In the past few months, under the situation that the Western sanctions against Russia have been increasing, the Russian economy has shown certain resilience despite difficulties.
However, the West’s weaponization of the monetary and financial system is backfired on itself and in global trade and finance.
Can Russia and the global economy continue to withstand the unbearable burden under the intertwining of complex factors?
What are the impacts on the global energy pattern and the process of globalization?
What enlightenment has this crisis brought to countries around the world?
In this regard, China News Agency "East-West Questions China Dialogue" invited Qu Qiang, Assistant Director and Researcher of the International Monetary Institute of Renmin University of China, and Alexei Beloshitsky, Executive Director of the Center for Big Data Storage and Analysis of Moscow State University, Shao Yu, chief economist of Orient Securities, explained the trend of the situation in depth.
Beloshitsky pointed out that the West has misjudged Russia's resilience. With the diversification of international trade, the dollar that dominates the international trading system and the "American peace" ("American peace" refers to the post-World War II, in the Western vision, the United States dominates the world economic, the concept of regional military status) is waning.
He believes that Russia's confrontation with the West is paving the way for other countries to win more sovereignty.
An excerpt from the conversation follows:
Russia suffers from sanctions,
The ruble makes a strong comeback
Qu Qiang: Western countries have been imposing severe sanctions. Has the Russian economy really collapsed?
Beloshitsky:
In financial services, there are currently some technical difficulties in working with the Anglo-Saxon world.
But as we have seen, Russia's trade with Western countries continues.
Since they initiated the sanctions first, they must now find ways to circumvent them in order to continue their cooperation.
The original goal of the sanctions was to destroy the backbone of the Russian economy within a month, but we survived the challenge.
Qu Qiang: How do you view the financial sanctions against Russia and the freezing of foreign exchange reserves?
Beloshitsky:
The Western countries imposed sanctions to force us to give up our sovereignty, but they misjudged our resilience and did not expect us to launch a special military operation in Ukraine, which was well prepared (for the consequences).
We always find new ways to import what we need and export what we have.
The West still depends on us in terms of resources, agriculture, science and technology.
Shao Yu:
Freezing a country's foreign exchange reserves actually has legal risks and consequences.
U.S. Treasury Secretary Yellen also mentioned that freezing the dollar foreign exchange reserves of a sovereign country, such as Russia, seems unfair or illegal.
This means that the currency of any country, especially a sovereign country, may be confiscated for ideological or other reasons, which will cause great concern in the entire monetary system, including the reserve security (in terms of) of different countries.
You're not my friend, I'll hold your money, sounds a bit like a "underworld" approach.
Qu Qiang: I think that 99% of economists and financial practitioners may have made a misjudgment. The West reduced the ruble to worthless at the beginning of the sanctions, and now it has to buy it. Why is the ruble so strong and how long will it last?
Beloshitsky:
It's actually a good sign for the economy because initially, the ruble did depreciate compared to the dollar or the euro, but our government did everything possible to stabilize the ruble and the economy and stopped panic.
So in the medium and long term, we have to depreciate the ruble back to the original level in the future, probably back to the level of January, when it was about 70 to 80 rubles per dollar.
Initially we let the ruble appreciate and bought all the necessary equipment to produce most of the goods.
Now we can devalue the ruble again.
It's not a perfect strategy, but any strategy will always depend on its impact on the economy's performance over the medium and long term.
I think it will work in the end.
Reshaping global geo-competition and
energy pattern
Qu Qiang: High energy prices bring benefits to Russia, but will it have a negative impact on Russia and the world economy?
Shao Yu:
At this stage, the strengthening of the ruble shows a certain effect of Russia's resistance to financial sanctions from Europe and the United States, especially the United States.
It maintains the sovereignty of its currency with essential oil demand.
Russia's important role in the supply chain may not be able to replace it at present.
If positive information can be released to the financial market and the market can gradually stabilize, then consider the appropriate devaluation of the ruble, which may help energy exports.
But globally, energy prices are now very high.
One of the logics of energy transformation is to keep traditional energy at a high (price) position, and everyone will shift to new energy.
This transformation may bring some mid- to long-term or even revolutionary changes to the global pattern, including the demand for fossil energy and traditional energy.
Qu Qiang: How do you view the US sanctions against other countries and the weaponization of the US dollar? What negative impact will this have on globalization?
Shao Yu:
Globalization is actually an all-round exchange of people, materials, technology, information and ideas.
We are accustomed to calling the past globalization version 3.0 of globalization, in which countries played different roles.
Three categories of countries constitute the complete structure of the globalization cycle.
The first category is energy or resource-based countries such as Russia and Ukraine; the second category is called producer economies, and the current account surplus of these countries exceeds GDP by more than 4%; the last category of consumer-oriented countries like southern European countries, the United States, current account The deficit is more than 4% of GDP.
But now, whether it's geopolitical conflicts or competition among some countries, the globalization structure has been fractured.
The world may enter a process of more intense geographic competition and alliances of different countries forming competing blocs, a bit like a downturn between World War I and World War II.
We predict that such a state may last for 10 years or even longer, so whether it is the transformation of resource-based countries, the improvement of production-oriented countries' capabilities, or the restraint of consumption-oriented countries' indiscriminate currency issuance, a new balance must be found, but this balance more difficult to achieve.
File:Ruble banknotes.
Russia challenges dollar hegemony
What are the implications of the Russia-Ukraine conflict?
Qu Qiang: The Russian government is working hard to promote the settlement of the ruble with the currencies of trading partners to bypass the dollar-dominated financial system. What impact will this have on the world financial and trading system?
Beloshitsky:
I think the influence of "American Peace" is waning.
We really don't care what currency we use.
The West's policy toward Russia is eye-opening.
In this case, we will see the diversification of international trade.
As more and more countries transact more widely and independently, in the long run, I think the United States will one day have to join this fair and equal trading system.
Russia is only paving the way for other countries to claim more sovereignty, and at the same time, we are always ready to sit at the round table and negotiate.
Shao Yu:
In the short term, the US dollar accounts for 80% of the market share, which is still very strong.
Currency is not only used for trading, but also for investment, and it has a financial market large enough to absorb it.
Hundreds of years of hard work have given the United States this privilege.
It is an attempt for Russia to build a direct currency trading system with other countries. In the short term, it is more difficult to shake the existing global structure of the US dollar.
But in the long run, unfriendly and unwise moves like freezing central bank reserves will eventually shake up the current monetary system.
We may expect more options, including multiple clearing systems, multiple currency options, electronic currency, digital currency and other new considerations.
Qu Qiang: What coping ideas can be drawn from the Ukraine crisis?
Beloshitsky:
Long-term development is the most important thing. (Russia) must constantly adjust to survive and develop in the future.
We can only rely on an equal and stable partnership.
Therefore, I think Russia should further communicate with Europe, the United States, the United Kingdom and other countries on an equal footing.
Different countries have different national conditions, and the government has always been committed to national sovereignty and people's well-being.
This world is my ideal world.
Shao Yu:
The series of sanctions and technical details in the Russian-Ukrainian conflict actually had a great impact on our thinking.
Future conflicts are all-round and may involve public opinion, communication technology, finance, trade, energy, supply chain and other aspects.
What we need to learn is how to ensure sufficient self-sufficiency, while maintaining good contact with the world in terms of economic cycles.
Although we may compete with the world in various ways, as long as it is a healthy competition, everyone should keep a relatively open mind and follow the principle of fairness. No matter what kind of conflicts in the future, we can survive any conflicts in the future, and the same should be true for Russia.