2024-02-29 07:36:53
2024-02-29 15:36 United Daily News Mainland Center/Real-time Report
The Russia-Ukraine war has entered its third year, and sanctions imposed by Western countries have not brought down the Russian economy. Xu Boling, director of the Russian Economic Office of the Institute of Russian, Eastern European and Central Asian Studies at the Chinese Academy of Social Sciences, pointed out that the two years of the Russia-Ukraine war have allowed the Russian economy to break its original over-reliance on the energy industry. He and other mainland scholars even reasoned that Russian President Vladimir Putin may not be in a hurry to end the war because the war has made Russian society more active.
After Russia invaded Ukraine on February 24, 2022, Russia has been subject to nearly 20,000 sanctions from 48 countries, led by Europe and the United States, in the past two years. The number of sanctioned countries and projects and the breadth of fields are unprecedented. But not only has the Russian economy not been brought down by this, in 2023, the Russian economic growth rate will even reach 3.6%.
How did Russia do it? In this regard, Xu Boling said in an exclusive interview with the online media “Observer Network” that he and other mainland scholars visited Moscow, St. Petersburg, and Armenia in June 2023; in November 2023, they went to Khabarovsk and Yekaterinburg.
Xu Boling’s feeling during the field visit is that the living order and social order of the Russian people are stable, people’s mental outlook is not as tense and anxious as it should be when the country is in a state of war, and the normal life of the people has not been greatly affected. .
Xu Boling pointed out that even following two years of war, the decline in the Russian economy was not significant. Russia’s GDP will decrease by 2.1% in 2022, but the economy will grow by 3.6% in 2023, and residents’ real disposable income will increase by 5.4% (excluding price factors).
Why can Russia withstand Western sanctions? Xu Boling believes that the three counter-sanctions measures introduced by Russia have effectively controlled the situation:
1. Capital outflow control, restricting outward remittances and external borrowings, cash exceeding US$10,000 is not allowed to be loaned out, and repayment of external debts is suspended;
2. Mandatory settlement and sale of foreign exchange. It is stipulated that 80% of the foreign exchange income from foreign trade contracts signed following January 1, 2022 must be sold to the central bank to improve the foreign exchange supply capacity in the Moscow market;
3. Drawing on the Bretton Woods system’s method of linking the U.S. dollar to gold, it is stipulated that 5,000 rubles can be exchanged for 1 gram of gold. If companies or the public do not have confidence in the ruble, they can take the ruble to a bank and exchange it for an equal amount of gold, which will quickly stabilize the confidence of the Russian financial market.
Xu Boling pointed out that especially following Russia announced the “natural gas ruble settlement order” on March 19, 2022, the market quickly restored confidence in the ruble. He described, “The natural gas ruble settlement order is a coup.” In this way, Russia anchored the value of the ruble with natural gas, and Russia controlled the pace of foreign exchange exchange in the market, and the ruble exchange rate rebounded rapidly.
When Xu Boling further analyzed Russia’s economic resilience, he summarized some deeper reasons:
1. Financial security construction. After the disintegration of the Soviet Union, the Russian banking system was once in great chaos. At its peak, there were more than 10,000 banks. Later, Russia rectified illegal banks every year. As of July 1, 2022, there were only 329 banks and 34 non-bank financial institutions in Russia. Therefore, in the face of this financial shock, the banking system did not fail or close down.
2. Russia has been promoting “de-dollarization” since 2014.
3. Diversification of fiscal situation and international reserves. From 2019 to 2021, the Russian Central Bank’s reserve assets increased a lot of Japanese yen and RMB assets. In addition, Russia has significantly increased its gold reserves since 2019.
Xu Boling said that when the assets of the Russian Central Bank were frozen in 2022, Russia had nearly 600 billion US dollars in reserves, of which gold reserves accounted for a large proportion. Diversified international reserves provided guarantee for Russia’s financial stability.
Xu Boling also pointed out that this war also allowed the Russian economy to break its original over-reliance on the energy industry. After the Russo-Ukrainian War, sanctions imposed by Western countries actually promoted the expansion of Russia’s manufacturing industry, especially in the light industry, machinery manufacturing and electronic information fields, where wages grew particularly rapidly.
Mainland scholars even infer that Putin may not be in a hurry to end the Russian-Ukrainian attack. Because the investment growth triggered by military orders in this war has expanded to non-military fields, it has provided Russian society with better labor opportunities and money-making opportunities, making Russian society more active.
Xu Boling also admitted that Russia’s ability to survive sanctions has something to do with China. The total trade volume between China and Russia will reach US$190.27 billion in 2022 and US$240.11 billion in 2023, accounting for regarding 39% of Russia’s total trade volume.
“Russia’s energy exports to China provide guarantees for Russia’s financial stability and financial stability, and have extended significance. China’s commodity exports to Russia are an important support for the resumption of production in its industrial and supply chains, and both parties are benefiting.”
Xu Boling believes that Putin may have turned the conflict between Russia and Ukraine into a “hormone” to reorganize Russian society and economy.
Regarding Russia’s experience in the Russo-Ukrainian War, Xu Poling said that the lesson Russia has taught us is that if the technical production chain and financial system are weak, we will suffer big losses.
He pointed out that in terms of effectively responding to international sanctions, Russia’s important experience is to have safe backups in terms of financial security, international reserves, and international settlement systems, as well as in key technologies, production chains, and supply chains related to national security. As long as China can prepare for a rainy day, “think regarding the risks and reserve enough means,” there is no need to worry.
Russia’s invasion of Ukraine triggered international sanctions, which not only did not bring down the Russian economy, but also contributed to the transformation of the Russian economy, which has… Ukraine Russia Russia-Ukraine War Putin Online Media
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