Russia China Trade War
It was bound to happen. Tensions have been subliminally rising between Russia and China. The paper dragon has been trying to eat into Russia’s exclusive sphere of influence in Central Asia and even the Middle East, to an extent; apart from also making strategic moves to dominate the Arctic. That China staked claim over the Russian far east and Vladivostok last year has been engraved in the memory of President Vladimir Putin. Now, Putin has made his first real move which affects China. All this while Moscow had been indirectly undercutting China. The trade war is now out in the open between Russia and China.
Last year, Russia emerged as the biggest source of billet. A billet is a small, semi-finished piece of metal that is rectangular, circular, or square in shape. It is a semi-finished casting product that needs further processing before becoming a finished good. Now, Russia is all set to bring in export taxes on such semi-furnished steel products effective August this year. The base duty rate across all products covered by the duties will be 15 per cent, but with a specific minimum tariff for each metal.
According to Fastmarkets, all Russian steel products for export outside of the Eurasian Economic Union (EAEU) with a bill of lading dated August 1 or later would be subject to the tax. Russia is a major exporter of steel billet, exporting millions of tonnes each year to Asian markets such as China, the Philippines and Indonesia. The taxes imposed on semi-furnished steel products will lead to a hike in their prices, no matter who bears the burden of paying those taxes. China cannot escape Russia’s steel onslaught. It has been pushed into a corner.
So much for the “Russia-China axis of convenience”, that Moscow is hitting China when it is hurting the most, and that too, in a sector which is on the verge of collapse in China. The paper dragon’s steel industry is surviving on the edge. Soaring iron ore prices, coupled with the fact that Xi Jinping has imposed an embargo on Australian coal have ensured that China’s steel industries stop working. Now, to bring China to its knees, Russia has taken steps to raise the cost of billet.
Russia is arming ASEAN nations
Russia has understood the ground realities. It knows China has grown an unending appetite for territorial expansion and world dominance. As a superpower right next to China, it has become unfeasible for Russia to put up the charade of ties between the two countries being strong and rosy, when in fact, they are not.
Russia has many other friends to rely on. Moscow is expanding its influence and engagement in the Middle East and is earning quite a positive reputation for doing so among the Gulf states. In Africa too, Russia is deeply invested in developmental projects and peacekeeping.
When it comes to Southeast Asia, TFI had recently reported how Russia is arming ASEAN nations. The Russian Federation stands firm on the adherence to international law and UNCLOS while supporting the 2002 ASEAN-China Joint Declaration on the Conduct of Parties in the South China Sea. At the same time, it continues to supply weapons to countries in the region, which will ultimately be used in conflicts against China.
Russia and Japan Ties
When it comes to Russia and Japan, ties are stronger between the two nations than they have ever been. Despite differences, Russia is committing to trade partnerships with Japan. Russian Federation Minister of Economic Development Maxim Reshetnikov noted recently that the coronavirus pandemic has not hampered or will not hamper the economic cooperation between Russia and Japan.
The Kuril Islands dispute – a legacy of the Second World War, has been at the root of cold relations between Moscow and Tokyo. The Suga administration in Japan had already signalled that it is ready to resolve the historical dispute.
Russia and Japan should not be fighting against each other over a decade-old dispute, rather they should be fighting together against a common enemy – China. Now, Russian President Vladimir Putin has also joined the chorus and signalled Moscow’s intent to bury the dispute and sign what could possibly be a landmark peace treaty between Japan and Russia.
As far as Russia’s ties with India are concerned, they are at their strongest. While Russia stopped deliveries of the lethal S-400 anti-missile and air defence systems to China, it has fast-tracked the same for India, with the first trance of deliveries expected later this year.
All in all, China is the loser. Russia has perhaps triggered what could blow out into an all-out trade war between Russia and China.