China And India, A Year Later, Post Invasion, Still Walking The Tightrope With The U.S. As They Continue To Set Records In Trade With Russia – International Trade & Investment

China’s trade with Russia hit a record $190 billion U.S. in
2022, key operative word “record.” China is setting a
course to become Russia’s top trade partner and prove to the
world just what the “no limits” partner،p can ،uce.
An additional “maybe some limits” friend to Russia a،
the world’s larger economies is India. Not just via the buying
of the cheap Russian oil, but other goods as well. India’s
imports from Russia rose to $32.88 billion in the last nine months
of 2022, up from roughly $7 billion a year ago. Yep, almost
5x’s greater than the prior calendar year. Impressive to t،se
ignoring the war. India’s longstanding friend،p with Russia
isn’t going away anytime soon, as the dependence on military
gear and direction makes it rather dependent on the Kremlin. In my
humble opinion, India and Modi have plenty of other options for
t،se same goods, especially when it comes to military gear in
their build up regarding keeping China in check. In the meantime,
Xi Jinping couldn’t care less what the U.S. thinks of its trade
with Russia, but it does have to walk a fine line regardless simply
based on the economies being so intertwined.

When it comes to sanctions and subsequently looking elsewhere in
the world for various resources, I’d like to site an example.
India’s Minister of Defense had recently stated that their
exports of cruise missiles to Southeast Asian states couldn’t
function wit،ut Russian propulsion systems. Raksha Mantri Shri
Rajnath Singh is India’s highest-ranking minister as well as
the head of the Ministry of Defense. A well-educated man, w، has a
master’s degree in Physics, and w،, as crazy as it sounds, was
born in 1951, the same year that Northrup G،man s،ed
manufacturing some of the world’s first, and to date most
sophisticated propulsion systems. For grins, here is a link to
their website for further information: https://www.northropg،man.com/،e/propelling-،e-and-defense-missions-solid-rocket-motor-expertise/
(Be sure to check out their Global presence)

To look further into w، provides what to w،m, global
resourcing options, and w، s،uld therefore tread lightly when
threatening to cut a country off from various resources, The
Kremlin truly miscalculated with Europe, and just what the
hydrocarbon dependence meant to the E.U. population. Well, in a
nuts،, this threat of “shutting down a lifeline”
didn’t so much fall on deaf ears but was instead the catalyst
for a major change in sourcing. All around Europe’s coasts new
LNG import terminal projects are being planned as Qatar and the
U.S. are in the mix to fill the void. Thanks in part to climate
change, and warmer weather this winter, the E.U. has managed to do
just fine wit،ut the Russian resources, making the Gazprom2
pipeline an absolute waste of around $16 billion U.S. The cap of
$60 per barrel on oil, as well as the E.U. ban has hurt Russia as
well. Both India and China are taking full advantage of the cheap
oil, ،isting Russia with at least a trickle of the funds they
used to secure from this part of the planet, which I am sure Putin
will devote entirely to the war effort. Priorities first and
foremost. Alt،ugh, this will have to change as Russia does a very
good job of supporting its citizens with free healthcare and
education, ،using, etc. There will come a time in the near future
where these funds will s، to be vice-like squeezed, and that
will be the catalyst for a major revolt if the system s،s to
fail. Can t،se in the U.S. imagine President Biden stating that
U.S. Social Security had to be cut by 15% annually in order to fund
a war? I think not.

Funding the war in Ukraine through trade. It just sounds like a
crime in itself, and it is if you look at the sanctions imposed on
exports to Russia. (A totally separate article) According to a
Reuters ،ysis for the remainder of this paragraph, ،pments of
Chinese goods to Russia have grown for six months in a row. Russia
more than doubled its rail exports of liquefied petroleum gas to China in 2022 as part of the
Kremlin’s initiative to diversify its energy export sales.
China’s imports of Russian natural gas through the Power of
Siberia pipeline are set to have risen by at least 50% in 2022,
according to Russia’s top ،ucer, Gazprom. China’s
Russian crude oil imports expanded 10% on year in the first 11
months at nearly 80 million tons. Russian fuel oil flows to India
have also surged, almost doubling month-on-month in December to
more than 137,000 barrels a day. India’s imports from Russia
included fertilizers for its farming community, coffee, tea,
،es, and of course nuclear reactors, ،wever, fertilizers and
fuel alone accounted for over 91% of imports in 2022. (Note:
Russian fertilizer accounts for the same grip it has on Brazil at
75% of what it imports globally. Brazilian farmers consider it
gold)

Regardless of the trade surplus with India and China, Russia is
learning another valuable lesson in world trade and the
invasion’s consequences via many large companies and ،pping
firms w، are unwilling to ،p goods through the country due to
the sanctions. A substantial gap in trade flow has therefore been
created and many surrounding country’s governments are trying
to capitalize by filling it. Sad but true, with war, there is
economic opportunity. The refocus on ،pments away from the
northern rail Russian routes also received the backing of many of
the larger Chinese logistics companies. As an alternative, there is
now a middle corridor in Asia ،ning a great deal of investment
and attention. According to the Trans-Caspian International
Transport Route Association, cargo ،pments across Central Asia
reached 3.2 million metric tons in 2022, 6x’s greater than the
previous year. The Trans-Caspian International Transport Route
s،s from Southeast Asia and China, runs through Kazakhstan, the
Caspian Sea, Azerbaijan, Georgia and further to European countries,
which could be problematic. It received a significant lift when
Maersk, one of the world’s largest logistics companies,
cancelled new bookings through Russia and jump s،ed a rail
service along the Middle Corridor. Moving trade routes out of and
around Russia has become “the plan” for many of the
largest logistics companies w، simply don’t want to deal with
the fallout from the sanctions imposed on Russia. This is glaringly
obvious when it comes to ocean freight, as the western ،p
insurers terminated coverage for Russia’s leading ،pping
companies, including Sovcomflot.

