As Biden Threatens Russia Sanctions, Putin Seeks Trade Alliance With China's Xi

As President Joe Biden threatens sanctions against Moscow over fears of a potential attack on Ukraine, Russian President Vladimir Putin is seeking to forge a new trade alliance with Chinese President Xi Jinping in order to insulate both powers from U.S. economic pressure.

In their 37th meeting over the course of eight years, Putin and Xi held a virtual summit Wednesday in which both men pledged to further boost the strategic partnership amid heightened tensions with Washington. Following the hour-and-a-half-long talks, Russian presidential aide Yuri Ushakov revealed further details that gave an insight into potentially critical deliberations made by the two heads of state.

Among the more notable comments from Ushakov was that "particular attention was paid to the need to intensify efforts to form an independent financial infrastructure to service trade operations between Russia and China" during the talks between Putin and Xi, according to Russia's RIA Novosti outlet. The goal, he said, was "to create such a structure that could not be influenced by third countries."

The remark followed news that Putin and Xi declared support for one another's efforts to challenge the U.S. in their respective regions.

Ushakov said Putin condemned U.S. efforts to form geopolitical blocs like the Quadrilateral Security Dialogue involving Australia, India and Japan, and the AUKUS alliance including Australia and the United Kingdom in the Asia-Pacific region, where China sees these coalitions as an effort to contain the rise of the People's Republic.

The Russian official also cited Xi as agreeing with Putin's demands that the U.S.-led NATO alliance not expand further toward Russia's borders in Eastern Europe, where a crisis was brewing over neighboring Ukraine.

Washington and Kyiv have accused Moscow of sending more than 100,000 troops near a border region where Russian-aligned rebels were engaged in a seven-year separatist war against Ukrainian security forces. Putin has denied any plans to provoke hostilities but has accused Western powers of threatening Russia's national security by increasing their presence in the former Soviet republic next door.

Following a virtual summit with Putin last week, Biden promised "severe" economic consequences against Russia if it chose to escalate, consequences that could reportedly go as far as to include cutting Russia off the international SWIFT banking system, a platform used by banks and other financial institutions to send and receive information. Such a move could wreak havoc on the Russian economy, but Putin's meeting with Xi appeared to present a lifeline.

"There is no doubt that Ushakov's mention of this Russia-China financial network was made with possible U.S./EU sanctions in mind," Artyom Lukin, the deputy director for research at the Far Eastern Federal University's School of Regional and International Studies in Vladivostok, told Newsweek.

"In fact, during the last few years Russia and China have incrementally been putting in place a bilateral mechanism, which would be independent from the U.S.-dominated financial system," he added. "The current crisis could become a crucial test if Moscow and Beijing have actually made progress in creating such a mechanism. As the world's second-largest economy, China can definitely help Russia out in the event of U.S. sanctions."

China, Xi, Russia, Putin, virtual, summit
Chinese President Xi Jinping waves to answer Russian President Vladimir Putin's greeting during the start of their virtual summit on December 15. Both men pledged to further boost the strategic partnership between their two countries during the meeting. Russian Presidential Press Office

Experts in the West have long cast doubt on the growing Sino-Russian detente, casting them as unnatural allies given their complicated past that often saw more competition than cooperation.

But at a time when the two touted their relations as the best in history, Lukin said Beijing would likely come to Moscow's aid in the event of an intensification of sanctions from Washington, even if it meant secondary sanctions against Chinese entities. He cited "two main reasons" for this.

"First, China needs Russian commodities, which means it must find ways to pay for them even if Russia is blocked from SWIFT," Lukin said. "Second, China is not interested in Russia's economic and possibly political collapse under the impact of Western sanctions. If Russia is defeated, China would lose its only major power ally, leaving Beijing one-on-one with Washington and U.S. allies."

Officially, China and Russia have both eschewed the notion of any formal alliance between the two powers, dismissing the term as a Cold War-era concept unfit for the 21st-century geopolitical landscape. But their growing economic, political and military has entered new realms, prompting the question as to whether they would coordinate directly on the simultaneous issues they face with the U.S.

