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Business Last Updated: Aug 15, 2022 - 9:13:10 AM


China: Economy Eclipses Politics and Diplomacy
By Strategy Page, August 12, 2022
Aug 13, 2022 - 10:31:15 AM

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China’s economic problems continue to get worse, notably bank failures, unemployment rates and economic growth. About a fifth of young (16-34) Chinese seeking work fail to find it. That’s twice the rate for other industrialized countries. More of these young job seekers, especially recent university graduates, are settling for lower paying and low career growth potential government jobs. The youth unemployment rate is partially due to rapid growth in university graduates. At the end of the 20th century, it was one million grads a year. Now it's 11 million a year.

The GDP growth rate continues to slide and bank failures are growing. The government has stopped announcing annual GDP growth rates and is now announcing it will make its best effort to keep economic growth going. Those efforts are concentrating on preventing a collapse of the financial system. Bank failures are a major and growing part of the problem. China implemented bank deposit insurance in 2015. It covers losses in bank failure of up to $75,000 per depositor. That protects all but a few percent of depositors, who hold less than half the liquid assets in banks. The problem is the bank must officially fail before depositors can get their money. Currently nearly half a million depositors are unable to access their money and the government further lowers confidence in the banking system by tolerating banks making excuses (“we are upgrading our software”) to postpone triggering deposit insurance payouts. Customers who protest publicly are silenced by changing their health status to “infected”. Anyone with that designation cannot appear in public without risking arrest and confinement. The more frequently and longer these tactics are used the more people will lose confidence in the banking system. There is already a lot of illegal behavior and corruption in the banking system and learning about more of it has long-term effects on popular attitudes towards the government. This is one reason for the contained problems for Evergrande, the largest real estate firm in China. Evergrande is still sliding towards bankruptcy. Efforts to prevent that have failed so far.

China’s economy was already slowing down when the current covid19 shutdown in Shanghai and elsewhere made matters worse. There is also a real-estate bubble that is unresolved and more Chinese banks are suffering liquidity (cannot meet demands for withdrawals) problems. The economic damage done by all this led to a $5 trillion dollar stimulus program to alleviate suffering among workers and provide businesses with cash needed to keep operating. The actual decline in GDP growth is a state secret but is believed to be bad enough to produce GDP shrinkage and an official end to the decades of high GDP growth. China’s economy is, at $18 trillion (or less) a year, the second largest in the world. The Americans have economic problems but not to the extent China suffers from.

This is mainly about the size of their $117 trillion (before the new stimulus) government debt, which is nearly four times the size of the U.S. debt. This Chinese debt is 6.5 times GDP while the American debt of $29 trillion is 1.26 times GDP. It’s worse when you take population size into account. China has about four times the population of the U.S. meaning the average Chinese has about 16 percent of the income of an American while carrying far more government debt per capita. Much of that debt comes from millions of housing units built by local governments that not enough Chinese can afford, or will not consider, because many of these “Ghost Cities” are too far from where the jobs are. China’s bond market is the second largest in the world after the United States. With this kind of debt, quality (the ability of debtors to repay) is a major factor. The quality of Chinese debt is much lower than the U.S. or the West in general and the extent of this problem was deliberately hidden by debtors, especially local governments, for decades. Some of that bad debt is related to BRI (Belt And Road Initiative) projects, which is currently about $60 billion. Poor management, covid19 and local violence and corruption turned most of that debt into a liability, or worse because default either means China assumes ownership of the project or the local government interferes and creates a diplomatic as well as economic problem. All this makes China’s real estate bubble far more dangerous than previous ones encountered in major economies.

The South China Sea situation is becoming more difficult for China because the Philippines came up with ways to reduce the Chinese threat by reducing corrupt Chinese influence in the Philippines. That is the main reason why the new Filipino government is canceling three Chinese-financed railroad construction projects worth nine billion dollars. This was part of a $24 billion Chinese proposal for projects that improved Filipino ports and transportation networks. Cancelation of these projects has been under consideration for over a year because of vague loan terms and Chinese failure to perform. The Chinese are believed to be using the loan program as a weapon to coerce the Philippines into making concessions in the South China Sea.

