Ruble Crash: China Pledges to Support Russia
Though it has been entirely unreported in the West, China has been saying all week that it stands ready to support Russia if its help is needed.
With $3 trillion of reserves the sums necessary would from China’s point of view be small change.
The only condition is that Russia must first ask China for assistance, as this editorial in the semi-official English language Chinese newspaper Global Times sets out.
Global Times belongs to The People’s Daily, the official newspaper of the Communist Party of China, so an editorial published by Global Times has official sanction and represents the opinion of the Chinese government.
Putting the question beyond any further doubt were comments pledging support for Russia from the Chinese Foreign and Commerce Ministers as reported by the Russian TASS news agency, which we also reproduce below.
With oil prices sinking and the ruble falling in value, Russia is experiencing the gravest economic crisis since the turn of the century. After its value crashed for two days running, the ruble has depreciated over 50 percent against the US dollar so far this year to become the worst performing global currency. At present, there seems to be no way to bail it out, and what will happen to the Russian economy is difficult to predict.
Some analysts are comparing Russia’s current situation with the eve of the Soviet Union’s dissolution, when oil prices were also at a low ebb. Some speculate that the deepening economic crisis will impose new challenges to Russian President Vladimir Putin’s tenure, forcing him to apply a defensive strategy. But there are also some concerns about him becoming more aggressive.
This speculation raises a question: Is Russia’s economy worse now than the time when the Soviet Union collapsed?
Compared with 23 years ago, Russia’s manufacturing capacity and agricultural production have not greatly improved, and it’s much diminished strength has not left much room to maneuver. What’s more, Moscow now faces Western sanctions and there is deep antagonism between Moscow and Washington.
But Russian society is much more united than before. Putin retains high approval ratings among the Russian public, who learned heavy lessons after the collapse and harbor no delusions toward the West.
Russia’s foreign exchange reserves still boast about $400 billion, which means, unlike immediately following the dissolution of the Soviet Union, the well-being of the Russian people will not be severely impacted in the short term. Although the threat of collapse is still far away, Russia will go through a long-running winter instead of a temporary storm.
China has become a significant factor that determines Russia’s strategic environment. Seeking China’s support is one of Russia’s most realistic options.
While it might play a key role, China has to keep a clear mind when giving a helping hand to Russia. China-Russia cooperation is no longer ideology-based but driven by common interests. Although it has the capability to offer help to Russia at critical moments, China does not have to act in a proactive manner.
Any facilitation and aid must be given with the request of Moscow through the normal channels of country-to-country exchanges. This will reduce Moscow’s misunderstandings to the minimum.
This crisis will probably urge Russia to recalibrate some of its national strategies. But it is by no means a fact that Russia will draw closer to China because of this. With many uncertainties, China also faces challenges about how to lead its relationship with Russia to a reciprocal end.
Russia is at a crossroads, and the direction it chooses will impact world politics. China’s stance is clear, and it does not want Russia to collapse.
The following article appeared on the website of the Russian news agencyTASS.
China believes Russia will be able to overcome the current economic problems, and is ready to offer whatever assistance if needed, China’s Foreign Minister Wang Yi said in an interview with Hong Kong’s Fenghuang television channel on Sunday.
“We believe that Russia has opportunities and knowledge to overcome the current problems in the economy. The Chinese-Russian relations of strategic partnership are at a high level, we are always supporting and helping our friend. If the Russian side needs it, we shall offer all possible support we may have,” the foreign minister said.
China’s Minister of Commerce Gao Hucheng told Fenghuang while commenting on the situation with rouble: “As for certain fluctuations in the stock market and the fluctuations in the currency market – they may be of certain interest for some capital investors, and from the practical cooperation point of view – we are still calm and promote actively our cooperation.”
The minister of commerce also expressed confidence the current financial and economic situation in Russia would not afflict implementation of the major Russian-Chinese projects in the energy, industries and other spheres.