Russian President Vladimir Putin and Chinese President Xi Jinping shake hands during a meeting in Beijing on October 18, 2023.
Sergei Guneyev Afp | Getty Images
MUNICH, GERMANY — The U.S. is considering sanctions on Chinese companies it believes are helping Russia fuel its war in Ukraine, members of Congress told CNBC, marking the first direct attribution of blame to Beijing since the war began.
Democratic Senator Gerald Connolly, a member of the US House Foreign Relations Committee, said on Saturday that lawmakers were already considering such plans after similar measures were proposed last week by the European Union.
The provisions would mark the first direct sanctions against Beijing despite long-standing Western suspicions of its support for Russia’s military operations.
“China needs to understand that the same kinds of sanctions that are really starting to take hold in Russia and affect Russian productivity, economic performance and quality of life, can also be applied to China,” he told CNBC’s Silvia Amaro on Saturday in Munich Security Conference.
“And frankly, China has a lot more to lose than Russia.”
US sanctions could seriously damage China’s already dormant economy, following a slower-than-expected Covid-19 recovery and turmoil in its real estate sector. But such a step could also hurt the US, Given the countries’ commercial interdependence, this thinking has also led Washington into the past.
However, Connolly said this would not prevent such penalties, which could come “very soon”.
“My hope is the threat itself – and the fact that the Europeans are really serious about it, which is a relatively recent development – should clear some thinking in Beijing, I hope,” he said.
“If broad sanctions were imposed on China, they would be really hit. And their economic performance right now is already weak. So I would hope that China would carefully calculate that there are consequences around the corner for supporting Russia’s violence and impoverishment in Ukraine.”
Asked if the US is considering similar sanctions on China to those proposed by the EU, US Senator Ben Cardin said Congress is currently considering options with the Biden administration.
“It’s an area that we’re looking at and Congress is working with the administration on how we can enforce sanctions against Russia, and that will require more cooperation from other countries.”
CNBC reported last week that the European Union is preparing to impose sanctions on Chinese companies it believes are helping Russia circumvent Western sanctions aimed at curbing the war in Ukraine.
The proposals, which would be part of the bloc’s 13th package of sanctions since the start of Russia’s wide-scale invasion, could be ready later this month to mark the second anniversary of the war. Top EU diplomat Josep Borrell said on Monday that those plans had taken on new urgency after the death of Russian opposition leader Alexei Navalny on Friday.
The plans come amid continued reports that Beijing is supporting Moscow’s war economy.
A CNBC investigation in September found that Chinese companies play a critical role in bolstering Russia’s military capabilities, including through trade in goods for use on the battlefield in Ukraine. A separate report in January found that China has become a key conduit for funneling critical Western technology to Russia.
China’s foreign ministry and the US National Security Council did not immediately respond to CNBC’s requests for comment.
“Historical mistake” the restrictions in China
ONE US Secret Service Report stated that China “has also become an increasingly important support for Russia in its war effort, possibly supplying Moscow with key technology and dual-use equipment used in Ukraine.”
But Beijing has been outspoken in rejecting such accusations, saying its trade with Moscow constitutes “normal economic cooperation,” and that it aims no “third party.” China has also tried in the past to mediate the war in Ukraine, last year publishing a 12-point peace plan for the conflict that has yet to gain traction.
In a speech at the MSC, Chinese Foreign Minister Wang Yi said trade should not be weaponized and said any attempts to limit trade ties with his country would be a “historic mistake”.
“Those who attempt to exclude China in the name of derision will be making a historic mistake,” he said, referring to existing US restrictions to limit, for example, trade in sensitive technologies.
Wang later met with US Secretary of State Anthony Blinken on the sidelines of the conference, where he urged Washington to lift existing sanctions on Chinese companies and individuals and said the US should not infringe on China’s legitimate development rights.
Washington has imposed sanctions on several Chinese companies it says are working with the Chinese military, despite the companies’ denials. US sanctions have also been imposed on individuals and entities accused of human rights abuses in China’s Xinjiang region.