Beijing also gave its full backing Wednesday to comments made earlier this week by China’s ambassador to Ukraine. “China will never attack Ukraine. We will help, especially economically,” Fan Xianrong was quoted as saying in a press release from the Lviv regional government.
Fears that Chinese companies could face US sanctions over ties with Russia had contributed to an epic sell-off in Chinese stocks recent days. That slump was reversed Wednesday when Beijing promised it would pursue policies to boost its sputtering economy and keep financial markets stable.
Beijing and Moscow share a strategic interest in challenging the West. However, Chinese banks cannot afford to lose access to US dollars, and many Chinese industries cannot afford to be deprived of US technology.
While China is Russia’s No. 1 trading partner, Beijing has other priorities. Trade between the two countries made up just 2% of China’s total trade volume. The European Union and the United States have much larger shares, according to Chinese customs statistics from last year.
Here are some measures Beijing has taken in the last few weeks to distance itself from the isolated and crumbling Russian economy.
Letting the ruble drop
China’s currency, the yuan, doesn’t trade completely freely, moving instead within bands set by officials at the People’s Bank of China (PBOC). Last week, they doubled the size of the ruble trading range, allowing the Russian currency to fall faster.
The ruble has already lost more than 20% of its value against both the dollar and euro since the start of the war in Ukraine. By allowing the Russian currency to fall against the yuan, Beijing isn’t doing Moscow any favors.
Sitting on reserves
The most significant help China could offer Russia is through the $90 billion worth of reserves Moscow holds in yuan, wrote Alicia García-Herrero, chief economist for Asia Pacific at Natixis, in a research report on Tuesday.
Sanctions have frozen about $315 billion worth of Russia’s reserves — or roughly half the total — as Western countries have banned dealing with the Russian central bank.
The PBOC has so far not made any comment about its position regarding these reserves.
If China allowed Moscow to convert its yuan reserves into US dollars or euros, “that would clearly help Russia’s current impasse,” García-Herrero noted. However, “the reputational risk of potentially breaching Western sanctions would be a huge step for the PBOC to take and therefore makes it highly unlikely,” she said.
“The long-term gains of moving closer to Russia might not match the impact of Western investors suddenly losing interest in China,” she added.
Withholding aircraft parts
That means Russian airlines could run out of parts within a matter of weeks, or fly planes without having equipment replaced as frequently as recommended to operate safely.
Earlier this month, a top Russian official said that China has refused to send aircraft parts to Russia as Moscow looks for alternative supplies.
Valery Kudinov, head of aircraft airworthiness at Russia’s air transport agency, was quoted by Russian state news agency Tass as saying that Russia would look for opportunities to source parts from countries including Turkey and India after a failed attempt to obtain them from China.
“As far as I know … China refused,” Kudinov was quoted as saying.
In response to CNN’s request for comment, China’s foreign ministry reiterated Beijing’s opposition to sanctions adding that China and Russia will maintain “normal economic and trade cooperation.”
Freezing infrastructure investment
The World Bank has halted all its programs in Russia and Belarus following the invasion of Ukraine. It hadn’t approved any new loans or investments to Russia since 2014, and none to Belarus since 2020.
More surprisingly, perhaps, is the decision by the Beijing-based Asian Infrastructure Investment Bank to do the same. In a statement earlier this month, it said it was suspending all its activities related to Russia and Belarus “as the war in Ukraine unfolds.” The move was “in the best interests” of the bank, it added.
— CNN’s Beijing bureau and Hannah Ritchie in Sydney contributed to this article.