Joe, Biden, Vladimir, Putin, virtual, summit
Russian President Vladimir Putin meets virtually with U.S. President Joe Biden from an office in Sochi for a summit on December 7. Putin was among the first heads of state with whom Biden spoke as they renewed a landmark nuclear arms control deal shortly after the new U.S. leader was sworn in earlier this year, and the two held their first summit in June amid a spat of ransomware attacks against U.S. industries. Russian Presidential Press Office

"So far it is difficult to say if Russia and China have actually stepped up cooperation on the Ukraine/NATO and Quad/AUKUS. We still need more concrete and material evidence beyond rhetorical statements," Lukin said. "The proof should come when, and if, Russia makes a move on Ukraine, which may happen soon. Then we will see how far China is actually willing to go, diplomatically and economically, to support Russia."

"Both powers have repeatedly signaled in the past to the West that they would rather partner with the West than with each other," Raffaello Pantucci, who serves as senior fellow at the S. Rajaratnam School of International Studies' International Centre for Political Violence and Terrorism Research in Singapore and senior associate fellow at the Royal United Services Institute for Defence and Security Studies in London, told Newsweek.

"They suggest that this is an alliance of convenience rather than anything durable, and they are to some degree forced together because of the West," he added. "The West interprets this as a tension which could be manipulated to their advantage."

But Pantucci said a new frame of thinking was needed to fully understand the depth of the relationship being forged by Moscow and Beijing.

"I think we need to update our analysis of the Sino-Russian relationship from the rather stale 'frenemies' or 'axis of convenience' narrative that is deployed to recognize that there is something durable and strong about this relationship which is now getting stronger," he argued. "In part because of their mutual confrontation with the West, but also because they see eye to eye on a great deal of things on the world stage."

Georgi E. Asatryan, an expert for the Russian International Affairs Council who serves as an associate professor at Moscow State University and Plekhanov Russian University of Economics, laid out a range of ways in which relations between Russia and China are developing, a trend he considered "a rational foreign policy" for the pair.

"We are talking about economic, trade, military, and political cooperation. It doesn't surprise me," Asatryan told Newsweek. "China is a growing superpower, the first in PPP and according to nominal GDP, it is the second economy globally and a major trading partner of more than 100 countries in the world. Russia borders China and is developing comprehensive relations."

And though the balance of international economic power has begun to shift toward the East, Asatryan said that the "modern world's financial system is still oriented towards the Global West" and an alternative would be difficult to imagine at this present stage.

"It is possible to survive without it, and the example of Iran has shown this, but full and rapid development and modernization will be complicated," he said. "China has grown, among other things, a lot just due to the interface with the West, the Chimerica, for example."

But as for the political rapprochement" between China and Russia, Asatryan predicted "it will intensify as the pressure of the Global West on both actors of international life increases."

"In my opinion, this is predictable and began from the structure of international relations at the present stage," he said. "Given the trends, creating a certain dividing line between democracies and autocracies, the collective securitization of threats by the global West, rapprochement becomes even more likely."

Like Lukin, he said that the scope of the complex relationship between Russia and China would be revealed should a major escalation erupt in Ukraine or in Taiwan, the self-ruling island backed by the U.S. but claimed by China.

"Parameters of these relations and the depth of cooperation will become known in the event of crises, for example, around Ukraine or Taiwan," Asatryan said.

Chinese officials have already spoken up against U.S. sanctions threats against Russia, including measures that could affect the Nord Stream 2 pipeline recently constructed between Russia and Germany. The project was opposed by Washington, which feared Moscow may use energy to leverage political pressure against Europe in the event of a crisis such as the one transpiring in Ukraine right now.

"It is China's consistent and clear-cut position that we oppose politicization of business projects and oppose unilateral and illegal sanctions," Chinese Foreign Ministry spokesperson Zhao Lijian told a regular press briefing last month in response to a question regarding the pipeline.

He argued at the time that the Biden administration was following in its predecessor's footsteps by threatening to cut others out of the U.S.-dominated global banking system if they did not conform to U.S. interests.

