Geo-Strategic Trend - 64. page

On March 12, the Russian newspaper The View (Взгляд) listed 10 areas in which Chinese companies have benefited from the ongoing Russia-Ukraine War and the sanctions from the U.S. and European countries.

First, the Union Pay system will be a winner. After Mastercard and Visa rejected overseas payment transactions, seven major Russian banks have indicated they plan to connect to China’s Union Pay system.

Second, the Chinese banking system will benefit. The West’s refusal to issue loans to Russian banks and invest in Russian assets creates opportunities for Chinese banks.

Third, it is good for the Chinese Yuan. Cutting off the access to the Dollar and the Euro will create a shortage of Western currency for Russian banks. Russian banks, companies, portfolio investors and ordinary people will turn their attention to the Chinese yuan.

Fourth, the Russian-Chinese trade will continue to climb to historic records.

Fifth, more Chinese consumer goods will enter the Russian market. Chinese clothing and daily products will become realistic substitutes for imported goods due to the shortage of dollars and euros.

Sixth, Chinese automakers will be in a favorable position.

Seventh, China will have access to all Russian energy and other raw materials that Europe rejected.

Eighth, Chinese investors will actively invest in Russian companies under favorable conditions, as competitors are exiting the Russian market.

Ninth, China’s role as a bypass route for Russia will increase. China could become a ‘middleman’ through which Russia could ship needed Western parts while paying to third parties.

Tenth, Chinese airlines will be in an advantageous position. After Russia bans European airlines from flying over its airspace, passengers will fly with Asian airlines, including Chinese airlines.

Source: HK01.com, March 14, 2022
https://www.hk01.com/即时国际/746656

According to the Russian newspaper Kommersant, the demand for China’s UnionPay cards has increased significantly as Visa and MasterCard exited from the Russian market, which has made it impossible to use cards issued by Russian banks for overseas and cross border payments.

Founded on 26 March 2002, UnionPay, also known as China UnionPay (CUP), is an association for the China’s banking card industry, operating under the approval of the People’s Bank of China (PBOC, the central bank of China). It is an electronic funds transfer at point of sale network, and the only interbank network in China that links all the automatic teller machines (ATMs) of all banks throughout the country. UnionPay cards can be used in 180 countries and regions around the world. In 2015 UnionPay overtook Visa and Mastercard in the total value of payments made by customers and became China’s largest card payment processing organization. However, only 0.5 percent of this payment volume was outside of China.

Gazprombank issued 1,000 physical and 3,700 virtual CUP cards on March 9 alone, despite an average issuance of 400 bank cards per month. Bank ZENIT claims to have received 1,000 daily applications, although there was little demand for CUP cards before March 6. The Russian Agricultural Bank has issued hundreds of thousands of CUP cards since 2017. The Post Bank (Russia) has started processing virtual CUP cards since March 9, the daily applications once exceeding 12,000.

A total of 10 Russian banks have launched UnionPay cards. In addition, five banks are studying the introduction of Mir-CUP dual cards. Mir is a Russian payment system for electronic fund transfers established by the Central Bank of Russia.

The CUP card can be used by Russian citizens abroad for ATM transactions. In recent years, Chinese tourists have frequently travelled and spent money abroad. Many countries around the world have started adopting CUP cards.

Source: Sputnik News, March 11, 2022
https://sputniknews.cn/20220311/1039902015.html

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, after the two major credit card brands Mastercard and Visa announced the suspension of their operations in Russia, several Russian banks, including Sberbank, announced on the same day that they plan to switch to China UnionPay. They have started issuing cards using the UnionPay payment system. This move is expected to ease the impact of the current situation on Russian cardholders. In addition to Sberbank, Alpha Bank and Tinkoff Bank both issued announcements to switch to UnionPay. Russia’s Pochta Bank, Gazprom Bank, Russian Industrial Communications Bank and some other small banks have already cooperated with China UnionPay. On March 6, Mastercard and Visa announced that they would stop their business in Russia in response to Russia’s military operations in Ukraine. Visa and Mastercard accounted for 74 percent of Russian payment transactions according to a previous report by The Wall Street Journal.

Source: Sina, March 6, 2022
https://news.sina.com.cn/c/2022-03-07/doc-imcwiwss4544738.shtml

Well-known Taiwanese Newspaper Liberty Times Network (LTN) recently reported that the Russian invasion of Ukraine faced heavy resistance and suffered heavy losses. According to the Ukrainian intelligence agency, the Russian army has lost 31 battalion tactical groups (BTG) in the fighting. This kind of loss is something the Russian army has never encountered in the past. Up through the present, 18 Russian BTGs have lost their combat capabilities, and 13 have been completely destroyed. This means means that, within two weeks, a total of 31 BTGs have completely lost their combat capabilities . Although the BTG with artillery as the main body is very large in scale and firepower, it can give heavy blows to fixed enemy units. However, it lacks mobility. Logistics is also one of its weaknesses. Earlier, Forbes military reporter and expert David Axe emphasized that Ukraine has figured out the main weaknesses of typical BTGs, including weak flanks. Axe also said that, if the Ukrainian commander can mobilize enough troops to withstand the artillery fire, he can attack the weakest positions in the BTG defense, including the command post, intelligence units, and key support units and other BTG main battle force gathering areas.

