July 2, 2022

Ferrum College : Iron Blade Online

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Before the Ukrainian invasion, Russia and China strengthened economic ties

Before the Ukrainian invasion, Russia and China strengthened economic ties

“If they do not comply with the United States, they are in trouble with the United States, but if they do not comply with China, they may also face sanctions in China,” he said.

Of course, Mr. Schurzimba added that collecting fines from companies unwilling to pay and monitoring whether companies comply with the rules can be difficult. “It has already proven difficult to monitor things that are actually controlled, and if you expand that list, it will be a real challenge to check what is going to Russia,” he said.

The Biden administration’s export controls apply to goods produced in any country as long as they use American technology — including chip makers such as Taiwan’s semiconductor manufacturer and Shanghai-based Semiconductor Industry Corporation.

These two companies continue to rely on the United States for certain components and manufacturing technology, said Gabriel Wildau, managing director of Teneo, a consulting firm. If they continue to supply Russia, SMIC and other Chinese companies could be cut off from US technology, the same kind of punishment that has crippled Huawei.

“If Beijing is seen as a catalyst for Moscow, pressure will rise in the US Congress to expand these restrictions,” Mr. Wildau wrote in a note to clients. He said Beijing would also run the risk that other major technology exporters, such as Japan, South Korea and the Netherlands, would adopt “Washington’s tougher approach.”

China’s state-owned banks may also face risks to continue lending to Russia. China and Russia are working to settle more of their trade using the renminbi and the ruble. Beijing is also trying to develop a digital use of its currency as an alternative to the dollar, which could help Russia reduce the impact of financial sanctions.

But Chinese banks are still heavily dependent on the US dollar. While it appears that major Chinese banks are already backing off their funding of Russia, Mr. Wildau said, Beijing could choose to support Russia by using smaller state-owned banks that do not do much international business that requires the use of dollars.

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