Oil lubricates Beijing’s Russian tightrope

Oil lubricates Beijing’s Russian tightrope

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

HONG KONG - Beijing is walking an increasingly slippery tightrope when it comes to Russia. China relies on crude from the now pariah state for nearly a fifth of total imports. Though the pair can sidestep Western sanctions on Moscow and settle most transactions in yuan, being too helpful could backfire on Beijing. Its banks will be caught in the crossfire either way.

The two countries have been deepening economic ties for years. Russia counts the People’s Republic as its biggest trading partner; its central bank holds 13% of foreign reserves in yuan assets, up from 0.1% in 2015. At the same time, China, which ran a $12 billion trade deficit with its northern neighbor last year, bought $40 billion worth of Russian oil in 2021, or 16% of total crude imports. Just last month, the two inked a 30-year contract to supply Russian gas to China via a new pipeline.

Western sanctions on Russia, which include kicking out certain banks from the SWIFT international payment system and curbing Moscow’s access to a huge part of its foreign currency reserves, will push the two economies even closer, thanks in part