Russia’s military challenges in Ukraine and the concerted Western response are forcing hard choices in Beijing. Regardless of how China balances its support for Russia and its long-term interests in access to the global financial system, Beijing’s decisions in the coming months will be carefully scrutinized.
So long as the G7 consensus on sanctions against Russia holds and the United States can credibly threaten secondary sanctions on Chinese institutions, China is likely to prioritize those institutions’ continued access to US dollar and euro financing. This means it is likely to encourage its big banks to comply with the financial sanctions aimed at Russia and tread carefully in helping Moscow navigate export controls on key technologies. Beijing will want to avoid becoming a bigger target for Washington. While there is some space for China to continue non-dollar trade with Russia through banks that are less exposed to sanctions, there are limits to how much Beijing can ease Moscow’s economic stress through trade.
