World

Russia’s reliance on China rises amid Ukraine sanctions

Like a salesman buttering up his best customer, President Vladimir Putin gushed about China's economic success as he welcomed Chinese leader Xi Jinping to the Kremlin.

“We even feel a bit envious,” Putin said Monday as Xi grinned.

That was more than idle flattery. China isn't just Moscow's diplomatic partner in opposing what they see as US domination of global affairs. Its thriving economy is the biggest buyer of Russian oil and gas exports, pumping billions of dollars into Putin's treasury and helping the Kremlin resist Western sanctions over its invasion of Ukraine.

Putin welcomes the lifeline, but that reliance is accelerating Russia’s slide into the junior role in an uneasy relationship with Xi’s government. Beijing has ambitions that diverge from Moscow's and sometimes conflict.

“Russia may worry about increasing reliance upon China, but it has no other good options,” said Li Xin, director of the Institute of European and Asian Studies at the Shanghai University of Political Science and Law.

The current Beijing-Moscow partnership dates to the 1990s, when they set aside border disputes and other strains that led to the 1961 Sino-Soviet split and forged a post-Cold War diplomatic front to push back against Washington.

For both sides, the importance of that relationship increased as Washington imposed sanctions on Russia and restricted Chinese access to US technology on security grounds. Xi accused the US this month of trying to block China's economic development.

“There’s a feeling that the US and American allies are out to contain the two countries,” said Li Mingjiang, an international relations expert at the S. Rajaratnam School of International Studies at Singapore’s Nanyang Technological University.

Despite “strategic mistrust” stemming from conflicts dating back to the 19th century, they share a “common political interest" of "resisting American challenges,” Li said.

Before last year's invasion, Xi and Putin declared they had a “no limits friendship.” But Beijing already has shown there are limits. It says they aren't allies and has avoided openly giving Russia military help in Ukraine, a step President Joe Biden and other Western leaders warn would trigger unspecified consequences for China.

Beijing once called the Soviet government “Big Brother,” but Moscow’s lead in political influence eroded as China’s economy raced ahead following market-style reform in the 1980s.

Russia had oil riches, but the post-Soviet economy failed to create competitive companies. Meanwhile, China launched auto, tech and other industries that are expanding into global markets.

In the mid-’90s, Russia's economy was half the size of China's but its smaller population had four times the output per person.

By 2020, China’s lead had multiplied. Its economy was 10 times the size of Russia's and edged ahead in output per person, $10,525 to Russia's $10,115, according to the International Monetary Fund. Russia’s $1.7 trillion economy was about three-quarters the size of that of Texas.

Russia also is losing its lead in arms technology, its biggest non-oil export.

China paid billions of dollars in the early 2000s for fighter jets and other weapons. But in another sign of the limits to cooperation, Russia suspended sales after 2004 due to complaints Beijing was copying its missile and other technology. Sales didn't resume until 2014.

China's imports from Russia, mostly oil and gas, rose 49 percent last year to $76.4 billion, according to customs data. The Global Times newspaper reported Russia overtook Saudi Arabia as China's biggest foreign oil supplier in January and February.

China can buy Russian energy without triggering Western sanctions that prohibit or limit imports into the US, Europe or Japan.

Beijing values relations with Moscow so highly that it has avoided using that economic power as leverage, said Li Mingjiang.

"We've seen Chinese caution not to do anything or say anything that may make the Russians upset or suspicious,” he said.

Moscow is uneasy that its dominant role among former Soviet republics in Central Asia might be undermined by Xi’s multibillion-dollar Belt and Road Initiative to expand trade by building ports, railways and other infrastructure.

Putin’s government shares worries with Washington, Tokyo and New Delhi that China is using Belt and Road to expand its strategic influence at their expense.

Beijing tried to mollify Putin’s government by agreeing Moscow would be in charge of security affairs in Central Asia while China would focus on trade.

To sweeten the deal, Beijing invested $1 billion to keep an oil project in Siberia alive after it lost access to Western financing due to sanctions imposed over Moscow's 2014 seizure of Crimea from Ukraine.

Beijing wants to keep Putin’s government as a viable diplomatic partner but has avoided doing anything that might trigger sanctions against Chinese banks or other companies or shut them out of Western export markets.

The potential losses for China's exporters if it crosses Western governments are immense.

The US bought 15 percent of Chinese exports last year, even after tariff hikes in a feud with Beijing over technology and security. The 27-nation European Union bought almost 13 percent.

And Russia? It accounted for 1.3 percent. Less than Thailand.

“To China, the importance of Russia is lower than the West in technology and economic cooperation,” said Li Xin. “But politically, the importance of Russia to China is on the rise, because of the geopolitical and military suppression of China from the US.”

For the latest headlines, follow our Google News channel online or via the app.

