The West is depriving China of access to resources, thus forcing it to turn its eyes to Russia. This creates prerequisites for selling Russian resources on more favorable terms
Russian Foreign Minister Sergei Lavrov met with his Chinese counterpart Wang Yi on August 4. During the meeting, the Chinese foreign minister said that China wants to strengthen “strategic cooperation” with Russia. According to Wang Yi, the two countries could “jointly defend the international system, in which the UN and international law play a key role”.
In a commentary on the statement, the United States Naval Institute (USNI) predicted that Moscow has a new window of opportunity to expand economic cooperation with Beijing.
USNI is a non-profit organization that formally bills itself as financially independent. In fact, the institute serves as a think tank for the U.S. Navy. It operates on the basis of the U.S. Naval Academy under permission granted by an act of the U.S. Congress.
The reasoning of US Navy analysts is as follows: Japan, Taiwan and the Republic of Korea are China’s main suppliers of technology products. There is an imbalance in China’s trade with these countries. Beijing exports more from them than it imports from them, i.e. Chinese imports exceed exports. This is especially so for Taiwan, which exports to China three and a half times as much as it imports.
China’s main market for its goods, in turn, is the so-called “collective West”, which accounts for 49% of its exports. Trade imbalances exist with all of these countries, but the USA accounts for the largest share. China’s exports to its main trading partner are almost three times greater than its imports.
As a consequence, China gets most of its trade revenue from the US in the form of debt. Those are records in American banks that they owe China a number of dollars and that China can use them to buy something in the future.
The system is as follows: the U.S. does not prevent China from striking deals on the Asian, African and Latin American markets. More precisely, the U.S. does not allow the Chinese to enter those markets which Americans historically consider their own. Beijing is allowed to make deals in those markets where the Soviet Union was previously present. We are talking about countries that were once part of either the Council for Mutual Economic Assistance or the so-called “Non-Aligned Movement” with which the Soviet Union closely cooperated. Essentially, China is being allowed to fill the niches that were created after the collapse of the Soviet Union.
In all of these regions, Beijing trades in American debt and uses it to acquire natural resources. In Africa, for example, it cooperates most closely with Angola, Nigeria, Algeria, Egypt, Ethiopia, the Democratic Republic of the Congo, Guinea, Kenya, Zambia and the BRICS member South Africa. In Latin America, with Peru, Chile, Mexico and BRICS member Brazil. In Asia, with Malaysia, Vietnam, Cambodia, Indonesia, Iraq, the Philippines and Kazakhstan. The exceptions to the general rule are Australia and Canada, which are also major suppliers of resources to the PRC.
To all of these countries, Beijing sells those very records in US banks with which it can conventionally buy something in the future. The problem is that the Taiwan crisis has worsened China’s relations with the West. And now there is no guarantee that the US will not freeze the very records in its banks that it owes China something. Especially since everyone has the example of what the West has done with debts to Russia before their eyes. Moreover, there is a danger that the United States will no longer recognize even those debts that the Chinese (with the help of the Americans) have sold off to other countries.
China would simply lose its main suppliers of resources. And Beijing would inevitably have to look for alternatives.
Russia could be such an alternative. The Russian Federation has enormous resources, which can easily be transported to China. This is why Beijing has expressed an interest in expanding cooperation. In turn, Moscow has an opportunity to significantly improve its trading position by selling resources on more favorable terms. This conclusion is contained in a forecast by the US Naval Institute.
At the same time, USNI analysts point to several “buts” that could create an obstacle for expanding Russian-Chinese cooperation. In particular, they cite a natural inclination on the part of the Chinese to cut costs. For example, China does most of its resource acquisitions in Asian, African and Latin American countries through Hong Kong, the Cayman Islands, the British Virgin Islands, Singapore, the US Virgin Islands and the US states of Wyoming and Delaware. All of these territories are considered offshore tax havens. With their help, the Chinese are able to save a considerable amount of money in trade transactions. Such cooperation is not acceptable for Russia.
For this reason, analysts at the US Naval Institute doubt that Moscow and Beijing will dramatically increase their cooperation in the near future. In their view, it is more likely to happen gradually.
We should add that this is the opinion of American analysts. Even they acknowledge that very good prospects are emerging for our country. And Americans have created these prospects with their own hands.
Yuri Gorodnenko, RenTV
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