China is providing the Russian military with geospatial intel, Plus Europe's ports are clogged with Chinese EVs -- China Boss News 4.12.24
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What happened
US Treasury secretary Janet Yellen warned Chinese companies last weekend against providing “material support for Russia's war against Ukraine,” and said there would be “significant consequences if they do so," Politico reported, citing a US Treasury statement.
Yellen’s admonition expressly included the provision of “support to the Russian defense industrial base” which could result in secondary sanctions.
Yellen told reporters at a briefing that she had “‘difficult conversations’ about national security with Chinese officials,” and singled out Chinese banks for a stern warning, according to CNN.
“President Biden and I are determined to do all that we can to stem the flow of material that is supporting Russia’s defense industrial base and helping it to wage war against Ukraine. We continued to be concerned about the role that any firms, including those in the PRC, are playing in Russia’s military procurement.”
“I also reinforced that any banks that facilitate significant transactions that channel military or dual-use goods to Russia’s defense industrial base expose themselves to the risk of U.S. sanctions,” she said.
Why it matters
US warns allies about ‘dangerous’ development
Yellen’s statements followed a bombshell revelation by US officials that "China has provided Russia with satellite imagery for military purposes, as well as microelectronics and machine tools for tanks,” as Bloomberg reported.
“China’s support also includes optics, propellants to be used in missiles and increased space cooperation,” news staff wrote, citing a person familiar with the matter.
In a measure of how seriously the US considers China’s increased cooperation with Moscow on the battlefields of Ukraine, the White House launched a full-court press with Blinken advising NATO and European allies, Sec. Yellen raising the issue in Beijing, and President Joe Biden speaking of it ‘directly with Chinese leader Xi Jinping’ in their phone call last week,” according to Frederick Kempe at the Atlantic Council.
Financial Times spoke to three people familiar with Blinken’s talks in Brussels who said the top US diplomat’s “warnings were explicit” and were “raised … in every session of a meeting of Nato foreign ministers.”
“There has been a shift and it was felt in the room . . . this was a new development. It was very striking,” one said.
Another official told Kempe that the US believes that “China is dangerous,” and that “‘90 percent of the reason’ Russia has been able to sustain the war effort and reconstitute its economy, despite sanctions, is due to a ‘massive effort’ by China.”
Harsher sanctions ‘around the corner’
Both the US and EU in February levied sanctions against several Chinese firms for helping Russia wage war in Ukraine.
The US first placed five Hong Kong companies on the Commerce Department's entity list for supporting Russia’s defense industrial base in June 2022. In 2023, the Biden administration really dropped the hammer by levying additional sanctions on scores of Chinese companies for providing satellite imagery, aerospace technology, and microelectronics used for missile and drone guidance systems to the Russian military.
For the EU, however, the February sanctions were unprecedented and Chinese officials responded with a tizzy of tirades and threats, Politico then reported.
"‘The European Union disregarded multiple interventions and discouragements from China, and acted single-handedly to list four Chinese companies in the package of sanctions. Such unilateral sanctions and [the exercise of] long-arm jurisdiction have no basis whatsoever in international law, nor were they authorized by the United Nations Security Council,’ the ministry said in a furious statement posted online.”
“It added that the sanction package ‘violates the consensus and spirit of the China-EU leaders' meeting" — referring to the summit between European Commission President Ursula von der Leyen and Chinese leader Xi Jinping in December — and ‘will bring about negative impact on China-EU trade and economic relationship.’”
The EU’s 13th package of sanctions - which were approved by all 27 members states, including Hungary - who often cozies up to Beijing and Moscow in geopolitics - were “narrowly targeted” and merely precluded EU firms from “sell[ing] battlefield or dual-use goods” to four Chinese firms.
But it was the message that stung as Europe finally made clear it could and would ramp up punishment on Chinese entities to stop a warmongering Kremlin.
Politico analysts recently took a look at why Russia is able to keep up momentum in Ukraine despite being slapped with some of the strongest sanctions in history.
One criticism was that the US and its allies had used "traditional economic sanctions" that "generally target individuals, companies and state bodies,” but, analysts said, they could also "hit financial institutions, including the central bank of a country that houses many of its national assets.”
On the sidelines of the Munich Security Conference held in Germany earlier this year, Democratic Congressman Gerald Connolly, member of the U.S. House Committee on Foreign Relations, told CNBC that “[i]f broad sanctions were applied to China, it would really hit home.”
“And their economic performance right now is already weak. So I would hope China would calculate carefully that there are consequences around the corner for supporting Russia’s violence and depravity in Ukraine,” he warned.
For their part, Chinese banks, especially the larger ones, seem to be taking the threat of secondary sanctions very seriously.
An increasing number are saying “no” to Russian business, although “some smaller Chinese banks with no other international business ties, have been willing to finance Russia and assist in service payments,” South China Morning Post reported.
That, however, may not last as the US and EU iron out the kinks in their sanctions regimes for broader - and harsher - application.
This Week’s China News
The Big Story in China Business
CHINESE EV MAKERS CLOG EUROPEAN PORTS WITH UNSHIPPED CARS: European ports are turning into "car parks" as mainly Chinese EV makers "struggle with a slowdown in sales and logistical bottlenecks including the lack of truck drivers," Financial Times reported earlier this week.
Officials at the Port of Antwerp-Bruges, which includes the busiest entry for car imports in Europe, Zeebruge, told FT that “[c]ar distributors are increasingly using the port’s car parks as a depot."
“‘Instead of stocking the cars at the dealers, they are collected at the car terminal. All major car ports’ were struggling with congestion, the port added, without specifying the origin of the vehicles.”
‘It’s chaos’: Auto industry analysts also said that the "glut" is occurring because
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