‘China has a lot more to lose’: U.S. considering sanctioning Chinese firms aiding Russia’s war

Munich,
GERMANY
—
The
U.S.
is
considering
slapping
sanctions
on
Chinese
companies
it
believes
are
helping
Russia
fuel
its
war
in
Ukraine,
members
of
Congress
told
CNBC,
marking
the
first
direct
apportioning
of
blame
toward
Beijing
since
the
start
of
the
war.

Democratic
Senator
Gerald
Connolly,
member
of
the
U.S.
House
Committee
on
Foreign
Relations,
on
Saturday
said
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
penalties
against
Beijing
despite
long-held
Western
suspicions
over
its
support
for
Russia’s
military
operations.

“China
has
to
understand
that
the
same
kinds
of
sanctions
which
are
beginning
to
really
take
hold
in
Russia
and
are
affecting
Russian
productivity,
economic
performance
and
quality
of
life,
can
also
be
applied
to
China,”
he
told
CNBC’s
Silvia
Amaro
on
Saturday
at
the
Munich
Security
Conference.

“And
frankly,
China
has
a
lot
more
to
lose
than
Russia.”

U.S.
sanctions
could
severely
hurt
a
Chinese
economy
already
in
the
doldrums,
after
a
slower-than-anticipated
Covid-19
recovery
and
turbulence
in
its
real
estate
sector.
But
such
a
step
could
also
hurt
the
U.S.,
given
the
countries’
trade
interdependence,
and
this
consideration
has
prompted
caution
from
Washington
in
the
past.

Still,
Connolly
said
that
would
not
deter
such
penalties,
which
could
come
“very
soon.”

“My
hope
is
the
very
threat
of
it
—
and
the
fact
that
the
Europeans
are
really
serious
about
this,
which
is
a
relatively
recent
development
—
ought
to
clarify
some
thinking
in
Beijing,
I
hope,”
he
said.

“If
broad
sanctions
were
applied
to
China,
it
would
really
hit
home.
And
their
economic
performance
right
now
is
already
weak.
So
I
would
hope
China
would
calculate
carefully
that
there
are
consequences
around
the
corner
for
supporting
Russia’s
violence
and
depravity
in
Ukraine.”

Asked
whether
the
U.S.
is
considering
similar
sanctions
on
China
as
those
proposed
by
the
EU,
U.S.
Senator
Ben
Cardin
said
Congress
was
currently
looking
into
options
with
the
Biden
administration.

“It’s
an
area
that
we’re
looking
at,
and
Congress
is
working
with
the
administration
as
to
how
we
can
enforce
the
sanctions
against
Russia,
and
that
will
require
greater
cooperation
of
other
countries.”

CNBC
reported
last
week
that
the
European
Union
was
preparing
to
impose
sanctions
on
Chinese
companies
it
believes
are
helping
Russia
circumvent
Western
penalties
intended
to
curb
its
war
in
Ukraine.

The
proposals,
which
would
form
part
of
the
bloc’s
13th
sanctions
package
since
the
start
of
Russia’s
full-scale
invasion,
could
be
ready
later
this
month
to
mark
the
war’s
second
anniversary.
The
EU’s
top
diplomat
Josep
Borrell
said
Monday
that
those
plans
had
gained
a
new
urgency
in
the
wake
of
the
death
of
Russian
opposition
leader

Alexei
Navalny
on
Friday.

The
plans
come
amid
ongoing
reports
that
Beijing
is
propping
up
Moscow’s
war
economy.

A
September
CNBC

investigation
found
that
Chinese
firms
are
playing
an
critical
role
in
boosting
Russia’s
military
capabilities,
including
via
the
trade
of
goods
for
use
on
the
battlefield
in
Ukraine.
A
separate
January

report
found
that
China
has
become
key
conduit
in
funnelling
critical
Western
tech
into
Russia.

China’s
foreign
ministry
and
the
U.S.
National
Security
Council
did
not
immediately
respond
to
CNBC
requests
for
comment.

A U.S.
intelligence
report stated
that
China
“has
also
become
an
increasingly
important
buttress
for
Russia
in
its
war
effort,
probably
supplying
Moscow
with
key
technology
and
dual-use
equipment
used
in
Ukraine.”

However,
Beijing
has
been
forthright
in
its
rejection
of
such
accusations,
saying
that
its
trade
with
Moscow
constitutes
“normal
economic
cooperation,”
and
that
it
targets
no “third
party.”
China
has
also
previously
attempted
to
mediate
in
the
war
in
Ukraine,
last
year
releasing
a
12-point
peace
plan
for
the
conflict
that
has
yet
to
gain
traction.

In
a
speech
at
MSC,
China’s
Foreign
Minister
Wang
Yi
said
that
trade
should
not
be
weaponized
and
said
that
any
attempts
to
limit
trade
ties
with
his
country
would
be
a
“historic
mistake.”

“Those
who
attempt
to
shut
China
out
in
the
name
of
derisking
will
make
a
historical
mistake,”
he
said
referring
to
existing
restrictions
implemented
by
the
U.S.
to
limit,
for
instance,
the
trade
of

sensitive
technologies.

Wang
later
met
with U.S.
Secretary
of
State
Antony
Blinken
on
the
side
lines
of
the
conference,
where
he
urged
Washington
to

lift
existing
sanctions
on
Chinese
companies
and
individuals
and
said
the
U.S.
should
not
hurt
China’s
legitimate
development
rights.

Washington
has
imposed
sanctions
on
various
Chinese
companies
that
it
says
are
working
with
China’s
military,
despite
the
firms’
denials.
U.S.
sanctions
have
also
been
placed
on
individuals
and
entities
accused
of
human
rights
abuses
in
the
Chinese
region
of
Xinjiang.