A national opinion survey conducted at the end of June found that Filipinos trusted the United States, Australia and Japan the most while trusting China and Russia the least. Respondents were asked to rank a list of ten nations in terms of trustworthiness. The results of the survey were, in order of trust; the United States, Australia, Japan, Germany, South Korea, Britain, Indonesia, India, Russia and China. There was some support for China but the U.S. had more than three times as much support. This meant the Americans had the support of most Filipinos while China had only a small minority. Only Russia and China had the majority of Filipinos mistrusting them. Trust of Russia used to be positive but the February invasion of Ukraine and Chinese support for it made Russia nearly as untrustworthy as China to most Filipinos. Until China expanded its “lost territory” claims to the South China Sea nearly two decades ago. China was seen as a potential ally of, and investor in, the Philippines. Despite numerous Filipino diplomatic efforts, China refused to compromise on its claims. At this point China is seen as the greatest threat to the Philippines, especially since the Chinese appear to have additional claims on Filipino territory and independence as a nation.

North Korea

North Korea continues to be an annoying problem. Fewer imports from China of industrial raw materials means that more weapons systems (ships, aircraft, vehicles, artillery and unguided rockets) are unavailable because fuel or key replacement components are not available. The official government explanation for all this is “insufficient loyalty” by workers and managers. It’s a criminal offense to openly criticize senior leadership, especially supreme leader Kim Jong Un.

China is less reluctant to criticize mismanagement in North Korea, especially when it comes to dealing with covid19. Since 2021 covid19 has been spreading in China because new strains of the virus spread faster, although they are less lethal. Most Chinese are vaccinated, but the local vaccines are less effective than Western ones and leave more people vulnerable to new strains of covid19. Because of this, earlier this year some Chinese cities near the North Korean border suffered shutdowns to contain the virus. North Korea responded by ordering border guards to wear gas masks if they were working at border crossings close to infected Chinese cities. North Korea continued to insist it has no covid19 epidemic and refused offers of South Korean or Chinese covid19 vaccines. Senior officials have apparently received regular doses of the most effective Western vaccines and other treatments. Border guards complain that the masks are uncomfortable and make it difficult for others to understand what masked men are saying.

Until recently North Koreans continued dying of flu-like symptoms. These people were not tested for covid19 and the deaths were simply attributed to flu. Many people who showed symptoms of influenza were sent to isolation centers for a few weeks before the survivors were released. Now North Korea admits that it does have a covid19 problem and is testing people more often or, as is the case in the capital, more frequently. China is keeping its borders with North Korea closed because of the perceived risk of reinfection by North Koreas visiting China. This cannot last long because China has many economic and political interests in North Korea so a testing and quarantine procedure for North Koreans crossing the border will be imposed.

August 10, 2022: China declared an end to eight days of military exercises around Taiwan. These activities included launching over a hundred war planes and several ballistic missiles. Dozens of warships were involved. The demonstration did not have the desired effects on Taiwan, which responded with some of its own military exercises and reminded China that Taiwan has been rearming because the majority of Taiwanese are willing to fight and have elected officials who have supervised the preparations. Some cargo ships headed for Taiwan delayed their arrival there until the Chinese military activities were done. Taiwan has the ability to shut down commercial shipping headed for Chinese ports but exercises for that are carried out quietly, in an effort, to avoid any Chinese detection. For nearly a decade Taiwan has been improving its defenses against blockade and invasion, as well its own offensive capabilities. This is eroding the Chinese advantage and the recent exercises were meant to demonstrate what China has been able to do for over a decade. The current war in Ukraine has revealed serious shortcomings in Russian military capabilities and now China has to determine if it suffers from the same delusions that Russia was operating under.

Chinese claims on most of the South China Sea have caused an arms race in the region and the formation of a military coalition to oppose Chinese aggression. China still insists it will unite Taiwan with the mainland by 2049 and do it peacefully. That may be mandatory because any attempt to blockade Taiwan or take it by force would disrupt the Chinese economy as well as the world economy. The impact would be far worse than what happened after Russia invaded Ukraine earlier this year.

August 8, 2022: China has another disease similar to covid19 and potentially more dangerous. This one is called LayV (Langya henipavirus) and has infected at least 35 people in Shandong and Henan provinces since 2018. Most of those infected were farmers who had contact with shrews (a mouse-like mammal) It appears that all the victims caught LayV vis contact with an infected animal on farms, not in an illegal “wet market” (where live animals sold as exotic cuisine). Medical investigators are seeking to discover if LayV can spread from person to person. LavV appears to be a new mutation that can infect other species. So far, the infection produces symptoms similar to influenza. Sometimes these new mutations mutate again and become fatal and easier to spread. That’s what medical researchers, especially in China, have to watch out for.

