By David Lawder

WASHINGTON (Reuters). Xi Jinping, the Chinese president could be forced to make a choice between a profitable trade relationship with China and a developing strategic partnership.

Beijing is at risk based on only trade flows. Biden spoke with Xi for nearly two hours on Friday. The White House confirmed that China sanctions were possible.

Reuters trade data showed that China still has a strong bias towards Western democracies despite growing trade ties with Southeast Asia, and it is more dependent on exports over the last decade.

Analysts believe that China would not benefit from a political alliance with Russia, since the United States and European Union consume more than one third of China’s exports.

Chad Bown is a senior fellow of the Washington-based Peterson Institute for International Economics and closely monitors China’s trade.

Qin Gang was China’s ambassador in the United States. He highlighted China’s strong relationship with Russia on Sunday.

Qin said that China had normal economic, trade and financial relations with Russia when he was asked whether Beijing would support Moscow financially. These are business transactions between two sovereign nations, according to international law, which includes WTO (World Trade Organization).

The broad-based economic sanctions imposed against Russia on Beijing could have serious implications for America and global markets. China, which is second in the world and largest exporter of goods and services, would be targeted. China’s economic dependence upon trade has declined as China’s GDP has increased to $16 billion over 20 years.

Graphic: Trade’s share of China’s economy eases to 1990s levels Trade’s share of China’s economy: https://graphics.reuters.com/USA-TRADE/CHINA/zdvxokzqzpx/chart.png

Domestic consumption and domestic services play a larger role in China’s economy as Chinese people become more wealthy.

China, however, is more dependent upon trade than either the United States (23%), or Japan (31%).

After last month’s invasion by Russia, the wealthy G7 nations that make up an anti-Russian alliance still consume over a third China’s exported goods. This is an increase from nearly half of China’s exported almost two decades back, but it’s a steady share ever since 2014 when Russia annexed Ukraine’s Crimea.

Graphic: China exports still dominated by U.S. and Western allies: https://graphics.reuters.com/UKRAINE-CRISIS/TRADE-CHINA/jnvwebqbavw/chart.png

China has now surpassed Japan’s share of exports to ASEAN countries through new trade agreements. China’s February 2022 trade data revealed that China’s imports to the European Union increased the most, at 24%.

OIL FOR CELLPHONES

Russia’s total trade with China has increased since sanctions were first placed on Moscow by the West in response to Crimea’s annexe.

For the 20-year period, China’s imports to Russia have been steady at 1% to 2%.

Russian imports of China from Russia are comparable to other countries. This includes electronics and consumer products such as cellphones and computers.

Graphic: Russia’s top imports from China: electronics, apparel Russia’s top imports from China: electronics, apparel: https://graphics.reuters.com/UKRAINE-CRISIS/TRADE-CHINA/lgpdwarzavo/chart.png

According to UN Comtrade data in 2020, China shipped 10x more smartphones per value to the United States. The total export was $32.4 billion.

China imports a lot of oil from Russia. Oil, which is estimated to be worth $27 billion by 2020, outstrips other Russian imports, including softwood lumber and coal.

Graphic: China’s top imports from Russia: all about the oil: https://graphics.reuters.com/UKRAINE-CRISIS/TRADE-CHINA/xmvjoezddpr/chart.png

The United States has not banned Russian imports of energy, but Western sanctions do not directly target Russia’s oil or gas exports. However, the U.S. sanctions against Russian banks which prohibit dollars transactions have made it difficult for China to trade finance oil Russian cargoes.