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China's UnionPay Backs Away From Closer Sino-Russian Ties
Fear Of Sanctions Or Something Else?
China may be Russia's sole remaining ally in the wake of Russia's invasion of Ukraine, but that hardly means that China sees its interests as perfectly aligned with Russia's. Russia got another reminder of this geopolitical reality this past week, when China's UnionPay payment processing service suspended talks with Russian banks over expanding UnionPay services in Russia to fill the gaps left by the abrupt exit of Visa and MasterCard.
Large Russian banks that have been under blocking sanctions from Western countries will not be able to issue UnionPay cards, as the payment system is afraid to cooperate with them because of the risk of secondary sanctions. RBC was told about this by five sources in large banks, including those that fell under sanctions.
Pullout Despite China's Pledge
Ironically, UnionPay's pullout comes closely on the heels of recent Chinese pledges of greater cooperation and closer relations.
Le Yucheng said that under the guidance of President Xi Jinping and President Vladimir Putin, China and Russia maintain high-level development of the comprehensive strategic partnership of coordination for a new era and continue to deepen cooperation in various fields.
At least for now, payment services is not among those “various fields”.
If the UnionPay decision is driven by sanctions concerns, as is claimed by the Russian media, that also calls into question Chinese pledges of cooperation “no matter what”, as was made in a Tweet from Chinese state-affiliated media outlet The Global Times.
Not The First Time
Yet this is not the first time Chinese firms have decided to move away from Russian business. At the beginning of April Russian media outlet Izvestia reported that Chinese telecommunications vendor Huawei stopped taking new Russian orders for network equipment.
At the end of March, Huawei stopped entering into new contracts for the supply of network equipment to Russian operators - the supply of gadgets is not contracted either. This was told to Izvestia by two sources close to the company, a partner of the Chinese vendor.
At the end of March, Chinese oil firm Sinopec suspended development of Russian petrochemical projects, according to Reuters.
Sinopec, formally China Petroleum and Chemical Corp, has suspended the discussions to invest up to $500 million in the new gas chemical plant in Russia, one of the sources said.
Concerns over sanctions were cited as the reason for both actions.
China Is Not Isolating Russia
In spite of these Chinese-led setbacks to closer Sino-Russian relations, it would be a mistake to conclude that China is isolating Russia or is supportive of the NATO-led sanctions regime. As the Chinese Foreign Ministry has pointed out, trade between China and Russia grew by 30% in the first quarter of this year.
Even as Chinese companies opt to tread lightly around the NATO-led sanctions against Russia, Beijing has been quite vocal in criticizing the sanctions regime, seizing the opportunity to attack American and European geopolitical leadership, as China's President Xi Jinping did in his recent opening remarks to the Boao Forum for Asia (BFA) Annual Conference 2022:
The current world order controlled and run by a handful of states has not only inflicted unrestrained damages to the planet but also crossed legal and ethical boundaries that shouldn't have been crossed. As a consequence, the world order has focused on un-sustained growth, power and profits, and in the bargain, it has meandered from human values, humanity and inner longing for shared peace, harmony and equality. This has only benefited few countries financially and economically. This can either become the new normal or an opportunity to change and create something new.
China's solution to current geopolitical problems is what China has termed the Global Security Initiative.
Chinese President Xi Jinping on Thursday proposed a Global Security Initiative to promote security for all in the globe while delivering a keynote speech via video at the opening ceremony of the Boao Forum for Asia Annual Conference 2022.
Xi outlined the initiative as having six core principles:
-- Stay committed to the vision of common, comprehensive, cooperative and sustainable security, and work together to maintain world peace and security;
-- Stay committed to respecting the sovereignty and territorial integrity of all countries, uphold non-interference in internal affairs, and respect the independent choices of development paths and social systems made by people in different countries;
-- Stay committed to abiding by the purposes and principles of the UN Charter, reject the Cold War mentality, oppose unilateralism, and say no to group politics and bloc confrontation;
-- Stay committed to taking the legitimate security concerns of all countries seriously, uphold the principle of indivisible security, build a balanced, effective and sustainable security architecture, and oppose the pursuit of one's own security at the cost of others' security;
-- Stay committed to peacefully resolving differences and disputes between countries through dialogue and consultation, support all efforts conducive to the peaceful settlement of crises, reject double standards, and oppose the wanton use of unilateral sanctions and long-arm jurisdiction;
-- Stay committed to maintaining security in both traditional and non-traditional domains, and work together on regional disputes and global challenges such as terrorism, climate change, cybersecurity and biosecurity.
The cynical view of Xi's Global Security Initiative is that Xi is merely looking to replace American hegemony with Chinese hegemony, as one could point to existing initiatives by the US which ostensibly aspire to many of these same ideals (e.g., Nunn Lugar “threat reduction”).
At the same time, the war in Ukraine is hardly a glowing endorsement of US and NATO efforts at global security and world peace, and it remains to be seen how great a role both US and Chinese biolabs have played in the COVID-19 pandemic.
Superficially, Xi's Global Security Initiative at least stands as a reminder that global interests are not the exclusive domain of any nation or alliance, whether that nation be the US, Russia, or China. No one has, and no one should have, a monopoly on “what's best” for mankind.
China Stands For China
Still, it should be remembered that China is ultimately pursuing its own economic and security interests. China stands for China, and for no other country.
The same is true of the US, of Russia, and of the European Union. Ultimately, national self interests, as perceived and defined by each individual nation, guides the economic and security thinking of all the world's governments.
UnionPay's pullout from deeper engagement with Russian banks may be occasioned by an immediate concern over possible secondary sanctions. Yet people should not blind themselves to the possible ways in which a supported Russia that can ignore the impacts of the NATO-led sanctions might be inimical to China's interests. Beijing's rather obvious desire to see the US lose the geopolitical conflicts swirling around the Ukrainian War is not the equivalent of wanting to see Russia prevail in those conflicts. A strong Russia is not necessarily desirable for Beijing any more than it is desirable for Washington.
China will always stand for China. Today that may mean bending to the NATO-led sanctions. Tomorrow it may mean standing against them.