The potential short-term risks for China’s economy emanating from the Ukraine crisis are all manageable, but the longer the time horizon, the greater are the dangers to China’s economy and its international influence. There are almost no scenarios in which China comes out net ahead.To get more bfinance news China/b, you can visit shine news official website.

China’s trade ties with Russia and Ukraine are not insignificant, valued in 2021 at $147 billion and $19 billion, respectively. Some portion of this commerce will certainly be impacted by both the conflict itself as well as subsequent sanctions, which will result in Chinese companies in these sectors taking a loss. Chinese exports to Russia, mostly finished goods, will likely suffer. This includes tech firms such as Xiaomi, Lenovo, and SMIC, which have substantial sales to Russia. Imports will be equally tricky. It looks like China has restored trade in wheat, but it’s not clear how much additional latent demand there is in China, and domestic growers in the country’s northeast won’t be thrilled. Some commodity imports from Russia, such as potash, aluminum, and nickel, may be cut off due to sanctions, leading to higher producer prices in China. One of the biggest variables is natural gas. China may have smartly secured new supplies from Russia, but sanctions could make natural gas supplies and prices more volatile going forward. And greater Russian imports may also become a disincentive to implementing a more robust energy transition, which has been a major Chinese economic and diplomatic goal.

Regardless, Beijing has plenty of tools to handle any near-term volatility that would affect trade, investment, or consumption. Chinese macroeconomic policy has remained moderately loose, as there is still a focus on reducing financial risks. Inflation is currently not a big threat. Finally, Beijing has allowed the yuan to remain strong (currently around 6.3 to the U.S. dollar), but if necessary, it could pump a lot of cash into the economy and supercharge exports by pushing the yuan lower. China will not have much difficulty having the economy grow 4.5–5.0 percent this year.

However, the risks for Beijing and China as a whole grow exponentially when looking beyond traditional commercial activity and further ahead in time. Most pressing will be the effect of sanctions on financial institutions and technology makers. The direct loss to Chinese producers would be at most a few billion dollars, but this would still be a small percentage of its economic activity.

The real danger here is whether China would risk becoming the target of Western secondary sanctions in order to maintain its support for Moscow. For the moment, it appears as if its largest banks, including the Industrial and Commercial Bank of China (ICBC) and Bank of China, have begun to restrict dollar and possibly yuan transactions for Russian commodity imports. But if China did try to undermine sanctions, its economy could be hit with substantial penalties that would be more challenging to absorb. Chinese international financial activity still overwhelmingly occurs in dollars and euros, and its Cross-Border Interbank Payment System (CIPS), created in 2015, is still not ready for ready for prime time and is not a realistic substitute for the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Most high-tech products in China utilize imported semiconductors or semiconductor equipment. If the West took the same approach toward the rest of China’s high-tech producers that it has taken toward Huawei, the consequences could be devastating. That is why China is likely to at least minimally comply with international sanctions. In sum, despite China’s rising economic prowess and growing international influence, the United States, and the West more broadly, still wields powerful carrots and sticks to shape global affairs.

The greatest threat of the Ukraine crisis to Beijing, though, is that it becomes a pivot in world history that makes it far more difficult for China to achieve its overriding ambition of becoming a military and economic superpower that makes the world safe for state capitalist, authoritarian regimes.

There is a growing consensus in Washington that the United States and China are in a “strategic competition” for outright power and influence over the direction of the international system. Nevertheless, that consensus has not been airtight, as there have been unsettled debates within and between the administration and Congress over the extent of the Chinese threat, the relative strength of the two sides, the ends and means of this contest, and the definition of victory. Moreover, there has been substantial daylight in positions between Washington and other market democracies in Europe, Asia and elsewhere over a whole host of questions that have hobbled or narrowed cooperation on a wide range of issues, including export controls, investment restrictions, supply chains, data privacy and security, research integrity, standards, infrastructure, and expanding commercial ties.