White House urges China's Xi to press Putin on Ukraine

US: ‘World should not be fooled’ by China's Xi proposals in Russia

China's Xi to Putin: Russians will support you in 2024 election

World

US determined to prevent full-scale war in Middle East, Joe Biden tells UNGA79

US President Joe Biden highlighted the US Administration’s determination to prevent a wider war that engulfs the entire Middle East region, noting that a diplomatic solution “remains the only path to lasting security to allow the residents from both countries to return to their homes on the border safely”.

In remarks he made today before the 79th Session of the United Nations General Assembly (UNGA79), the US President said, “Full-scale war is not in anyone’s interest,” adding that a diplomatic solution is still possible.

He also touched on “the rise of violence against innocent Palestinians on the West Bank”, and the need to “set the conditions for a better future”, which he said featured “a two-state solution, where the world — where Israel enjoys security and peace and full recognition and normalised relations with all its neighbours, where Palestinians live in security, dignity, and self-determination in a state of their own”.

President Biden underscored the ceasefire and hostage deal put forth by Qatar and Egypt, which the UN Security Council endorsed. He said, “Now is the time for the parties to finalise its terms, bring the hostages home,” adding that this would help ease the suffering in Gaza, and end the war.

-WAM

World

TRENDS Explores Cooperation with Indonesia’s BNPT and Launches Indonesian Edition of a Book

On its first day in Jakarta, Indonesia, as part of the third leg of its Asian research
tour, TRENDS Research ‘ Advisory met with the Indonesian National Counter
Terrorism Agency (BNPT). The discussion focused on the role of think tanks in
combating terrorism and extremist ideologies, as well as potential areas for
cooperation and partnership in specialized research and strategic studies.
Dr. Mohammed Abdullah Al-Ali, CEO of TRENDS, presented the center’s
intellectual and research efforts in this field, emphasizing the crucial role think
tanks play in refuting the arguments of extremist groups.
TRENDS researchers also showcased the Encyclopedia of the Muslim
Brotherhood, a project comprising 35 books, with 12 already published and
translated into multiple languages.
During the discussion, TRENDS launched the Indonesian translation of the 11th
book in the encyclopedia, titled “The Concept of the State According to the
Muslim Brotherhood”
The book highlights the Muslim Brotherhood’s adversarial stance, since its
inception, toward the Arab states, viewing them as an obstacle to the group’s ascent
to power. The group opposed the modern principles upon which these states were
built, considering them incompatible with its unique interpretation of Islam, which
the group claimed to exclusively embody.
The discussion also featured the introduction of the Muslim Brotherhood
International Power Index (MBIPI), the first of its kind globally. Compiled

annually by TRENDS, the index tracks and measures the global influence and
strength of the Muslim Brotherhood.
TRENDS researchers were briefed by BNPT officials on the agency’s work, vision,
and achievements. The BNPT representatives praised TRENDS’ research efforts
and expressed a strong desire to establish constructive cooperation between the two
sides to enhance efforts in countering terrorism and extremist ideologies.
The discussion between TRENDS and BNPT underscored the importance of
mutual cooperation in this field and other research areas, fostering research
excellence and knowledge dissemination.
Both sides agreed to maintain communication with the goal of signing a
memorandum of understanding and cooperation.

World

White House Partners with Monroe Capital to Launch New Strategy to Support U.S. Automotive Industry Growth Initiatives and American Autoworkers

The White House selected Monroe Capital
LLC (“Monroe”) to develop a first-of-its-kind investment strategy focused on supporting
businesses operating in the U.S. automotive supply chain. Along with the anticipated advisory
support of MEMA, The Vehicle Suppliers Association (“MEMA”) and the Alliance for
Automotive Innovation, Monroe intends to launch this new strategy (the “Drive Forward Fund
LP” or the “Fund”) to help address this key White House initiative. The Drive Forward Fund LP
will seek to raise up to $1 billion and focus on investing in companies that play a pivotal role in
fueling growth and innovation within the $1 trillion U.S. automotive industry.
Monroe will develop this White House inspired strategy to support small and medium-sized
companies operating within the automotive value chain that are essential to the growth and
modernization of the U.S. automotive industry. The Drive Forward Fund LP will target suppliers
and manufacturers, as well as other adjacent businesses that provide complementary products
and services to the industry. The mission of the Drive Forward Fund LP is to provide financial
support to the businesses that supply mission critical parts such as powertrain, body, drivetrain,
chassis, interiors, and electrical components, as well as complementary Software-as-a-Service
(“SaaS”) and other auto technology and business service providers that cater to the industry. The
Fund will also evaluate growth opportunities to invest in innovative companies in battery
component and subcomponent manufacturing and materials recycling. This entire ecosystem of
businesses is critical to ensuring the U.S. position at the forefront of the global automotive
market. In addition, Monroe believes the Drive Forward Fund LP will benefit the American
automotive industry, which should have a positive impact on workers as well as state and local
economies with jobs in the areas where these target companies are located.
Building on the announcement Vice President Harris issued in Detroit in May supporting growth
and jobs in the automotive industry, Monroe will seek to provide capital solutions to help
manufacturers, suppliers, and service providers modernize the key automotive supply chains;
including the clean vehicle supply chain, as well as support jobs in the automotive industry –
more than 9.7 million across the country. As part of its strategy, the Fund also intends to provide
companies access to funding for technology investments, including but not limited to
investments in the transition from internal combustion production to electric vehicles (“EVs”), as
well as the software offerings that will drive the industry’s shift from a purely transaction sales
model to a complete vehicle lifecycle. Major technological enhancements transforming the
industry include Software-Defined Vehicles (“SDV”), autonomous driving systems, smart
factories, and many other connected technologies. The Fund’s investments will intend to not
only allow these businesses to capitalize on the industry’s compelling growth tailwinds, but also
to navigate supply chain challenges and the rapidly evolving operating landscape.

