Beijing Tells Chinese in Russia to Help Fill Economic Void

(Bloomberg) -- China's top Russia envoy urged Chinese business people in Moscow to seize economic opportunities created by the crisis, a strategy that could help soften the blow from international sanctions.

Ambassador Zhang Hanhui on Sunday told about a dozen business heads to waste no time and “fill the void” in the local market, the Russia Confucius Culture Promotion Association said on its official WeChat account. While the summary made no mention of sanctions or sanctions compliance, Zhang described the situation as an opportunity.

“The current international situation is complex. Big companies face major challenges or even disruptions in payment and supply chains,” Zhang said, according to the post, which included photos of the meeting. “This is a moment where private, small- and medium-sized enterprises could play a role.”

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Chinese Foreign Ministry spokesman Wang Wenbin said at a regular briefing Tuesday in Beijing that “China and Russia have been conducting mutually beneficial cooperation in economics and trade,” without acknowledging the ambassador's meeting in Moscow. The Chinese embassy in Moscow and Russia Confucius Culture Promotion Association didn't immediately responded to requests for comment.

President Joe Biden warned his Chinese counterpart Xi Jinping in a call Friday of unspecified “implications and consequences” if Beijing supported Vladimir Putin's invasion of Ukraine. Japan, the European Union, the U.K. and others have joined a U.S.-led sanctions campaign against Russia in an effort to isolate Putin's regime and push the war toward a resolution.

While China has decried sanctions and pledged to maintain “normal trade relations” with Russia, major Chinese companies so far appear to be complying with the penalties.

Alicia Garcia Herrero, Natixis SA Asia Pacific chief economist, said she doubted the push to engage smaller Chinese businesses in Russia would be successful. “Navigating the sanctions is the same for everybody,” she said. “My sense is these private, small companies will hear the message, but they'll be very reluctant unless they see the biggest companies backed by the Chinese state moving forward.”

Zhang said the Chinese government was finding ways to adjust to logistics and payment challenges in the “new situation,” in an apparent reference to the sanctions regime. The Chinese envoy gave unspecified examples and advised attendees to “adapt” to new reality as soon as possible.

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With assistance from Bloomberg