In 2020 the government imposed a ban on the sale and consumption of illegal wildlife. These animals, which are offered live in large markets, have always been a delicacy in China and the increased number of people who can afford it has meant more, and larger, markets that provide it. Chinese are big fans of exotic food. Cuisine plays a bigger role in Chinese history and life than just about anywhere else on the planet. Wild game is particularly popular and the more exotic the better. Outlawing consumption makes such delicacies even more desirable. Bringing all those different species together so often provides more opportunities for a new disease created by a virus moving from one species to the other via these animals breathing near each other. With the sale of these animals going underground there will be no large markets and less risk of new diseases developing. The transferred virus cannot survive long outside the animal they came from and in the wild there is miniscule chance of such transfers. On farms or in crowded markets, where cages containing many wild species are stacked up for people to closely examine, you get more viral transfers that turn very, very bad. Most viral transfers have no impact at all or one that is benign and often not noticed at all. Even with widespread efforts to ignore the ban, the disappearance of the hundreds of large live wildlife markets will help.

The risk remains, as LavV indicates. For thousands of years China had the largest population of any political entity on the planet. Most of the people were farmers who lived closely (often in the same building during bad weather) with domestic animals like swine and poultry (especially ducks). This led to influenza and periodically new strains of the flu. Less often it brings us SARS or the coronavirus. There are still a lot of farmers and this problem may spur greater efforts to improve the lives of farmers and reduce their frequent interaction with the livestock. This disease creation phenomena is known to Chinese medical professionals but the government long refused to do anything about the hugely popular wild animal trade. It was a matter of priorities. Now the situation has changed and a permanent ban is in effect. If living standards on farms can be increased and the number of farmers decreased this ancient cycle of devastating new diseases may be disrupted.

August 1, 2022: For the Chinese, what happened to the Russians in Ukraine puts the actual effectiveness of modern military power into perspective. Defeat of the Russians is also depriving China of what seemed to be a powerful military partner and turns Russia into a paranoid (about China) nuclear armed dependent state, much like North Korea. Ukrainians are fighting for their existence as a nation and that is a very big deal for Ukrainians. Russia is fighting to recreate a Russian empire that most Russians don’t see as essential to the existence of Russia as a nation. There are obvious similarities between expanding China and stubbornly independent Taiwan

China is also paying attention and revising its war plans while the Russians are still in shock, even though much of what went wrong made sense based on what Western military historians knew of the post-Soviet Union Russian military.

The Russians' failures in recruiting, training, logistics and wartime production are nothing new. It was very obvious in wars Russia has been in since the 19th century. This was especially true in World War I and II as well as the Cold War. That reality was revealed in Afghanistan during the 1980s. After each of these debacles Russia vowed to change but that never worked. Military historians noted this happening since the 1990s but the official view (of intel agencies and senior military staff) was that the Russians were making real progress. They weren’t. There were some practical reasons for this. Since the 1700 China had similar problems during several disastrous encounters with the now militarily and economically superior Europeans.

History teaches that it is better to overestimate the enemy than underestimate. There are problems with this because if you go too far in overestimating your foes you come up with a less effective doctrine. There is no easy solution for this because in peacetime, which is most of the time for most militaries, it's easy for reality to be outvoted by political expediency. This problem is only recognized in wartime, something that is relatively rare and the unpleasant details more likely to be forgotten by policy makers. This includes some very practical matters, like railroads and railway equipment capable of moving military units quickly to where the fighting is. The U.S. depends on rail transport to get mechanized forces to ports while many nations need effective rail transport to more troops and supplies directly to the front. The Americans still haven’t fixed this problem and the Ukrainians demonstrated they had adapted better than the Russians. Now China has to reexamine its own situation in these areas. There is also a Chinese history of creating impressive military forces that existed more to intimidate than actually fight a potentially powerful opponent.

Russian-occupied East European nations experienced uprisings from the 1950s through the 1980s that demonstrated why the Russian reluctance to fight was real. While most of these uprisings were quickly suppressed by local security forces and some additional Russian special operations troops, there were some exceptions. In 1956 the Hungarians rebelled and the local security forces could not handle it, nor could the initial Russian use of their troops and tanks. The Russians had to retreat and come back with a larger force to put down the uprising. The Russian troops were not particularly enthusiastic about fighting the Hungarians but sheer numbers overwhelmed Hungarian resistance.

