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China In Eurasia

Russian President Vladimir Putin (center) and Chinese Vice President Han Zheng (second from left) visit the Russian-Chinese EXPO in Harbin, China, in May.
Russian President Vladimir Putin (center) and Chinese Vice President Han Zheng (second from left) visit the Russian-Chinese EXPO in Harbin, China, in May.

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia. Subscribe here.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

An Evolving Fight On Sanctions

Chinese banks have tightened their restrictions on payments from Russia out of fear of triggering U.S. secondary sanctions.

Will this make an impact in choking off Russia’s war machine?

Finding Perspective: The latest batch of information on this comes from the Russian newspaper Kommersant, which reported at the end of July that trade between Russia and China is getting ever more difficult, with some payments between partners taking up to six months to be processed.

About 80 percent of bank transfers made in the Chinese yuan are also getting bounced back with no explanation after being stalled for weeks while banks decide whether they can go ahead, the newspaper reported, citing anonymous sources.

This follows a report from July 17 by Bloomberg in which several major Russian commodity exporters said that trade with China had become increasingly difficult due to direct payments made in the Chinese yuan getting stuck indefinitely or delayed.

In June, the Russian division of the Bank of China stopped processing yuan payments with Russian banks that had been sanctioned by the U.S. Treasury Department.

The Industrial and Commercial Bank of China (ICBC), China CITIC Bank, and most other large Chinese lenders have made similar moves.

How Did We Get Here? Beijing has emerged as a top partner for Russia since its full-scale invasion of Ukraine, with analyses of Chinese customs data showing that in 2023 90 percent of dual-use goods deemed “high priority” and used to make Russian weapons came from China.

The United States and its allies have been intensifying restrictions in recent months after multiple senior U.S. officials said that the supply of dual-use goods by China has had a substantial impact for Russian forces on the battlefield.

This latest round of pressure originated back in December 2023 when the United States authorized secondary sanctions targeting financial institutions involved in trade linked to Russia's military industry.

This prompted global banks from China to the United Arab Emirates, Turkey, and Austria to reduce transactions with Russia to avoid getting in the crosshairs.

The payment issues were also exacerbated in June when the U.S. Treasury rolled out a new package of expansive sanctions against Russia for its full-scale invasion of Ukraine, forcing the Moscow Exchange to halt dollar and euro trade.

Why It Matters: Sanctions and finding ways around them is a constant game of cat and mouse.

In early July, a top Russian banker said the sanctions-evading methods should be made a “state secret” because they kept getting shut down so fast.

Andrei Kostin, the head of Russia’s second largest lender VTB and the banker who made those comments, called for a greater use of cryptocurrencies and other digital assets to facilitate payments, something that Bloomberg reported is increasingly being done in Hong Kong via Central Asia-based intermediaries at a growing frequency.

Worried about being targeted by U.S. secondary sanctions, China’s big banks have limited their cross-border transactions involving Russia and Russian firms of late, with Chinese companies that trade with Russia instead moving to smaller banks or underground financing channels that are difficult to track and have less exposure to the international financial system.

Tom Keatinge, director of the Center for Financial Crime and Security Studies at the Royal United Services Institute, told me that this makes up a “burner bank strategy.”

This is where China’s trade with Russia becomes concentrated increasingly into institutions that are unlikely to have a contagion effect on the country’s economy and that also are set up with no need for access to the international banking system and thereby limit the reach of U.S. sanctions.

Three More Stories From Eurasia

1. Brazil, China, And The Ukraine War

Beijing announced that a joint Brazilian-Chinese plan to end Russia's war against Ukraine has received a “positive response” from more than 110 countries.

The Details: The August 1 statement came following a visit to Brazil by Li Hui, China’s special envoy for Eurasian affairs, where he met with multiple high-ranking Brazilian officials.

China and Brazil jointly published a “six-point consensus” meant to bring about a lasting political solution to the war.

At the beginning of May, Li made a series of visits to countries across the Global South, as did Brazilian officials, as they crafted this new set of proposals.

China’s previous attempt to mediate between Russia and Ukraine, with a 12-point plan it put forward in February 2023, was quickly dismissed by European leaders.

Brazilian President Luiz Inacio Lula da Silva has strong working ties with China and looked for his country to play a role in pushing for a peace process to end the war in Ukraine.

