While China has said it would sit out sanctions against Russia over its invasion of Ukraine, many of the country’s tech firms have begun backing away from doing business in Russia.
That’s according to a Friday (May 6) report by the Wall Street Journal, which said the Chinese government has called for businesses to resist pressure from the U.S. and other countries.
Nevertheless, sources close to the matter told the Journal that several major Chinese companies are quietly cutting back on shipments to Russia, where they’ve dominated the market in a number of products.
These companies include computer maker Lenovo Group Ltd. and smartphone and gadget firm Xiaomi Corp., the sources said. But unlike Western companies, these businesses have not made public statements criticizing Russia’s war in Ukraine.
In March, the head of China’s banking and insurance regulator said the country opposed financial sanctions against Russia and would not join Western countries in imposing them.
Guo Shuqing said in a briefing at the time that the country would “not participate in such sanctions, and we will continue to maintain normal economic, trade and financial exchanges with relevant parties.”
He argued that unilateral financial sanctions typically don’t produce a positive result and lack a legal basis.
According to the Journal, China’s Ministry of Commerce last month admitted that the sanctions have disrupted the country’s trade with Russia, but urged companies “not to submit to external coercion and make improper external statements.”
The steep decline in tech exports to Russia underlines how impactful the West’s sanctions have been and how effective they’ve been at influencing the behavior of companies based far away, even in countries where the government opposes the sanctions. Trade data showed that China’s overall exports to Russia fell 27% in value from February to March.
As PYMNTS reported in April, Russia has called for the BRICS group of emerging economies (Brazil, Russia, India, China and South Africa) to extend the use of national currencies and integrate payment systems.
Russian finance minister Anton Siluanov said at a meeting with BRICS that the global economic situation was drastically worse due to the sanctions, adding that they have also destroyed the foundation of the existing international monetary and financial system based on the U.S. dollar.