FirstFT: China warns of retaliation if hit by Russia sanctions fallout

China has sought to distance itself from the conflict in Ukraine following US claims that Beijing was willing to supply military equipment to Moscow.

The US state department recently sent cables to allies in Europe and Asia, according to an official the FT spoke to, telling them that Russia had asked China for military equipment, including surface-to-air missiles, following the faltering start to its military campaign in Ukraine.

A US defence official told the FT that if China did choose to materially support Russia in the war, there would likely be “consequences for China.”

But China today insisted it was “not a party” to the crisis and warned that if it was hit by the west with sanctions it would retaliate.

“China is not a party to the crisis, nor does it want sanctions to affect China,” Wang Yi told his Spanish counterpart, José Manuel Albares, in remarks published by the Chinese foreign ministry earlier today. “China has a right to safeguard its legitimate rights and interests,” he added.

President Xi Jinping and other senior Chinese officials have insisted that Beijing is a neutral party in the war, but they and state media continue to repeat and bolster Russian justifications for its invasion.

Reports that China is prepared to help Russia are beginning to unsettle investors. Yesterday the Hang Seng index in Hong Kong suffered its biggest fall since 2008 and it fell by another near 6 per cent today.

Falls in Hong Kong and on other Chinese stock markets in Shanghai and Shenzhen are being exacerbated by a serious outbreak of Covid-19 and subsequent lockdowns in the affected cities and regions.

More on Ukraine

• Military developments: Russia continued its bombardment of residential areas in Kyiv and Rivne, a city in the west of Ukraine where 19 people were killed by an air strike on a TV tower.

• Russian opposition: Marina Ovsyannikova, a journalist working at Russia’s main state television channel, burst on to an evening news bulletin last night to protest against the war in Ukraine.

• Business: Andrea Orcel, chief executive of Italian bank UniCredit, is conducting an “urgent” review of operations in Russia. Bayer has threatened to suspend crop supply sales to Russia next year unless the country stops its attacks on Ukraine.

• Social media: Russia’s influencers on Instagram are bidding a hasty farewell after the Kremlin banned the social media app. Chechnya’s warlord-leader Ramzan Kadyrov, a Vladimir Putin loyalist and deft user of social media, announced via Telegram that he had personally joined the Russian campaign.

• Opinion: Xi Jinping’s decision to embrace Putin looks likes a miscalculation, writes Gideon Rachman. Constanze Stelzenmüller at the Brookings Institution argues that the west should assure Russians that their quarrel is not with them but with the Kremlin. Mohamed El-Erian says the global economy is facing the same challenges as the 1970s, 1980s and 1990s — but simultaneously.

Follow our live blog and updated maps for the latest on the conflict.

Five more stories in the news

1. JPMorgan Chase loosens mask and Covid vaccine rules The largest bank in the US is discontinuing a policy of hiring only vaccinated people and has ended mandatory mask wearing and testing for employees as cases fall and pandemic concerns ease.

• Related news: Citigroup is founding a hub for new investment bankers in the southern Spanish city of Málaga. The Wall Street lender is seeking to gain an edge in the fierce war for talent by offering younger employees a better work-life balance.

2. Joe Manchin to oppose nomination of Sarah Bloom Raskin The conservative Democratic senator from West Virginia said he would oppose the appointment of Sarah Bloom Raskin to the board of Federal Reserve governors because of her previous advocacy for regulators having a larger role in policing climate change risks.

3. Legal action prepared against Shell directors The energy major’s board of directors bear personal responsibility for not preparing to cut emissions fast enough, an environmental shareholder group has claimed in the first significant attempt to hold individual executives legally accountable for alleged failures to tackle climate change.

4. Former Wirecard chief executive charged with fraud Markus Braun has been formally charged by Munich public prosecutors with fraud, breach of trust and accounting manipulation after a 21-month criminal investigation into the collapse of the German payments group.

5. ENRC drops lawsuit against FT and journalist Tom Burgis A Kazakh mining group has dropped a libel claim against the Financial Times and one of its journalists over a book detailing the influx of “dirty money” into the west’s financial system.

The day ahead

Ukraine diplomacy The leaders of Poland, Czech Republic and Slovenia are preparing to visit the war-torn Ukrainian capital of Kyiv to meet president Volodymyr Zelensky. Meanwhile, negotiators from Russia and Ukraine will resume their talks today to secure a ceasefire.

Federal Reserve meeting The US central bank begins a two-day policy meeting, where it is expected to lift interest rates for the first time since 2008. The yield on the benchmark 10-year Treasury yesterday rose 0.14 percentage points to 2.15 per cent, its highest since mid-2019.

Opec monthly oil market report The group is set to release its monthly data today as UK Prime Minister Boris Johnson appeals to Saudi Arabia to increase production. Sign up here to receive our Energy Source newsletter.

What else we’re reading

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We need a grand bargain on energy Within the current crisis, there is opportunity: namely, the possibility of an US-EU grand bargain on energy security and climate change. It should not be missed, writes Rana Foroohar. Read more from Rana on this topic in her Swamp Notes newsletter.

What you need to know about South Korea’s new president South Korea’s new conservative president-elect Yoon Suk-yeol, a former chief prosecutor, has no foreign policy experience and has never held office. Elected last week by a margin of less than 1 per cent, Yoon will take charge when he assumes office in May. Read up on his policy positions.

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