In 1969 there was a six-month long border war with China. Despite the numbers involved (650,000 Russian and over 800,000 Chinese troops) there were only a few hundred casualties and Russia refrained from using its more numerous artillery, armored vehicles and warplanes to kill a lot of Chinese. After months of negotiations the confrontation ended with China getting most of what it wanted, mainly because the Americans refused a secret Russian request to join in or at least condone a Russian plan for a major nuclear attack on China. Without the nukes, Russia could not risk heavy infantry losses from prolonged fighting with China. At the same time China was appalled when they found out about the Russian plan to go nuclear. The Chinese were pleasantly surprised by the more measured attitude of the United States in refusing Russian requests to participate in a nuclear war, even against communist China. This led to China and the U.S. resuming diplomatic relations in a few years. Russia now had another potential invader; the angry Chinese. Russia also realized its military age population was not as willing as earlier generations to tolerate a major war, especially one that did not involve an invasion of Russia. During the next twenty years Russia received more reminders of the fragility of the morale in its combat forces. There was the very real problem in 1956 Hungary and a similar situation in Poland, where the uprising was avoided by a compromise. This meant some Russian troops were withdrawn from Poland and economic reforms tolerated. The Hungarians got a larger Russian garrison and a more oppressive local government. China has adopted a similar cautious attitude towards troublesome neighbors.

July 25, 2022: The enormous and risky foreign investments needed to maintain the BRI (Belt And Road Initiative) projects played a major role in the recent economic crisis in the island state of Sri Lanka, which is off the southern tip of India. The Sri Lankan president, Gotabaya Rajapaksa, in office since 2019 recently fled the country and found temporary refuge but not political asylum in Singapore. India would not grant asylum, in part because of the close ties Rajapaksa and his family have had with China. Rajapaksa literally ruined the Sri Lankan economy with a series of disastrous decisions that ended with economic collapse, national bankruptcy and massive protests against him and his government. He fled the country on July 13th after resigning earlier. It took a few days to find a country that would let him in.

Rajapaksa belongs to a prosperous Tamil family based in the capital. He joined the army as an officer cadet in 1971 and when the Tamil civil war broke out in 1983, he served with an infantry regiment, eventually becoming commander of one of its battalions. The Tamil insurrection seemed to be ending in 1990 and Rajapaksa took early retirement and enrolled at a local university to study computer science. That led to emigration to the United States for graduate studies, post graduate employment and U.S. citizenship. He returned to Sri Lanka in 2006 at the request of his older brother Mahinda, who was running for president. The older brother won and served until 2015, with Gotabaya as his Secretary of Defense. Gotabaya oversaw the end of the Tamil civil war by 2009. The Tamils realized that Gotabaya was the key man in the government supervising the defeat of the rebels and made several attempts to assassinate him. One such attempt in 2006 almost succeeded, had not the car carrying the army commander swerved into the path of the Tamil suicide car bomber. The army commander and another officer died.

With the end of the civil war in 2008 Gotabaya shifted his efforts as a government minister to urban development. At the same time Gotabaya and Mahinda were on bad terms with the West over allegations they had won the civil war via the use of murder, deception and corruption. This led Gotabaya to renounce his U.S. citizenship, run for president of Sri Lanka in 2019 and win. These accusations of criminal behavior led Gotabaya to develop good relations with the Chinese as his relations with India and the West declined. Once he was president, he sharply cut taxes so that much of the government budget had to be covered with loans, at least ten percent of them supplied by BRI money. When all the debts came due, China would not bail him out. This may have been because ten percent of the national debt was owed to China.

In another effort to regain solvency he banned many imports. A 2021 order halting imports of fertilizer and insecticides for famers, who were told to switch to organic farming, failed. Gotabaya had brought his older brother Mahinda into government as his prime minister, along with several cousins in lesser posts. Most of these kin quit as Gotabaya’s decisions destroyed the economy. Mahinda remained, trying to convince Gotabaya to change direction. Gotabaya was the first Sri Lankan elected to office with no previous elected office experience.

