Opinion | Why China Can’t Bail Out Putin’s Economy

The West has, however, largely cut off Russia’s access to the world banking system, which is a very big deal. Russian exporters may be able to get their stuff out of the country, but it’s now hard for them to get paid. Probably even more important, it’s hard for Russia to pay for imports — sorry, but you can’t carry out modern international trade with briefcases full of $100 bills. In fact, even Russian trade that remains legally permitted seems to be drying up as Western companies that fear further restrictions and a political backlash engage in “self-sanctioning.”How much does this matter? The Russian elite can live without Prada handbags, but Western pharmaceuticals are another matter. In any case, consumer goods are only about a third of Russia’s imports. The rest are capital goods, intermediate goods — that is, components used in the production of other goods — and raw materials. These are things Russia needs to keep its economy running, and their absence may cause important sectors to grind to a halt. There are already suggestions, for example, that the cutoff of spare parts and servicing may quickly cripple Russia’s domestic aviation, a big problem in such a huge country.But can China provide Putin with an economic lifeline? I’d say no, for four reasons.First, China, despite being an economic powerhouse, isn’t in a position to supply some things Russia needs, like spare parts for Western-made airplanes and high-end semiconductor chips.Second, while China itself isn’t joining in the sanctions, it is deeply integrated into the world economy. This means that Chinese banks and other businesses, like Western corporations, may engage in self-sanctioning — that is, they’ll be reluctant to deal with Russia for fear of a backlash from consumers and regulators in more important markets.Third, China and Russia are very far apart geographically. Yes, they share a border. But most of Russia’s economy is west of the Urals, while most of China’s is near its east coast. Beijing is 3,500 miles from Moscow, and the only practical way to move stuff across that vast expanse is via a handful of train lines that are already overstressed.

Scroll to Top