sanctions
Despite being shut out of the SWIFT international payments system, Russia did not turn to China’s (CIPS). Putin was betting on the yuan-centred system to replace the one based on the dollar after the attack on Ukraine. Refineries in China have stopped buying crude oil from Russia for December, waiting to see the effect of new Western sanctions on Russia’s oil sector.
Beijing (AsiaNews) – Nothing suggests that Russia has turned to the China’s yuan-centred international payments network, Cross-Border Interbank Payment System (CIPS), to circumvent sanctions imposed by the West in the wake of its invasion of Ukraine. In fact, Chinese refineries reduced their purchase of Russian oil for December.
After the attack against Ukraine in February, the United States, the European Union, and other Western countries punished Russia by excluding it from SWIFT, the main international transaction platform controlled by Washington.
Without access to the dollar system, the Russians have bet on financial synergy with China, interested in promoting the internationalisation of its currency (yuan) as part of its geopolitical rise.
To date, no Russian bank participates directly in CIPS, which has 1,353 users in 107 states and territories. By comparison, Belgium-based SWIFT brings together 11,000 institutions from more than 200 countries and territories.
Analysts note that China's payments system cannot help Russia replace the US-dominated one because China does not allow the free movement of capital, which is crucial for the use of the yuan globally.
In terms of global payments by value SWIFT is another league. in October, the dollar was used in over 42 per cent of global transactions. Despite its growth, yuan’s share was just above 2 per cent.
With respect to energy, for Putin, prospects are not much better. China has bought large quantities of Russian oil at discounted prices this year; given China’s domestic woes and Russia’s need to find alternatives to European markets (bound to fall to nil), both sides benefitted.
However, the decision by Chinese refineries to stop buying Russian oil coincides with the entry into force next month of a price cap on Moscow's crude, agreed by G7 countries, and the EU ban on Russian crude oil imports.
According to Bloomberg, Chinese buyers want to see how Western restrictions will work in practice to get perhaps cheaper Russian oil.
The cynical calculation of refineries in China is indirect proof that Beijing and Moscow do no constitute a real anti-Western bloc.
Since the war broke out in Ukraine, the Chinese have increased their purchase of gas and oil from Russia for reasons of economic convenience, not out of any strategic design to boost Putin in his fight with the United States and its allies.
Xi’s signature on the final declaration at the recent G20 in Bali, which condemns with some nuances Russia’s attack against Ukraine, clearly shows that.
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01/03/2022 09:30
17/03/2021 14:27