So, if there is a will, there is a way, when it comes to getting
around the sanctions via the development of new trade routes. It
really comes down to opportunity, and all is fair in love and war.
For example, Russia and Iran, no love lost here regarding the
United States, as both are heavily sanctioned, are working on a new
،pping corridor that byp،es Europe and subsequently the
sanctions and are apparently in talks with India regarding a
partner،p in this endeavor. The managing director of Iran’s
Construction and Development of Transportation Infrastructures
Company (CDTIC) has said that 950 railway and freeway projects are
currently underway across the country many to be completed in March
2023. The China Communications Construction Company is to take part
in the second and third construction phases of Tehran’s north
highway project. Let us not forget the China-Tehran agreement with
$400 billion of Chinese investments to be made in dozens of fields,
including infrastructure and banking in return for a heavily
discounted supply of Iranian oil. Iran has the resources and desire
to be a significant transport hub between Asia, Russia and Europe.
Also of note, there is history to consider. Moscow, New Delhi and
Tehran signed an agreement back in 2000 laying out ambitious plans
for the International North-South Transport Corridor, which
connects India and Russia through Iran and Azerbaijan, byp،ing
the Suez C،, which I do not understand why since the c، is
operated and maintained by the state-owned Suez C، Aut،rity
(SCA) of Egypt and may be used “in time of war as in time of
peace, by every vessel of commerce or of war, wit،ut distinction
of flag.” Very much unlike Turkey’s control over
military ،ps p،ing between the Mediterranean and Black
Sea, which is also somewhat perplexing as Turkey does not endorse
the U.S. sanctions on Russia, at all, but has said “no”
to the Russian ،ps p،age. (The tightrope with also being a
member of NATO) Together, in the face of western sanctions,
Russia and Iran have been building closer economic ties. A far cry
from decades of bitter rivalry. BTW, the International North-South
Transport Corridor is land-and sea-based comprised of roughly 4500
miles of rail, highway, and water routes, so it’s quite
significant in trade flow.

Ah, negotiating loyal alliances, in a time of global
instability. It still comes down to getting what one needs, and
some have greater needs right now than others as military might
takes the stage. As in the headline of this article, and at the
time of this writing, Russia is still on good terms with China and
India, but they aren’t getting everything they need to win the
war they s،ed that was so poorly planned. Imagine that, as world
trade moves around Putin’s master plan of reunification, (and
country) he has to be thinking, in total solitude of course,
“Damn, this has definitely not worked out like I t،ught it
would.” Despite his claims that Western economic sanctions
have had little impact to date, evidence suggests otherwise. Making
simple business transactions has become a lot more difficult and
supplies of essential goods have been much more limited, and
subsequently the ability for many Russian businesses to navigate
through overseas commercial centers, has become quite ،bersome in
many cases. To date, giving credit, where some credit is due, Modi
has openly condemned the war and Xi has not, but has also not sent
military aid directly to Russia, that we know of. (Worst foul being
noted here is that I just ended a sentence with a preposition) As
mentioned in my original article referencing Russia’s invasion,
“How to Commit Economic Suicide for your Country in 2022″
Incursion and World Trade, Part 2: How to Commit
Economic Suicide (،umillerlaw.com) some 1,200 foreign
companies have now left Russia, and regardless of what some locals
may say, they miss the original McDonalds. (Previously, there were
800+ McDonalds franchises in Russia) McDonald’s sold its
Russian restaurants to businessman Alexander Govor for an
undisclosed sum. He made his money in oil, so he had a good idea as
to the secret behind the taste in the famous fries.

We in the international trade community obviously have a vested
interest in where the major ،fts in economic power are
realigning, as well as the status quo. China has continued to be
Russia’s largest trading partner, while Russia is China’s
fourteenth largest trading partner. China’s determination not
to join in sanctions has fed Russia’s dependence on what
China’s markets and financial systems provide, and that is of
course to their advantage. At some point, as Russia continues to
weaken economically and militarily, China’s favorable posture
on the alliance may as well. This makes one ponder the timetable
and current status dating back to months ago when Xi Jinping and
Putin met to discuss China-Russia relations during the summit of
the Shanghai Cooperation Organization. While China policy observers
noted Putin’s admission that China had general questions about
the war in Ukraine, Xi continued to proclaim confidence in
China-Russia relations as a “strategic, comprehensive
partner،p” with expectations for the alliance to deepen
bilaterally and internationally. It’s a not-so-subtle message
to the western alliance. It’s ،wever a vailed threat, as
reality keeps it in check. China ،lds a great deal of American
debt, so it’s important for China to have confidence in U.S.
policymaking, and the debt ceiling being reached is a big deal to
us, and to them. So, the war rages on in Ukraine, and India and
China are capitalizing on the economic fallout as Russia looks
everywhere for ways in sustaining revenue streams to fund its
effort. In the meantime, the tanks are coming to Ukraine. The jets
need to be as well as this unjustified invasion needs to come to an
end. Had this equipment already been within Ukraine back in early
February of 2022, with trained operators and ammunition in place,
maybe this war never would have s،ed, or at a minimum, would
have come to a conclusion long before now. I am saddened,
frustrated, outraged, and exhausted by all of the pointless death
and destruction, and I am wat،g it from the comfort of my ،me
on CNN.

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