Russia’s trade flow shifts towards China

The United States is poised to unleash a wider array of sanctions against Russia if Moscow escalates the conflict in Ukraine, denying key Russian financial institutions and companies access to US dollar transactions and global markets for trade, energy exports and financing. read more

But the United States and its allies have never before attempted to cut a $1.5 trillion economy out of global commerce, and it is unclear how much pressure even unified Western sanctions can put on Moscow.

A review of World Bank and United Nations trade data shows that since lesser sanctions were imposed in 2014 after Russia annexed Ukraine's Crimea, China has emerged as its biggest export destination.

New sanctions could prompt Russia to try to deepen its non-dollar denominated trade ties with Beijing in an effort to skirt the restrictions, said Harry Broadman, a former US trade negotiator and World Bank official with China and Russia experience.

"The problem with sanctions, especially involving an oil producer, which is what Russia is, will be leakage in the system," Broadman said. "China may say, 'We're going to buy oil on the open market and if it's Russian oil, so be it.'"

Under an executive order signed by President Joe Biden on Monday, any institution in Russia's financial services sector is a target for further sanctions, the White House said, noting that more than 80 per cent of Russia's daily foreign exchange transactions and half its trade are conducted in dollars.