The six-point plan is a fairly bland diplomatic outline that calls for cooling down fighting on the battlefield and a recognition that dialogue and negotiations are the only way to end the war.

During a July visit to China by Ukrainian Foreign Minister Dmytro Kuleba, he praised China “as a global force for peace” and said that Kyiv was open to peace talks.

But Kuleba also made clear that Ukraine attached conditions to such negotiations, saying it would only engage Russia when Moscow was “ready to negotiate in good faith,” and added that “no such readiness is currently observed on the Russian side.”

2. Boots On The Ground?

As China’s investments in Central Asia have grown over the last two decades, Chinese companies have also faced a growing list of new security challenges.

Odil Gafarov, writing for the Carnegie Russia Eurasia Center, looks at the rise of Chinese private security companies (PSCs) in the region.

What You Need To Know: This phenomenon is not unique to Central Asia and has already grown in unison with China’s expanding economic footprint in places like Africa and Southeast Asia.

The expansion of PSCs operating in Central Asia have gone hand-in-hand with incidents like clashes between Chinese and local personnel at oil refineries and gold mines in Kyrgyzstan in 2014 and 2019, the 2016 suicide bombing at the Chinese embassy in Bishkek, and numerous anti-China protests in Kyrgyzstan and Kazakhstan over the years.

As Gafarov notes, these companies offer “both armed and unarmed site protection, security consulting, safety training, insurance provision, and logistical support.”

The report notes that most of the companies do not fit the connotation of private security personnel operating in tactical gear and instead says that many of the Chinese PSCs prefer to keep their presence less visible.

The number of PSCs operating is also set to grow in the coming years and line up with other aspects of Chinese foreign policy in Central Asia.

“It aligns with China’s modern security diplomacy, police/paramilitary cooperation, and recently adopted Global Security Initiative. From this perspective, these entities potentially present an attractive instrument for advancing Beijing’s geopolitical agenda,” the report stated.

3. Drone Clampdown

The Chinese Commerce Ministry announced that it will ban the export of all drones that can be used for military purposes starting September 1, RFE/RL’s Ukrainian Service reported.

What It Means: Small and affordable consumer drones, many of which can even be bought online or off the shelf, have become a staple of the war in Ukraine for both Kyiv and Moscow for reconnaissance and targeted attacks.

This has led to both sides burning through the products at a high rate and constantly needing to replenish their stocks. China is the largest manufacturer of consumer unmanned aerial vehicles.

While the latest announcement points to the added scrutiny from the West against Chinese companies over the flow of dual-use equipment to the battlefield in Ukraine, it’s unclear if this move will make a significant impact.

DJI -- the preeminent Chinese drone maker -- first said it would stop doing business in Russia and Ukraine nearly two years ago, yet the flow of its products continues. The Chinese Commerce Ministry has also enacted multiple measures to limit the flow of drones, but both Kyiv and Moscow have managed to secure a continued flow to their forces.

Across The Supercontinent

Previewing Kallas: Former Estonian Prime Minister Kaja Kallas will be taking over as the European Union's new foreign policy chief, but what does her past record tell us about how she'd deal with China?

The South China Morning Post’s Finbarr Bermingham takes a look here.

Scooting Forward: With a $10 million investment, the Uzbek-Chinese company Ecomoto is scheduled to begin manufacturing electric scooters in Uzbekistan.

Beijing’s New Man In Berlin: Deng Hongbo, a seasoned Chinese diplomat with decades of experience in the United States, is slated to be Beijing’s next ambassador to Germany, the South China Morning Post reports.

One Trillion Dollars?: Chinese authorities have rejected a $ 1 trillion proposal made by the International Monetary Fund to use central government funds to complete unfinished housing in China, Bloomberg reports.

One Thing To Watch

U.S. Vice President Kamala Harris has chosen Minnesota Governor Tim Walz as her running mate on the Democratic ticket.

Walz doesn’t bring a great deal of foreign policy experience, but he did live and work in China as an English teacher in 1989. Since then, he says he has visited the country at least 30 times and even speaks some Mandarin. Walz also honeymooned in China with his wife and organized summer educational trips to China for U.S. students.

The Minnesota governor also became an outspoken advocate for human rights in the country, meeting with the Dalai Lama. While teaching, he also visited the Tiananmen Square protests under way in 1989 before the massacre that year.