"Out of its own geopolitical and economic interests and following the 'America first' mantra, the U.S. has been putting its domestic law above normal international relations, imposing unwarranted sanctions on normal cooperation between sovereign countries, and willfully slapping 'long-arm jurisdiction' on other countries," Zhao said. "Such flagrant bullying and hegemonic mentality tramples on international law and basic norms governing international relations and undermines other countries' legitimate rights and interests. This wins no support and will ultimately face opposition from the international community."

Zhao used similar language during Wednesday's press conference when he accused Washington of undue interference in the South China Sea, where the U.S. has opposed China's broad territorial claims and

"The U.S. has made itself an example of hegemony and bullying by throwing its weight internationally, wantonly imposing unilateral sanctions, exercising long-arm jurisdictions, overstretching the concept of national security to hobble foreign companies and employing economic coercion," he argued.

Under both Biden and President Donald Trump before him, the U.S. has imposed sanctions against China for its activities in the disputed waters of the South China Sea, as well as for allegations of human rights abuses in China's Xinjiang province and the semi-autonomous region of Hong Kong.

These areas of contention were topics of discussion when Biden and Xi held their first virtual summit last month. Also discussed was the issue of Taiwan, which China has vowed to retake it by diplomacy or by force, if necessary. The issue was elevated when Biden hosted Taiwan at the recent Summit for Democracy, an event that both Moscow and Beijing accused of stoking ideological tensions.

Joe, Biden, Xi, Jinping, virtual, summit
U.S. President Joe Biden meets with China's President Xi Jinping during a virtual summit from the Roosevelt Room of the White House in Washington, D.C., on November 15. Ties between Washington and Beijing soured under the previous administration of President Donald Trump and continue to struggle as the world's top two powers remain at odds. MANDEL NGAN/AFP/Getty Images

Moscow has also declared support for China's position on Taiwan, a stance enshrined in the Treaty of Good-Neighborliness and Friendly Cooperation signed between China and Russia 20 years ago. The agreement, which was renewed this summer, has served as the basis for the two countries' growing relationship and was discussed by both heads of state in their meeting on Wednesday.

"The consistent implementation of this fundamental document, which comprehensively reflects the deep historical traditions of friendship and mutual understanding between the Russian and Chinese people, has helped us to take our relations to an unprecedentedly high level," Putin said during his meeting with Xi, according to a Kremlin release.

Building on this agreement, the Chinese Foreign Ministry said that the two men "have extended firm mutual support on issues concerning each other's core interests, thus defending the national dignity and common interests of both countries."

And on the economic front, Putin and Xi both noted that their bilateral trade has actually exceeded pre-pandemic levels to reach $123 billion in the first three quarters of 2021, a figure expected to soon reach record levels as they pursue the $200 billion mark in the near term. The number has been boosted by a number of joint projects including the integration of Xi's Belt and Road Initiative with Putin's Eurasian Economic Union project.

Putin declared during the meeting that "a new model of cooperation has developed between our countries, a model based, in part, on the principles of non-interference in each other's affairs and mutual resolve to turn our common border into a belt of eternal peace and good-neighborliness."

Xi, for his part, said that "the two countries have actively fulfilled their responsibilities as major countries, promoted a united, global response to COVID-19, communicated the true meaning of democracy and human rights, and acted as the bulwark of following true multilateralism and upholding fairness and justice in the world."

Ukraine, soldier, front, line, war, Donbas
A Ukrainian serviceman walks out of a dugout on the frontline with pro-Russia separatists near the village of Pesky, Donetsk region, on December 14. China has signaled support for Russia's challenges against U.S. military activities in Eastern Europe, and Moscow has backed Beijing's position on the U.S. presence in the Asia-Pacific. ANATOLII STEPANOV/AFP/Getty Images

Editor's pick

Newsweek cover
  • Newsweek magazine delivered to your door
  • Unlimited access to
  • Ad free experience
  • iOS and Android app access
  • All newsletters + podcasts
Newsweek cover
  • Unlimited access to
  • Ad free experience
  • iOS and Android app access
  • All newsletters + podcasts