Sri Lanka continued to collapse and by 2022 there was not enough money to pay for all the imported fuel needed to keep the power plants operating full time. Unemployment was rising and so were popular protests that drove Gotabaya to resign on July 9th and discover that no nation would grant him political asylum. Sri Lanka is still a mess but the main cause of the catastrophe is gone. The solution is another matter. Sri Lanka now finds itself in a situation similar to that afflicting Pakistan and several other central Asian nations; too much debt caused, in part, by Chinese investments. When China is asked for more loans so that debt-crippled BRI recipients can avoid further economic and political damage. The initial Chinese response is often to offer some money but not nearly as much as was asked. Similar disasters have been developing in Pakistan for over a decade and more recently in central Asia. Normally prosperous and stable Sri Lanka became an economic disaster in a few years.

When Britain dissolved its Indian (including what is now Pakistan, Bangladesh, Burma and Sri Lanka) colonial government in 1947, the new nations that emerged were quite different and remain so, each in their own unique way. Sri Lanka, formerly Ceylon, is very distinct from India, with a native population that is 75 percent Sinhalese. This is an ethnic group similar to northern Indians but speaking a different language and using a different alphabet. Most Sinhalese are Buddhist while the Tamil minority is about 25 percent of the population. The Tamils originally came from Southern India (Tamil State) are Hindu (like most Indians) and generally appear and act differently than the Sinhalese. The two groups never got along well, in part because the Tamils got there first, about a thousand years before the Sinhalese showed up as part of the Central Asian Indo-European invasion of India. The Indian Tamils developed northern Ceylon, especially the coastal areas while the rest of the island remained sparsely populated by tribal groups. The Sinhalese went after the less populous and defended south but never absorbed the Tamil north. This was similar to what happened in India where the Tamils kept the Central-Asian invaders out of the south. After the British departure Ceylon was an independent state. Now known as Sri Lanka, its people became more prosperous, better educated and healthier than average Indians. Sri Lanka GDP per capita was nearly twice the Indian average.

Since the 1950s Sri Lanka developed tense relations with India because many Indians believed that Sri Lanka should have been part of post-British India. In response to that Sri Lanka developed better relations with the West and China to avoid being absorbed into India. Sri Lanka became the beneficiary of substantial Chinese economic and military aid over the last decade and has become very friendly with the Chinese. Sri Lanka received crucial military aid from China during the war with Tamil separatist rebels that began in the 1980s. The Tamils received a lot of aid from Tamils in southern India until they were finally defeated in 2009. India can't become too friendly with Sri Lanka without causing political problems with its own Tamils, many of whom still support the defeated Tamil rebels of Sri Lanka, where Tamils remain a troublesome minority.

July 20, 2022: China is having more problems with investments in Africa. In a Congo court-appointed administrator ordered China’s China Molybdenum Company (CMOC) to halt exports from its Tenke Fungurume copper and cobalt mine. In 2021 the Tenke Fungurume mine alone produced ten percent of the world’s cobalt. In February 2022 Congo’s state mining company sued CMOC and accused it of understating the mine’s ore reserves with the goal of reducing the royalties the Chinese corporation owed Congo. CMOC denied the charge. According to Congolese sources, CMOC recently denied the Congolese special administrator access to the mine.

July 16, 2022: The U.S. Navy conducted another FONOP (freedom of navigation operations) by sending a destroyer into the Spratly Islands, an area of the South China Sea that China considers its territorial waters. The Philippines has military detachments on nine of the disputed islands or reefs. These are part of an effort to oppose the illegal Chinese claims. The U.S. carried out a similar FONOP in the area three days earlier. Since 2020 the Americans have taken a stronger stand against Chinese aggression in the South China Sea by declaring Chinese claims to offshore resources across most of the South China Sea are completely unlawful, as is the Chinese campaign of bullying to control these resources. In 2016 an international court ruled against China and stated that occupying uninhabitable rocks and building artificial islands did not confer an EEZ (Exclusive Economic Zone). Ownership of “rocks” gets, at best, 22 kilometers of territorial waters from the edge of each rock rather than 360 kilometers for EEZ rights. Before this change the U.S. merely called for China to comply with the court ruling, something China said it would not do even before the court completed its deliberations. The Americans did continue to carry out aerial and naval FONOP with warships to assert the right of innocent passage. This annoyed the Chinese, who claimed most of the South China Sea was under Chinese control and no foreign ship or aircraft could enter without permission. China has been claiming areas long recognized as belonging to Vietnam, Indonesia, Malaysia, Taiwan and the Philippines. That has caused all these nations, plus the United States, Japan and South Korea to form an alliance to halt Chinese aggression.