Source: LTN, March 13, 2022
https://news.ltn.com.tw/news/world/breakingnews/3857182

Three government sources revealed that Global Times recently reported that the Italian government just rejected a deal to sell a military drone company to Chinese investors. This is the latest move by Italian Prime Minister Mario Draghi to curb Beijing’s “advancement” into the euro zone’s third-largest economy. A 75 percent stake in Alpine Aircraft Manufacturing in northern Italy was sold to Chinese investors in 2018. After an investigation into the deal was launched last year, the Italian government recently approved the cancellation of the deal at a cabinet meeting. The Italian Cabinet determined that the transaction participants failed to notify the Italian government under the so-called “Golden Power” regulations. In addition to canceling the deal, the Italian government has imposed fines on the deal participants, according to officials familiar with the matter. The “Golden Power” regulations are said to be designed to protect strategically important assets. Since it was implemented in 2012, the “Golden Power” regulations have prevented foreign companies from entering Italy six times. It is worth noting that five of the six times were to prevent Chinese companies from bidding, and four of them happened after Draghi took office. Light aircraft and Strix mini-drones produced by Alpine Aircraft Corporation have been used by the Italian Air Force in Afghanistan. The company supplies high-tech drones for military use to Italian special forces and NATO.

Source: Global Times, March 12, 2022
https://world.huanqiu.com/article/479mlMWfcaZ

After the result of Korea’s presidential election was made public, China’s state media, Global Times, published an editorial giving advice to Korea’s new administration not to side with the U.S. on some key issues such as THAAD deployment. An excerpt of the article follows:

“The results of South Korea’s 20th presidential election were released on March 10. Yin Xiyue the candidate of South Korea’s largest opposition party,  the National Power Party, won the election. The extent to which the new president will adjust South Korea’s domestic and foreign policies has attracted great attention from the outside world. At the press conference held that morning, Yin Xiyue said that “the Korea-China relations will be developed on the basis of mutual respect.” This sentence leaves a lot of room for the public’s interpretation.”

“Due to a number of reasons, some people in South Korea are now paranoid because they believe that ‘China does not treat South Korea as an equal. They think that the connotation of ‘mutual respect’ should be that China treats South Korea ‘as an equal.’ Some even believe that China will respect South Korea only if South Korea-U.S. relations are consolidated.”

“In fact, mutual respect is one of the basic principles of China’s handling of foreign relations and the same is true for South Korea. China understands and respects South Korea’s independent foreign policy orientation, and is also aware of the alliance between the United States and South Korea. However, China’s respect for South Korea has never been due to the U.S.-Korea alliance or other reasons. It can only be based on a mutual understanding of each other’s core interests and major concerns.”

“At the same time, we also want to remind that ‘mutual respect’ not only includes ‘respect,’ It includes the connotation of ‘mutual,’ which is equally important. It not only means that China respects Korea, but also includes China’s legitimate concern that Korea should respect China.”

“There is a view that Yin Xiyue deliberately mentioned ‘mutual respect,’ which is aimed at the relevant remarks of the Moon Jae-in government on the THAAD issue (not joining the U.S. anti-missile system, not developing security cooperation between South Korea, the United States and Japan into a tripartite military alliance and not deploying an additional THAAD system). Although Yin Xiyue did say that he did not think it was ‘achieved within the framework of mutual respect,’ his senior adviser also said that Yin Xiyue supported the addition of a new ‘THAAD’ system. But we hope that this view is a distorted one or a misunderstanding of Yin Xiyue. In other words, China respects South Korea’s legitimate concerns about its own security, and at the same time, it also recognizes that real security must be common, comprehensive, cooperative and sustainable. China’s strategic security interests should also be respected by South Korea. The South Korean side should not regard the deployment of THAAD as an issue of ‘internal affairs’ or a ‘sovereignty’ issue, which is essentially a wedge that the United States has nailed in Northeast Asia.

“At the press conference, Yin Xiyue expressed his desire to ‘rebuild the Korea-U.S. alliance.’  We fully respect South Korea’s independence and sovereignty, but China-South Korea relations should not be regarded as an appendage of South Korea-U.S. relations, nor should the self-esteem of South Korean society be filled with misreading and misjudgment that ‘China will respect South Korea only when South Korea-U.S. relations have been consolidated.’ Moreover, South Korea actually has no room to gamble in the so-called ‘China-U.S. battle.’ Only by accurately clarifying and grasping the connotation of ‘mutual respect’ can South Korea find the code to become a ‘central country.'”

Source: Global Times, March 10, 2022
https://opinion.huanqiu.com/article/478hZjJlQhJ