Insights

China is Making Sure it Can’t Be Economically Sanctioned Like Russia

For more crisp and insightful business and economic news, subscribe to
The Daily Upside newsletter.
It’s completely free and we guarantee you’ll learn something new every day.

In their efforts to cut off Russia’s elite from global markets, Western nations bent on punishing the country for its invasion of Ukraine may have inadvertently revealed their cards to another not-entirely friendly world power.
On Thursday, The Wall Street Journal reported that Chinese President Xi Jinping ordered senior officials to divest foreign holdings, immunizing them from the sorts of sanctions the West is putting on Russian oligarchs. Meanwhile, Bloomberg reported China quietly reached out to Russia about strengthening energy ties. Can you say global realignment?
In On the Secrecy
China has no rules against foreign investments by its citizens, though the extent of holdings by senior officials is unclear because of the Communist government’s highly secretive nature. Don’t bother asking, either: nine years ago, activists who criticized the lack of disclosures were arrested.
Given the massive Western sanctions against Russia, which French economy minister Bruno Le Maire said had frozen $1 trillion in assets, Chinese officials’ foreign holdings are suddenly a matter of acute concern to Beijing. According to the WSJ, in March, Xinping secretly issued an order blocking the families of ministry-level officials from owning foreign real estate or stocks. As it moves closer toward greater economic independence from the West, China is leaning on Russia:
Beijing quietly reached out to Moscow about buying more oil for its strategic reserves, according to sources who spoke to Bloomberg. Chinese oil refineries have also been making discrete purchases of cheap Russian crude since March.China doesn’t disclose its holdings — again, secretive regime — but analysts at Kpler estimate the country has 926 million barrels in reserve, 6% lower than in fall 2020 (US reserves are currently at 538 million barrels). What better way to stock up than with Russian oil selling at a 20% discount?Worst-Case Scenario: What if China’s pursuit of limiting exposure to sanctions leads to global economic fragmentation? Analysts at Bloomberg Economics simulated what would happen if two camps — US and Western-aligned nations vs. Russia and China-aligned nations — imposed historically high tariffs on each other. The result is not pretty: global trade would plummet 20% and the world economy would shrink by 3.5%. Cooler heads, please prevail. –

For more crisp and insightful business and economic news, subscribe to
The Daily Upside newsletter.
It’s completely free and we guarantee you’ll learn something new every day.

In their efforts to cut off Russia’s elite from global markets, Western nations bent on punishing the country for its invasion of Ukraine may have inadvertently revealed their cards to another not-entirely friendly world power.

On Thursday, The Wall Street Journal reported that Chinese President Xi Jinping ordered senior officials to divest foreign holdings, immunizing them from the sorts of sanctions the West is putting on Russian oligarchs. Meanwhile, Bloomberg reported China quietly reached out to Russia about strengthening energy ties. Can you say global realignment?

In On the Secrecy

China has no rules against foreign investments by its citizens, though the extent of holdings by senior officials is unclear because of the Communist government’s highly secretive nature. Don’t bother asking, either: nine years ago, activists who criticized the lack of disclosures were arrested.

Given the massive Western sanctions against Russia, which French economy minister Bruno Le Maire said had frozen $1 trillion in assets, Chinese officials’ foreign holdings are suddenly a matter of acute concern to Beijing. According to the WSJ, in March, Xinping secretly issued an order blocking the families of ministry-level officials from owning foreign real estate or stocks. As it moves closer toward greater economic independence from the West, China is leaning on Russia:

Beijing quietly reached out to Moscow about buying more oil for its strategic reserves, according to sources who spoke to Bloomberg. Chinese oil refineries have also been making discrete purchases of cheap Russian crude since March.China doesn’t disclose its holdings — again, secretive regime — but analysts at Kpler estimate the country has 926 million barrels in reserve, 6% lower than in fall 2020 (US reserves are currently at 538 million barrels). What better way to stock up than with Russian oil selling at a 20% discount?

Worst-Case Scenario: What if China’s pursuit of limiting exposure to sanctions leads to global economic fragmentation? Analysts at Bloomberg Economics simulated what would happen if two camps — US and Western-aligned nations vs. Russia and China-aligned nations — imposed historically high tariffs on each other. The result is not pretty: global trade would plummet 20% and the world economy would shrink by 3.5%. Cooler heads, please prevail.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info