Walz and his wife also got married on June 4, the anniversary of the Tiananmen massacre of student protesters. When asked why that date was chosen, his wife said it was because Walz “wanted to have a date he’ll always remember.”

That’s all from me for now. Don’t forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your inbox every Wednesday.

Afghan and Chinese officials attend a ribbon-cutting ceremony to inaugurate the Mes Aynak copper-mining project on July 24.
Afghan and Chinese officials attend a ribbon-cutting ceremony to inaugurate the Mes Aynak copper-mining project on July 24.

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia. To subscribe, click here.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

Harvesting Afghanistan's Mineral Wealth

After 16 years of delays, Chinese engineers and the Taliban government officially started work at Mes Aynak, a massive project in Afghanistan to mine the world's second-largest deposit of copper, my colleagues at RFE/RL's Radio Azadi reported.

Finding Perspective: At the July 24 event, Taliban officials along with Chinese businessmen and diplomats carried out a ribbon-cutting ceremony as work began on the construction of a road to the mining site.

A $3 billion deal signed in 2008 with the previous Afghan government gave the Chinese state-owned China Metallurgical Group Corporation (MCC) a 30-year mining concession, but combat between NATO-led troops and Taliban insurgents at the time delayed the project from moving forward.

But with violence waning since the Taliban's 2021 takeover, the cash-strapped Taliban-installed government is eager to exploit the country's vast and lucrative mineral deposits.

Since it seized power, the Taliban has faced the task of undertaking the reconstruction and development of a country devastated by decades of war. At the same time, officials have also found their economy suffocated by Western sanctions and are dealing with international isolation that has cut them off from receiving financial support.

China has been an exception for the Taliban government, with Beijing vowing to pursue deeper cooperation shortly after the group took control of Kabul, and Chinese companies have had an eye on exploiting Afghanistan's extensive resource wealth, signing a series of deals to secure the rights to oil and gas fields and rare-earth metal deposits.

What Comes Next?: Taliban officials said it would likely be at least two years before the first copper was extracted by MCC.

According to a Brookings Institute report, Afghanistan sits on some 2.3 billion metric tons of iron ore and 1.4 million metric tons of rare-earth minerals, and the U.S. Geological Survey has calculated that the country is sitting on $1 trillion in untapped minerals, such as iron, gold, and lithium -- an essential but scarce component in rechargeable batteries and other technologies.

Mes Aynak is one of the most attractive offerings for Chinese firms. The deposit is estimated to contain 11.5 million tons of copper ore, which is vital for electronics components and is surging in value due to its use in growing markets related to electric vehicles, renewable energy, and data centers.

Why It Matters: The ground breaking is a sign that Chinese resource ventures are moving forward in the country after decades of delays, but security concerns are still paramount.

Further developing the mine and turning a profit from it will require a substantially larger footprint of Chinese workers inside Afghanistan, and there are lingering questions about whether the Taliban can offer protection, especially amid Islamic State-Khorasan’s expanding profile.

Chinese workers have increasingly become a target of attacks in the region by various militant groups.

In neighboring Pakistan, there have been growing attacks on Chinese citizens, including a suicide attack that killed five Chinese engineers in March and a 2021 bombing that killed 13 people, including nine Chinese workers, at a dam project.

In Afghanistan, at least five Chinese nationals were wounded when gunmen stormed a Kabul hotel popular with Beijing businessmen in 2022.

Three More Stories From Eurasia

1. Kuleba's China Trip

Ukrainian Foreign Minister Dmytro Kuleba wrapped up a three-day trip to China and Hong Kong, where he met with his Chinese counterpart, Wang Yi.

Here’s what happened:

The Details: While meeting with Wang in Guangzhou, Kuleba said that Ukraine remains ready to hold talks with Russia provided Moscow proves it's ready to negotiate in “good faith,” but that Kyiv has yet to see such inclination from the Kremlin.

He then met with Guangdong Governor Wang Weizhong and regional officials, where he encouraged them “to consider investment and business prospects and humanitarian needs.”

“There is great demand for construction, industrial recovery, renewable energy, and other areas. So now is a good time to deepen trade ties,” Kuleba said.

Ukraine’s top diplomat then went to Hong Kong and met with Chief Executive John Lee where he asked him “to take measures to prevent Russia from using Hong Kong to circumvent restrictive measures introduced for Russian aggression against Ukraine.”

