The EU announced upcoming sanctions today against human rights abusers; the targets of the sanctions include prominent business and political leaders in Russia, Myanmar, and for the first time since the Tiananmen Square massacre, China. The Chinese sanctions will included four individuals and one entity, none of which have yet been officially named. They come after Canada and the United States have moved forward on sanctions against China.
As noted on Friday, top officials from Russia and China are meeting today in Bejing to discuss details of future cooperation. For the most part, those are expected to concern the re-establishment of the 2001 Sino-Russian Treaty of Friendship which is due to expire in a few months. This morning, before the meeting began, the Russian Foreign Minister proposed another point on the agenda while speaking to Chinese state media.
“In addition to strengthening cooperation under the UN framework on the immediate end to unilateral coercive measures, China and Russia should also take the opportunity to enhance their scientific and technological innovation and improve their national strength in response to the sanctions.
The risks of sanctions should be reduced by strengthening the self-reliance of the science and technology industry, [and] promoting settlement by local and other international currencies that can replace the US dollar so as to gradually move away from the Western-controlled international payment system
Sergei Lavrov on CGTN, via South China Morning Post
This is not a new development; Russia produced a report at the end of last year which indicated that in Russia-China trade, roughly 25% of it was settled between the yuan and ruble, bypassing both the US dollar and the EU euro, two of the traditional staples for international trade. This development as been noticed by America’s enemies, as demonstrated by the news report from the Iranian state service Pars Today. Bypassing American dollars on trade is a useful mechanism for minimizing vulnerability to sanctions; it’s impossible for the American or EU governments to freeze bank accounts which are unconnected to their nations’ banks and which don’t operate with their currency.
Bypassing trade in American dollars has other effects. Most obviously, it provides greater leverage for monetary action against the US, by freeing portions of dollar stockpiles to be dispersed on the open market.
These concerns are raised at a time when the Dow Jones is in record territory following more than a decade of national policy designed to unmoor the growth or reduction of the market from actual production numbers. They also come as Russia has aggressively moved into south and central African markets, China has aggressively moved into Asian markets, and both China and Asia have attempted to forge inroads into north African and South American markets.
The most obvious answer is to lower the vulnerability of the United States stock markets to monetary attacks by shifting them back toward production-based standards – slowly reversing the cheap borrowing policy which has led to the current situation – but this has significant political risks. Whether Biden will be ready to expose himself to those at a time when he is facing pressures from the hard left of his party and the primary alternative of the Republicans are still embracing authoritarianism is yet to be seen, but seems unlikely.
In the absence of top-level political action, the only recourse for average citizens is to minimize their long-term vulnerability to shifts away from American trade as best they can. That would include careful monitoring of any items in their stock portfolio – the days of “buy it and hold it” are over; holding a stock for decades may well be a wise choice, but a person should regularly check those stocks even if they have no intent to sell – and decreasing their debt exposure where possible. It is very possible that this is merely a hint of economic saber-rattling on the part of the Russians, and absolutely nothing will come of it, but wisdom favors preparedness.
