China’s deals with Russia irritate the United States, but do not violate sanctions

BEIJING (AP) – China’s support for Russia through oil and gas purchases irritates Washington and increases the risk of retaliation, foreign observers say, although they see no sign that Beijing is helping Moscow evade sanctions over the war against Ukraine.

Beijing’s importance as a lifeline for Russian President Vladimir Putin rose on Monday after 27 EU countries, the main market for fossil fuels, which provides most of Moscow’s foreign income, agreed to stop buying oil.

On the eve of Russia’s February 24 attack, President Xi Jinping’s government said it had no borders of friendship with Moscow and was forcing the West to speculate on whether it could save Putin.

China denies sanctions as illegal because the United States, Europe and Japan have cut off Russia from their markets and the global banking system by not working through the UN, where Beijing and Moscow have veto power.

Sanctions do not prohibit China, India and other countries from buying Russian oil and gas. But President Joe Biden has warned Xi of the uncertain consequences if Beijing helps Moscow evade sanctions. This leaves open the risk that Chinese companies could be punished by losing access to valuable Western markets.

Beijing seems to be complying. But state-owned companies are buying more Russian oil and gas, giving the Kremlin export profits. They are also potential investors in Russian energy projects when Western companies leave.

“The Biden administration is likely to be increasingly annoyed by China’s continued support for Russia,” Neil Thomas of the Eurasia Group said in an email.

This increases the likelihood of “unilateral steps to punish Beijing” and “allied coordination of economic security measures aimed at countering China,” Thomas said.

The conflict adds tensions with Washington over Taiwan, Hong Kong, human rights, trade, technology and Beijing’s strategic ambitions.

China is “the most serious long-term challenge to the international order,” Secretary of State Anthony Blinken said in a May 26 speech.

Xi’s government has tried to distance itself from Putin’s war by calling for peace talks, but avoids criticism from Moscow.

Other governments “should not harm China’s legitimate interests” in relations with Ukraine, Foreign Ministry spokesman Zhao Lijian warned.

The decision of EU leaders on Monday to reduce imports of Russian oil by 90%, said the head of its executive branch Ursula von der Leyen. European customers pay Russia up to $ 1 billion a day for oil, gas and coal.

Russia’s permanent representative to international organizations in Vienna, Mikhail Ulyanov, said on Twitter: “Russia will find other importers.”

Moscow is small as a trading partner for Beijing, but an ally against the fact that both resent US dominance in global affairs.

China views Russian oil and gas as a way to diversify supplies for its energy-intensive economy. China bought 20% of Russia’s oil exports last year, according to the International Energy Agency. Both sides announced a new 30-year gas contract on February 4, three weeks before Moscow’s attack on Ukraine, which, according to the state-run Global Times, would increase annual supplies to China by about 25%.

While they are friendly, China is using the situation to get cheaper energy and profitable business deals, said Maria Shagina of the International Institute for Strategic Studies.

“They have always used Russia’s isolation,” Shagina said. “But they will be very careful not to violate the sanctions directly.”

On May 24, during Biden’s visit to Tokyo, Russian and Chinese warplanes conducted a “strategic air patrol” over the Sea of ​​Japan, the East China Sea and the western Pacific. The Japanese government said the bombers flew near Japan.

Biden warned Xi during a March 18 video conference not to provide military or economic assistance to Moscow.

Biden’s national security adviser, Jake Sullivan, said in March that Washington would not tolerate China or any other country helping Moscow circumvent sanctions. The White House has criticized Beijing’s “rhetorical support” for Putin.

Washington is “closely monitoring” China’s cooperation with Moscow, the US embassy said in a written response to questions.

“We have not seen the provision of military equipment,” the statement said. Asked about economic sanctions and possible violations, the embassy said they had nothing more.

After BP and ExxonMobil announced their withdrawal from Russian oil and gas projects, “there were rumors that state-owned Chinese companies could intervene and buy stakes,” Shagina said.

China’s imports from Russia in April increased by 56.6% over the same period last year and amounted to $ 8.9 billion, according to customs. This helped the Putin government record a current account surplus, the broadest trade turnover, of $ 96 billion in the four months ending April.

Washington is also disappointed that India, which is the world’s importer of № 3 oil, is buying more in Russia to take advantage of low prices. The Biden administration is lobbying the government of Prime Minister Narendra Modi to stop it.

In March, the U.S. government told Asian and European allies that U.S. intelligence had determined that China had shown Russia that it would be willing to provide military support to the campaign in Ukraine and financial assistance to limit the effects of sanctions.

Russia has been excluded from the global SWIFT network for bank transfers.

China’s UnionPay credit card processor has refused to cooperate with Russian banks after Visa and MasterCard stopped servicing them, Russia’s RBC news agency reported in April. He said UnionPay was worried it could suffer from “secondary sanctions” and cut off from the Western-controlled global financial system.

China has given Moscow an economic lifeline following Western sanctions imposed in connection with the 2014 seizure of Crimea from Ukraine.

Beijing has agreed to buy Russian gas as part of a $ 400 billion deal over three decades. Moscow has turned to Chinese state-owned companies to help pay for oil and gas development after sanctions over Crimea halted Western funding.

“Help will never be free,” Shagina said.

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