The next day after Wang’s meeting with Kuleba, the Chinese official met with Russian Foreign Minister Sergei Lavrov on the sidelines of the Association of Southeast Asian Nations (ASEAN) talks in Laos where they praised their close ties and discussed implementing “a new security architecture” in Eurasia.

2. Hearts, Minds, And Dirty Air

The massive copper-mining complex in eastern Serbia run by China’s state-owned Zijin Mining Group is facing fresh pushback from nearby residents over pollution concerns, my colleague from RFE/RL’s Balkan Service, Branko Pesic, reports.

What You Need To Know: Zijin took over Bor’s massive copper-mining and smelting complex in 2018 and has grappled with concerns about its environmental impact and the health of nearby residents, including fines and a temporary work-stop order.

But the Chinese mining venture, which has poured billions into the project, has been praised by the Serbian government as a much-needed job creating investment.

Environmental groups have accused Serbian authorities of turning a blind eye to pollution and health concerns stemming from the copper mine, which is boosting its output and expanding operations rapidly as value for the metal rises amid increased demand for the role it plays in the global energy transition away from fossil fuels.

Branko spoke with locals and activists who say that pollution, especially from some carcinogenic heavy metals, is getting worse, despite Zijin’s claims. Read his full report here.

3. A China And Russia Flyby Of Alaska

The United States and Canada scrambled fighter jets on July 24 after two Russian and two Chinese military planes were tracked in international airspace close to Alaska.

What It Means: The North American Aerospace Defense Command (NORAD) said that it “detected, tracked, and intercepted two Russian Tu-95 and two PRC H-6 military aircraft operating in the Alaska Air Defense Identification Zone (ADIZ).”

The “identification zone” is a stretch of international airspace that acts as a buffer zone where U.S. and Canadian national airspace ends. All aircraft entering the ADIZ require identification for national security reasons.

The presence of the Russian and Chinese planes was not seen as a threat, and intercepts of Russian planes are relatively common in the area.

But China and Russia together represent a newer development. While the two countries have carried out several joint patrols in the past, this incident was the first one that brought together bombers from both countries in the north Pacific area.

Earlier in July, the Chinese and Russian navies conducted their fourth joint sea patrols in the western and northern Pacific.

Across The Supercontinent

Anaklia Ruling: In May, the Georgian government awarded a contract to a consortium of Chinese companies to build a new deep-sea port in Anaklia on the country’s Black Sea coast.

But a previous bid to build the strategic port that was canceled by the government after years of political jostling had spent years waiting for a ruling by an international arbitration court, which ruled on July 29 in Tbilisi’s favor. The move removes a legal obstacle to the project, RFE/RL’s Georgian Service reports.

Election Watch: The U.S. Director of National Intelligence said “foreign actors” are conducting and planning "influence operations" targeting the November elections in the United States using increasingly refined tactics “to better hide their hand.”

Il Ripristino: After pulling her country out of the Belt and Road Initiative (BRI), Italian Prime Minister Giorgia Meloni made her first trip to Beijing, where she met with Chinese leader Xi Jinping.

The trip is seen as part of a reset effort by Rome after criticizing the Chinese infrastructure project. During her visit, Meloni called China an "important interlocutor" in managing global tensions.

Harris’s Foreign Policy: My colleague Margot Buff and I made a short video looking at what U.S. foreign policy might look like under a Kamala Harris presidency, with a particular focus on Russia and China. Watch it here.

One Thing To Watch

The Summer Olympics in Paris kicked off on July 26, and a doping scandal involving Chinese swimmers and the World Anti-Doping Agency (WADA) is under way in the background.

Three different incidents have been reported over the last several months in which the Chinese have blamed food contamination for positive drug tests. WADA accepted the results of the Chinese investigations and an independent follow-up was carried out. The doping watchdog organization then kept the matter secret until reporting made the incidents public.

Now, a bipartisan group of U.S. lawmakers has introduced a bill that could cut future U.S. funding for the global sports anti-doping system unless sweeping reforms are made.

That’s all from me for now. Don’t forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your inbox every Wednesday.

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About The Newsletter

In recent years, it has become impossible to tell the biggest stories shaping Eurasia without considering China’s resurgent influence in local business, politics, security, and culture.

Subscribe to this weekly dispatch in which correspondent Reid Standish builds on the local reporting from RFE/RL’s journalists across Eurasia to give you unique insights into Beijing’s ambitions and challenges.

To subscribe, click here.

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