China feels heat amid surging global energy prices due to Russia-Ukraine war

Beijing [China], March 10 : China is facing the heat of the ongoing Russia-Ukraine war as global energy prices have surged and Beijing is dependent on imports for its energy requirements.
China is facing severe challenges in managing the pressure on its external sector as more than 70 per cent of China's oil requirements and 80 per cent of iron ore requirements are fulfilled through imports, reported local media.
Rising prices of major Chinese import items such as oil and gas, coal, iron ore, etc. is also likely to augment the import payments.
This would in turn drain out the country's foreign exchange reserves to cover the import bills amid reduced export receipts, local media said.
However, China has been highlighting around 13 per cent growth in total trade with both exports and imports registering a double-digit rise during the first two months of 2022 and stable foreign exchange reserves at around USD 3.2 trillion at the end of February 2022.
The rise in the values of both imports and export may primarily be attributed to the rising global prices rather than any substantial increase in the volume.
Moreover, there is a possibility of a decrease in demand for Chinese exports due to prevailing anti-China sentiments in the international market.
At the same time, the imports are expected to increase on account of rising demand from China's large manufacturing sector, plans to stockpile its gas and coal reserves as well as its energy-hungry projects such as South-North Water Transfer Project, despite the adoption of policies to decrease its dependence on imports.
The ongoing crisis between Russia and Ukraine has placed China in a difficult position as Beijing struggles to balance its stance to protect its economic and strategic interests.
China and Russia relations have become closer since 2014 when it stepped in to help Russia, which was dealing with heavy economic sanctions post its annexation of the Crimean Peninsula and establishing a de-facto republic.
After the annexation, Russia was heavily sanctioned, impacting its economy. China stepped in and helped Russia's economy to recover by buying oil, investing in companies, etc.
China has neither supported nor denounced Russia's actions against Ukraine. However, it has been alleged that Russia has finally moved against Ukraine despite being heavily sanctioned because it has China's backing. Moreover, China has issued directives for covering the Russia-Ukraine crisis which includes not showing Russia in an unfavourable light and not being pro-West.
However, China is Ukraine's biggest trading partner as it imports wheat, corn, iron ore, sunflower oil and barley from Ukraine and exports machinery and consumer goods to the country. Since 2018, Ukraine has been supplying modern engines for jets to China. Ukraine is also a major arms supplier to China. Ukraine joined the Belt and Road Initiative (BRI), China's ambitious infrastructure project, in 2017. In 2020, Ukraine and China signed agreements for the financing and cooperation of BRI.
Ideally, China needs to maintain friendly relations with Ukraine because of extensive trade relations as supporting Russia would bring China's robust trade with Ukraine to a screeching halt. Further, China would also face severe backlash and economic sanctions from Eastern Europe as well.