China and Russia: The Trade Ties That Bind

As Russia’s horrific attack on Ukraine escalates, so do the calls entreating nations to commit to sanctions intended to kneecap the Russian economy. International hopes to stop the carnage in Ukraine depend not only on providing military equipment to Ukraine; they also count on debilitating the Russian economy to the extent that it ceases to function properly. This, it is thought and hoped, will eliminate Moscow’s ability to fund its war – and perhaps even lead to a public uprising against Russian President Vladimir Putin.

But, of course, such sanctions don’t completely work if Russia has back door sources of support and aid. The largest and most likely of those is China, whom the world saw commit to a Sino-Russian partnership with “no limits” just weeks before Putin’s army was mobilized against Ukraine.

The head of Russia’s Council on Foreign and Defense Policy, longtime Kremlin adviser Sergey Karaganov, is confident that the strength of the relationship with China would help Russia weather any storm. “China is our strategic cushion. We know that in any difficult situation, we can lean on it for military, political and economic support,” he said, as reported by Nikkei Asia in early February.

Six weeks later, that perspective is being put to the test. How far will China go to support Russia? Will it risk having secondary sanctions slapped on it for providing Russia with military and financial aid to continue the indiscriminate onslaught on Ukraine's citizens?

Certainly, part of the calculation must be based on what advantages China derives from cooperation with Russia, the concomitant risk of alienating a world already more suspicious of Chinese state behavior than at any time in recent history. After all, with much of the world already calling Beijing a purveyor of genocide against the Uyghurs, few would be sympathetic to a China that in addition aided and abetted the slaughter of innocent civilians and children in Ukraine.

What does China get from Russia in its trading relationship that would prompt it to take such a risk, if indeed its leaders believe that the West would carry out meaningful sanctions against them? (And they might well believe it. There has rarely been such a unified and prolonged reaction to an instance of military action as that which has spontaneously arisen among citizens around the world, much less their governments, both in fervent support of Ukraine, as well as in utter condemnation of and repugnance for Putin and his supporters.)

China is most interested in two major exports from Russia: energy and wheat.

The first is not surprising. From a country that was completely dependent on its own oil resources three decades ago – there were only two publicly accessible gas stations in Beijing in 1987 – China today has the largest number of cars in the world – over 300 million – and needs the corresponding amount of oil to run them. (By contrast, the U.S. had nearly 287 million cars registered as of 2020.)

At first glance, therefore, the energy supplies that China imports from Russia would seem to be the most critical economic link to protect and preserve. Although China imports oil from many sources, Russia is currently its second largest oil supplier, only surpassed by Saudi Arabia. There have been times when Russia has held the top spot.

In times of ample wheat production in China, it would likely be true that preserving its oil supply would be Beijing’s primary concern in calibrating its posture toward Russia. After all, wheat imports account for just under 7 percent of the total amount of wheat consumed in China. But just as Russia invaded Ukraine, China struck a deal with Russia to increase its wheat imports, removing health-related restrictions that had been in effect.

Reports suggest that this year’s wheat crop in China could be historically bad, based on a poor winter wheat harvest. This means imports are crucial to make up the shortfall.

But why is wheat so important to China in the first place? It seems counterintuitive on the face of things. None of the major Chinese cuisines focus on bread products. In fact, doesn't China cuisine primarily use rice as its grain of choice?

Not quite. China has two primary staple foods (zhushi, 主食), rice and noodles, and one or the other is typically eaten with every meal, three times a day. The emphasis on rice and noodles is because they are foundational foods. Even if nothing else is available, a person can survive on just one or the other, if need be. Every restaurant in the country asks its diners which one they prefer with the rest of the meal being ordered, and every meal cooked at home will include one, as well.

This elevates the status of wheat. Although there are many other types of noodles, such as those made from rice or eggs, wheat noodles are prevalent in northern China, which means everywhere above the Yangtze River. Other major staple foods made from wheat are mantou, a dense bread also found mainly in northern China, and dumplings, ubiquitous throughout the country. Wheat is a critical source of nutrition in the Chinese diet.

In China, even small percentages still mean big numbers. The South China Morning Post reports that Chinese imports of wheat in 2021 rose by 16.6 percent year on year, to 9.77 million tonnes. China consumes 140 million tonnes of wheat a year; this means that just under 7 percent of China's wheat requirements come from imports. China plans to increase its Russian imports, saying that the door is “wide open” for Russian wheat.

Therein lies China’s dilemma. Were even 5 percent of the Chinese population to be deprived of food made from wheat, due to China’s recently reinstated imports from Russia improbably being shut off by the Chinese government in a nod to sanctions, that translates into over 72 million people in China missing out on a staple food.

That in turn would be not only a humanitarian disaster but also a political one for the Chinese Communist Party. If oil imports are not sufficient to meet demand, people may get ornery, but they won’t starve to death. If food imports dry up, and people begin to be hungry, that would incite social protest and worse.

In 1960, China produced 20,960,000 tons of wheat. The following year, production fell by 32 percent, to just 14,250,000 tons. That drop, brought about by an unfortunate combination of baffling agricultural policy shifts and natural disasters, caused the death by starvation of somewhere between 15 and 55 million people between 1959 and 1961 (that the number is still so imprecise is an indication of the human devastation the famine brought, as well as the government’s tight censorship of historical research on the subject). China’s Three-Year Great Famine is the worst instance of mass starvation known to humankind.

Almost 200 million people in China today are over 65. That means that the Great Famine is held within the living memory of a significant portion of the Chinese population, approximately 13.5 percent, according to Chinese figures. Little haunts China more than the idea of impending hunger. As such, China will go to great lengths to protect the stability and security of its food supply.

If that means flouting international sanctions against Russia, expect China to do so. No sanction on China could be worse from its perspective than a threat to its food supply and the consequences of not having enough.

Scott Kennedy, senior adviser and trustee chair in Chinese Business and Economics at the Center for Strategic and International Studies (CSIS), told The Diplomat that China under President and Communist Party head Xi Jinping has been trying to secure its food supply by boosting domestic production.

Kennedy noted that “over the last ten years, China has reversed course on its original strategy” of diversifying its sources for imported rice and other agricultural products to feed the Chinese nation. Instead, Xi has moved China back toward a policy of self-sufficiency, Kennedy said.

China is finding it difficult to achieve that goal, however. It is producing 93 percent of its wheat but is finding that it is not enough. Reuters reports that China’s use of wheat in animal feed is expected to be half of last season’s – not only due to higher prices, but also due to Chinese government restrictions disallowing the sale of state stockpiles to be used in animal feed.

In assessing how China will react to international sanctions going forward, Kennedy said that he is “concerned that China now views interdependence with the West as essentially a vulnerability, not very different from the debate that the U.S. is having about decoupling.” In fact, he added, decoupling – weaning off trade ties to reduce exposure to major rival – is a concept first raised by China, not by the United States. In Kennedy’s view, China’s leaders “underestimate how bad things could get if relations with the U.S. get bad. I’m concerned that their evaluation of their relationship is distorted enough that they'll throw their lot in with Putin.”

Ultimately, China may paint itself into a corner. The images from Ukraine are now seared into the mind’s eye of the world. Popular outrage against Russia is sky-high in the United States and European Union, by far China’s most important trading partners. As calls grow to declare Putin a war criminal, it will be interesting to see if Xi Jinping will still leave the “door wide open” for Russian wheat.