By 2027, Goldman Sachs predicts that China will overtake the United States as the world’s preeminent economic power. Photo: iStock
China's money supply has been rising. Photo: iStock

China’s state media criticized the United States as “arrogant” after Washington called on Beijing to help in Ukraine during a meeting between the two countries’ diplomats in Rome on Monday.

After US National Security Adviser Jake Sullivan raised concerns in the meeting about China’s potential moves to support sanctioned Russia, Beijing’s Foreign Ministry spokesperson Zhao Fijian said Tuesday that China and Russia would continue to conduct normal economic and trade cooperation in the spirit of mutual respect, equality and mutual benefits.

Zhao said China strongly urged the US not to undermine its legitimate rights and interests when handling relations with Russia.

Meanwhile, an article published by a social media account of Defense Times, a state-owned newspaper, reported on Tuesday that the Eurasian Economic Union (EEU) and China would jointly launch the first draft of an independent international monetary and financial system by the end of this month.

The article said the development was first reported by Russian media, which cited an announcement made by the Eurasian Economic Commission.

Since Russian troops attacked Ukraine on February 24, the US has asked China about its stance on the war. Beijing officials have reiterated that China hoped all sides would resolve conflicts peacefully through dialogue, while it opposed the West’s sanctions imposed unilaterally on other countries.

At the same time, Chinese state media suggested Russia use China’s Interbank Payment System (CIPS) to settle its external trade after seven Russian banks were removed from the SWIFT system. They also promoted the use of renminbi in Sino-Russian bilateral trade.

Jake Sullivan, US President Joe Biden’s national security adviser. Photo: AFP / Yasin Ozturk / Anadolu Agency

A seven-hour meeting

On Monday, Sullivan had a seven-hour meeting in Rome with Yang Jiechi, director of the Office of Foreign Affairs Commission and a politburo member of the Communist Party of China, with a substantial discussion on Russia’s war against Ukraine.

The two diplomats also discussed Hong Kong and Taiwan issues. Their meeting followed up on the November 15, 2021, virtual meeting between US President Joe Biden and Chinese President Xi Jinping.

After the meeting, White House press secretary Jen Psaki said Sullivan had said during the meeting that China would face “significant consequences” if it provided Russia with military or other support that “violates sanctions or supports the war effort.”

The meeting was described by Biden administration officials as intense and candid. It had reportedly been planned before Russia invaded Ukraine almost three weeks ago.

A senior Biden administration official said Sullivan had expressed concerns about Beijing’s “provocative” activities across the Taiwan Strait during the meeting with Yang.

Prior to this, US officials told the media that Russia had asked China for military assistance for its war in Ukraine. On Monday, Zhao of China’s Foreign Ministry said in a regular media briefing that the US had been maliciously spreading disinformation targeting China.

He said China had been playing a constructive part in promoting peace talks and hoped that all parties would exercise restraint and cool the situation down instead of adding fuel to the fire, and work for a diplomatic settlement rather than further escalate the situation.

On Tuesday, Zhao was asked again by journalists the same question. Zhao said Dmitry Sergeyevich Peskov, the press secretary for Russian President Vladimir Putin, had denied that Russia asked China for military equipment.

He called the US “unprofessional, immoral and irresponsible” for spreading disinformation. He also said China did not agree with resolving issues using unilateral sanctions that have no basis in international law.

Shocks to world economic recovery

“The world economy is already struggling due to the impact of Covid-19. Sanctions will only create shocks to world economic recovery and do no good to any parties,” Zhao said.

“We strongly urge the US not to undermine China’s legitimate rights and interests when handling the relations with Russia. China and Russia will continue to conduct normal economic and trade cooperation in the spirit of mutual respect, equality and mutual benefits.”

On Tuesday evening, Xiakedao, a social media account run by the overseas edition of the People’s Daily, published an article criticizing the US for spreading disinformation before the Yang-Sullivan meeting.

“Since the current US government took office, it has repeatedly raised public opinion, smeared and put pressure on China before its important talks with China. Such practice is very bad. It also shows that the US is outwardly strong but inwardly weak,” Wang Dong, a professor at the School of International Studies at Peking University, said in the article.

“The US does not only seek cooperation with China, but also hopes that China will obey its words, pretending to be tough and accusing China. The US side should reflect on its practices and change its arrogant attitude.”

“Blindly imposing sanctions will only make the Russia-Ukraine situation more complicated. It is necessary to seek a comprehensive solution to the Ukraine issue through dialogue and consultation,” Diao Daming, an associate professor of the School of International Studies, Renmin University of China, said in the article.

“The US realized that the sanctions on Russia could be not as effective as expected, and immediately began to put pressure on China. This pressure is pointless and unreasonable.”

Diao did not elaborate on how ineffective the sanctions on Russia were, but he said such an outcome was basically due to the US’ wrong direction of pursuing the Cold War mentality. He added that other countries had the right to maintain their correct position.

China wants to replace the US dollar with its own currency. Photo: AFP

Replacing the dollar

On Tuesday evening, Paitou International Vision, a social media account operated by the state-owned Defense Times, published an article titled “China-Russia will set new currency rules, replacing the US dollar with renminbi, ignoring the West’s pressure.”

Citing Russian media reports, the article said the EAEU, which included Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, had started setting up a new financial settlement system with China. It said the first draft of the system, which could measure the involved countries’ currencies and commodity trading, would be unveiled in late March.

“After the Western countries led by the US and the United Kingdom opened the curtain of the ‘new Cold War,’ the economic integration process in the Eurasian region has accelerated simultaneously,” said the article. “It’s great news for China and EAEU member countries. However, Western countries led by the US have collectively opposed this.”

After the West froze hundreds of billions of dollars of Russia’s foreign reserves, Russia had to find a way out to ensure its long-term economic stability, it said. Sino-Russian cooperation could solve Russia’s urgent needs while the establishment of the EAEU-China’s new financial settlement system will achieve mutual benefit and win-win results, it added.

“The renminbi-ruble settlement system will yield unusually brilliant results while the US dollar dominance will turn weak,” it said, adding that the US and the UK only wanted to stop China from providing Russia with its yuan-denominated reserves.

On Sunday, Russian Finance Minister Anton Siluanov told the media in Moscow that Russia could not use about US$300 billion, almost half of its international reserves, due to recently imposed Western sanctions, but that it still had access to its yuan-denominated reserves. He said he believed relations between Russia and China would continue to grow. 

Read: Chinese exporters warned of Russian payment risks

Follow Jeff Pao on Twitter at @jeffpao