The Relationship of Russia with China



Austrian Chancellor Karl Nehammer visited Russia and his meeting with President Vladimir Putin did not yield any serious results, as expected by many political experts and analysts. However, Putin did not give up his desire to achieve his main goal in the East Europe.

Scholars argues that one of the main causes of such security connected with the distrust of Vladimir Putin towards the pro-western oriented Russian liberal elite.

As a result of Russia’s disconnection from the economic systems of the Western world, there is only main channel through which the exchange of goods, technology and finance will be carried out – big Chinese market. Russia will switch from US dollars to China yuan.

The Central Bank of Russia made a very curious attempt to switch small and medium-sized businesses to the Chinese currency, at the same time freezing for up to six months a part of dollar deposits exceeding $10,000.

It is known that the population of Russia (mainly the middle urban class) has accumulated, according to various estimates, up to 40 billion dollars in cash and debit accounts.

The Central Bank of Russia raised the key rate to 20 percent, and most private banks raised also rates on local rouble deposits to 20-21 percent and on foreign currency deposits to 4-8 percent per annum and it happened because the citizens carried their money, including foreign currency to their native banks. The top five – Sberbank, Alfa-Bank, VTB, Otkritie and PSB raised about three trillion rubles and six billion dollars in less than a week. At the same time, at least two million new accounts opened which, according to the Central Bank of Russia, more than 90 percent of foreign currency accounts do not exceed $10,000.

China, as a country with the largest economy, depends on the obligations of the European Union and NATO, and therefore this is a separate deal with Russia because of the political motives. Although China also adheres to a neutral course. Thus, the main tools to support the Russian economy are three critical areas – monetary, financial, trade and industrial. Russia will stabilize Chinese partners with his fuel, energy, and food security.

Nowadays, after the withdrawal of Western brands from Russia, Chinese manufacturers of vehicles, building materials and textiles can gain a foothold in the vacant Russian market. Whoever comes to Russia now will become the beneficiary of the growth of the Russian economy for the next five years.

China may become a technological platform for those industries that fell under sanctions or forced to curtail their lines in Russia and became the alternative for them in Russia and successfully replace them. Finally, a lot of things will depend on this group and relations between Russia and China and from development process of Russia’s forced turn from west to south and east. This is significant turning point for the global word and most probably Vladimir Putin will begin to implement this new strategy.


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