July 12, 2022: Taiwan’s IDS (Indigenous Defense Submarine) program is a year ahead of schedule according to an announcement today by the government-controlled CAN (Central News Agency). The first (of eight) IDS subs will be in the water (launched) sometime in September and after nearly three years of fitting out and sea trials will enter service in 2025. The first sub of the class always takes longer, especially for a nation that has never built submarines before. At this point Taiwan believes they can have all eight of the IDS boats in service by the early 2030s. If this all happens China will have suffered an embarrassing defeat due to poor intelligence and underestimating Taiwanese efforts to defend itself.

While Taiwan sought to play down their IDS program, it was not a secret. In 2014 Taiwan announced that the United States had agreed to help Taiwan build its own submarines. In 2016 Taiwan’s CSBC (China Shipbuilding Corporation) established a submarine development center. In 2018 the U.S. government said it would approve American firms selling or licensing submarine technology to Taiwan. In 2019 Taiwan revealed a scale model of its IDS design, which is very similar to the twelve Japanese Soryu-class boats, the last of which entered service in 2019. Japanese firms are supplying Taiwan with design and construction assistance for the IDS. This may mean some or all of the IDS boats may be built with Japan’s Lithium-ion battery technology, which has been in safe use since 2020 and three Japanese subs with six more on order. The Japanese are the most proficient and advanced submarine builders in East Asia. South Korea also builds its own subs. These three nations all have to deal with the growing Chinese naval threat. Singapore, Malaysia, the Philippines, Vietnam, Indonesia and Australia are also part of this coalition and most of them have modern diesel-electric submarines.

Later in 2019 Taiwan announced that the Keelung shipyard in northeast Taiwan would build the IDS. Tech personnel working on IDS were told to stay out of China, including Macau and Hong Kong to avoid Chinese efforts to arrest such travelers on fabricated charges in order to extract details of the IDS program. China frequently does this sort of thing when it has the opportunity.

In 2020 construction of the first IDS boat began in Keelung. Up until then the conventional wisdom in the West, and especially China, was that Taiwan was not supposed to be capable of this. Foreign journalists began wondering what was going on. Questions were asked and the response was either “no comment” or statements professing no knowledge of such a project. Investigations continued and with many journalists searching for information, details began to emerge. There were rumors that British companies were assisting Taiwan in secretly designing and building its own submarines. This led to a 2021 story from the Reuters news agency that detailed how Taiwan had, since 2014, managed to quietly enlist the help from seven foreign countries, including Britain and the United States, to discreetly recruit foreign submarine design and construction experts. This enabled Taiwan to design their own diesel-electric submarine and quietly obtain the components, including major systems, from foreign suppliers. The secrecy was critical because since the 1980s China has threatened economic retaliation against any foreign country that supplied Taiwan with new subs or the components and expertise to build their own.

China currently has 58 subs, twelve of them nuclear powered, Taiwan has four submarines. Two are World War II era American Guppy-class diesel-electric subs that entered service months before that war ended in August 1945. These two boats are used only for training and are increasingly difficult and expensive to maintain. Despite that, the crews and trainees work hard to keep these museum pieces looking good and still operational. Recently Taiwan announced a $19 million effort to refurbish one of these World War II era subs so that it will remain in service until 2026. Since this sub entered service in mid-1945 as the USS Cutlass and in 1973 was given to Taiwan where it has served as the Hai Shih it will, with the latest refurb, become the submarine with the longest active career; 81 years if it lasts until 2026. One reason these relics were kept operational was to train the crews for the IDS subs. So now the oldest subs still in service are more useful than ever.

July 9, 2022: In Ukraine president Zelensky fired the Ukrainian ambassadors to India, Germany, Czech Republic, Norway and Hungary. Replacements were not immediately announced. Zelensky was dissatisfied with Ukrainian diplomatic efforts to obtain more foreign support for the fight against the invading Russians and Russian efforts to evade economic sanctions. For example, Russia and China have already organized a method for conducting trade in Russian rubles and Chinese yuan. A few other nations are willing to join this network, but none of them can help with the Russian airliner spare parts problem. China sees the situation as a useful and low risk challenge while for Russia it's more a matter of life and death for airline passengers facing lower flight safety levels and Russian officials responsible for the war crimes in Ukraine. Substitute spares can keep the airliners flying for a year or so but then the need for more difficult to counterfeit components will make this massive improvisation more difficult and unsafe. China is involved but Russia is committed to making this work and willing to risk lives to make it happen.


Source:Ocnus.net 2022

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