The Banking Executive Magazine - April 2022 Issue

China’s Growth cause Russia to divert some of its food exports to China on favorable terms. Similarly, China is likely to gain more favorable terms for its energy imports as the war continues and other coun- tries reduce their purchases of Russ- ian oil and gas. The US has banned imports of Russian oil, and other countries are likely to follow suit. Likewise, the EU plans to reduce its reliance on Russian natural gas by two-thirds this year and seek alterna- tive suppliers and energy sources to compensate. While the switch away from gas will take time, it seems inevitable that Russia will need to look for other buyers soon. Given that oil and gas accounted for 60% of Russia’s ex- ports and generated 39% of its fed- eral budget revenue in 2019, China will be in a strong bargaining posi- tion. Ultimately, the Russia-Ukraine con- flict’s impact on the Chinese econ- omy will depend on the duration of the conflict and the extent of the dev- astation that it causes in Ukraine and Russia, and other parts of the global economy. It will also depend on how much goodwill remains between China and Ukraine’s Western allies when the fighting stops. Clearly, 2022 will be a year of uncer- tainty in which China has limited control over its rate of economic growth. New risks arising from the war in Eastern Europe have com- pounded the challenges that policy- makers anticipated owing to the slow and uneven post-pandemic recovery. At this point, how China and the rest of the global economy will fare in the coming months is anyone’s guess. ISSUE 160 APRIL 2022 the BANKING EXECUTIVE 45 Oil and gas accounted for 60% of Russia’s exports and generated 39% of its federal budget revenue in 2019, China will be in a strong bargaining position.