- [Narrator] Over the past decade,
Chinese President Xi Jinping,
and Russian President Vladimir Putin
have become close.
(beeping sound) (cameras clicking)
They made pancakes together.
(chef speaking in foreign language)
And toasted with vodka.
(crowd clapping)
Xi even presented China's first Friendship Medal to Putin.
- The alignment between the two countries is getting closer
and some analysts would say it's more close
than at any point in the past 60 years.
- [Narrator] But that relationship
is now getting tested after Russia's invasion
of Ukraine, which has prompted the US
and its allies to drop a barrage
of sanctions against Moscow.
They included hitting Russia's energy industry,
a major source of the country's income,
as well as unplugging the world's 11th largest economy
from the global financial system.
But China has taken a different position.
(Wang speaking in foreign language)
- [Narrator] As Russia's biggest trading partner,
China could provide the country
with much-needed help
by purchasing energy and providing financial services
but the friendship has limits.
One of the biggest hits to Russia
has been its energy sector.
It's the world's largest natural gas exporter
and produces about 10% of the world's oil
and last year, total exports reached about $240 billion.
So when Putin deployed troops
to breakaway regions of Ukraine,
the West tried to hit Russia where it could hurt.
- One of the responses
that the West has had to Russia's invasion
is to reexamine the energy relationship it has with Russia.
- [Narrator] One of the biggest reexaminations
was the Nord Stream 2 project,
a newly built pipeline that was expected
to send 55 billion cubic meters
of natural gas from Russia directly to Germany,
doubling the volume.
Germany said it would halt the $11 billion project.
And as Russia has continued bombarding civilian areas
of Ukraine, the US took action against Russian energy.
- We're banning all imports of Russian oil
and gas and energy.
- [Narrator] The UK also said it would phase out
Russian oil imports
while the EU said it's aiming to cut some imports too.
China could help fill some of the gaps.
A few weeks before Russia's invasion,
Putin visited the Chinese president
ahead of the Winter Olympics.
During their meeting,
Beijing agreed to buy 100 million tons
of crude oil from its neighbor.
- There was another agreement between Russia and China
to construct a new pipeline
that would send an additional 10 billion cubic meters
of natural gas.
- [Narrator] That's on top
of an existing 1,800-mile pipeline
that's already sending 16 billion cubic meters
of natural gas per year to China.
But even with all the planned pipelines running
at full capacity,
China's purchase would still fall short
of what the Nord Stream 2 pipeline
was expected to send each year to Germany.
And all of these Chinese projects
will take years to fully bear fruit.
- The deals are significant in size
but they still don't amount
to any sort of immediate economic lifeline for Russia.
The new pipeline won't be constructed until 2026
and even the crude oil deal,
that will stretch out over the course of a decade.
- [Narrator] Energy hasn't been the only sector hit
by the West.
It's also been isolating Russia's financial industry.
The US and its allies said
they would remove seven Russian banks
from the global financial messaging system, SWIFT,
which is used by more than 11,000 banks
and other organizations
in more than 200 countries and territories.
And getting excluded means these banks
can't execute financial transactions,
meet obligations or receive payments for exports,
practically disconnecting a large part
of Russia's economy.
But China could help out here too.
- There was speculation that perhaps China's rival system,
the Cross-Border Interbank Payment System,
could provide something of a lifeline
to Russian banks.
- [Narrator] However, the Chinese system
has its own limitations.
Last year, it handled an average
of just 13,000 transactions a day.
Although the comparison isn't exact,
SWIFT processed more than 40 million messages per day.
- China's system is teeny at the moment,
so analysts don't really think that the Chinese system
is a viable alternative.
- [Narrator] Russian banks could also face problems
with their credit cards.
Visa and Mastercard said
they're suspending their Russia operations,
which practically blocks many Russians
from purchasing goods or services outside the country.
To get around this,
several Russian banks said they were working
on the possibility of issuing cards
that used China's state-owned UnionPay system.
These cards are accepted widely online
and in stores around the world
but switching to this new system would also take time.
- There are ways for China to help Russia economically
but every time China helps Russia,
it risks provoking further confrontation with the West.
- [Narrator] So far, China has been trying
to strike a delicate balance.
It has opposed the Western sanctions.
(Wang speaking in foreign language)
- [Narrator] But at the same time,
it hasn't signaled that it would be ready
to backstop Russia's economy.
US officials said that Russia has also asked China
for military equipment
and the White House issued an warning.
- Should they provide military or other assistance,
that of course violates sanctions
or supports the war effort,
that there will be significant consequences.
- [Narrator] The Chinese Embassy in the US said
it has never heard of such a request from Moscow
and China has earlier made vague pledges
to facilitate negotiations to end the war.
(Wang speaking in foreign language)
- The bottom line for China
is to ensure its own strategic interest.
Beijing wants to keep Russia close
as a strategic collaborator against the West
but it's also having to manage its own relationship
with the US and the West
to keep that from going off the rails.
(dramatic music)