The conflict between Russia and Ukraine may be the biggest geopolitical event since the 21st century, and its impact on China's economy and trade cannot be underestimated. Combined with the experience of the Crimean crisis and the current economic and trade situation, this paper discusses the overall and structural impact of the Russian Ukrainian conflict in three scenarios from the perspective of commodities, trade channels, capital flows, financial markets and psychological channels.
Although the Crimean crisis lasted for a short time, the sanctions imposed by western countries on Russia have not been lifted. In order to improve its ability to resist further sanctions in the future, Russia has made substantial adjustments to its financial and economic structure, including reducing external debt deleveraging, maintaining a double surplus in trade and financial accounts, increasing the diversification of foreign reserves, hoarding key parts and strengthening trade ties with non western countries. A series of sanctions and anti sanctions led to a significant decline in Russia's economic growth center after 2014.
The direct impact of the conflict between Russia and Ukraine on China is relatively limited, but the indirect impact should not be underestimated. International organizations such as the European Central Bank, the Federal Reserve, the OECD, the IMF and the United Nations Trade and Development Commission All lowered their economic growth expectations for 2022. Although China and Russia can achieve trade complementarity, the uncertainty of conflict and Russia's economic recession are difficult to significantly boost China's trade market in the short term. The sharp rise in commodity prices, the upward inflation risk, the warming of "hawks" of major central banks, the intensification of public opinion game and the turbulence of financial markets are not conducive to China's requirements for stability in 2022. However, the "weaponization" of financial instruments by western countries will help to enhance the internationalization of RMB.
The conflict between Russia and Ukraine has a far-reaching impact on China's long-term strategic planning. Economically, China needs to accelerate the construction of a dual cycle pattern dominated by internal circulation and mutually promoted by China and the world, and adhere to development and do its own thing well; In finance, China should continue to adhere to both security and openness, actively improve international mutual trust and improve the financial infrastructure in line with international standards; In terms of science and technology, China should not only rely on its own development to break through the encirclement, but also increase international exchanges and learning. As long as there is no sudden rupture, the economic and financial system can adjust and adapt spontaneously. In the coming period of time, globalization may gradually evolve into regionalization. China's goal is to build a communication bridge between regions and avoid irrational behavior.
Risk tip: the conflict between Russia and Ukraine is highly uncertain, and the western countries are irrational.
