And so it was that China’s President Xi Jinping reportedly pushed for resolve to “strengthen mutual support on multilateral forums” when he met with Russian Foreign Minister Sergey Lavrov on July 15 as top diplomats from the 10-member Shanghai Cooperation Organisation (SCO) gathered in Beijing for talks. Chinese state media also reported that Xi said both nations should work to “unite countries of the global South and promote the development of the international order in a more just and reasonable direction.”
It was hailed as a momentous meeting given the context in which it took place. China has been in a trade standoff with USA since President Donald Trump’s first stint at the White House. Despite multiple rounds of talks and some headway, tensions have not really thawed in any significant way.
Just hours earlier, President Donald Trump threatened to impose “very severe” tariffs on Russia’s remaining trade partners if Moscow failed to end the Ukraine war within 50 days. China immediately rebuffed the ultimatum.
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Foreign ministry spokesman Lin Jian warned that “there are no winners in a tariff war, and coercion and pressure will not solve problems.”
This cementing of Sino-Russo relations may not be what the USA was looking for; it may even be the exact opposite. Even earlier, American sanctions on Russia following its invasion of Ukraine only tightened Sino-Russo ties.
The Centre for European Policy Analysis observes, “trade cooperation between China and Russia has grown in tandem with anti-Russian sanctions and tensions with the West”. China now absorbs vast quantities of Russian oil, gas and grain, often paid in yuan, binding their respective economies. Russia is “becoming increasingly interconnected with China” through the use of the ‘renminbi’. The more Washington presses Moscow, the more Russia considers Beijing its indispensable partner.
So far, by isolating Russia, the US is helping create a counterweight that could lead to a larger realignment of global finance and alliances. China has been at the centre of such movements.
At the recent BRICS summit (which now includes Egypt, UAE and others), leaders openly discussed trading in national currencies to sidestep the dollar. Egypt’s government, for example, has urged the BRICS member states to settle trade in their own currencies.
This year, Brazil’s presidency has been studying new payment systems “to ease international payments in local currencies, opening the door to less dependence on the dollar”. Such moves directly counter President Trump’s belligerent defence of “the mighty US Dollar”.
For USA, the timing could not be much worse. There are already signs of eroding trust in all-weather US allies. In Brussels and NATO capitals, President Trump’s trade war rhetoric is causing alarm.
His announcement of 30% tariffs on imports from the EU and Mexico effective August 1 provoked a furious response. The EU called the move “unfair and disruptive” and warned that it would undermine the very cooperation on security for which Europe depends.
German and Italian politicians have revived calls to repatriate gold bullion from the New York Federal Reserve, fearing that it is unsafe under an unpredictable US administration. Michael Jäger, President of the Taxpayers Association of Europe (TAE) warned that Trump “wants to control the Fed, which would also mean controlling the German gold reserves in the US.” He added that leaving Italy’s gold abroad “under the unreliable Trump administration would be very dangerous for (Italian) national interests.”
In sum, Trump’s tariff threats appear to be backfiring in a way. He has antagonised friends and rivals alike, inadvertently reinforcing an anti-US bloc. It is quite possible that the world may be witnessing the unintended handover of global leadership from Washington to Beijing and Moscow.