Monroe intends to pair private investor capital with leverage, including low-cost government-
guaranteed leverage that Monroe hopes to obtain through applying for a U.S. Small Business
Administration (“SBA”) Small Business Investment Company (“SBIC”) license for the Fund.
“We believe this new Drive Forward Fund will be critical to catalyzing growth and innovation
within America’s automotive supply chain,” said Monroe’s Chairman and CEO, Ted Koenig.
“The Fund will have an opportunity to provide essential financial support to small and medium-
sized businesses and will help provide a consistent and reliable supply chain to the Original
Equipment Manufacturers (“OEMs”), Tier 1 auto manufacturers, and other auto industry
stakeholders. In addition, the Fund will strive to provide support to auto industry suppliers as
they become more competitive and remain local community anchors as they grow their
businesses to support key initiatives within the overall automotive industry. Monroe Capital is
honored to play a leading role in this new strategy.”
Alex Parmacek, Portfolio Manager for the Fund at Monroe, added “Looking ahead, we believe
the automotive industry is poised for transformative changes driven by advancements in electric
vehicles (“EVs”), hydrogen fuel cell technology, and autonomous driving systems, among
others. We believe a shift towards clean energy and sustainable vehicles can play a role in efforts
to reduce carbon emissions and create a more durable supply base for the OEMs and Tier I
suppliers. This Drive Forward Fund expects to play a pivotal role in supporting these
technological innovations, to help ensure that the U.S. remains at the forefront of automotive
technology and manufacturing.”
Bill Long, President and CEO of MEMA, stated, “MEMA is pleased to have a seat at the table in
our ongoing collaboration with the White House to address industry challenges associated with
the transition to advanced technology vehicles and to enhance manufacturing competitiveness in
the US. In this role, MEMA will continue to provide insights to ensure the supplier community is
best served going forward.”
John Bozzella, President and CEO, Alliance for Automotive Innovation said, “A successful
transformation to automotive electrification in the United States requires a cutting-edge
automotive supply chain that keeps the country competitive and underpins our economic and
national security. Automakers are investing billions in this transition and building electrified
vehicles in all makes and models, but you’ve got to remember the automotive supply chain is
made up of hundreds of companies – many small and medium-sized businesses – that have been
churning out components and parts for generations, support communities across the country, and
keep the wheels turning on the $1 trillion American auto business. Auto suppliers are essential to
this transformation, and that’s what is promising about the Drive Forward Fund. It’s an option
for smaller auto businesses to access private money to modernize and support the production of
the vehicles of today – and tomorrow. We’re glad to be part of the advisory council for this new
fund and provide the automaker perspective.”
The Drive Forward Fund plans to be advised by a council of experts from across the automotive
industry to help ensure capital is directed to small and medium-sized auto suppliers,
manufacturers, and service providers with ties to significant domestic manufacturing content.

Monroe anticipates the advisory council will include representatives from MEMA and Alliance
for Automotive Innovation, with support from the OEMs, consultants and business organizations
who recognize the importance of providing adequate liquidity and stability for the auto supply
chain and critical suppliers. With the expected commitment of strategic and financial investors,
along with support and counsel from key industry leaders, the Fund intends to invest in
businesses that align with White House’s pledge to ensure that the future of the automotive
industry is made in America by American manufacturers and American autoworkers in the
communities that have historically powered the industry.
For limited partner investors, the Fund will seek to generate attractive returns on investment
while targeting exposure to manufacturers and other business service providers, coupled with
compelling growth opportunities in the EV and clean energy markets and auto technology. The
Fund will be managed by Monroe, an asset management firm that was previously recognized by
the SBA as the SBIC Fund of the Year. As of July 1, 2024, Monroe, together with its affiliates,
has approximately $20 billion in assets under management in a diversified private credit platform
of 35+ investment vehicles, with more than 450 active portfolio investments, comprised of direct
lending and alternative credit funds, business software, real estate, venture debt, publicly traded
and private BDCs, separately managed accounts, and collateralized loan obligations. The firm
has more than 250 employees and is headquartered in Chicago and maintains 10 offices
throughout the United States and Asia.
The Fund intends to begin fundraising after progressing through the SBA licensing process.
SBIC licensed funds nationwide manage more than $43 billion in SBA-government guaranteed
and private capital, providing equity investment and long-term loans to small businesses in a
wide range of industries.