Like its allies, Germany is counting on the threat of economic sanctions to avoid conflict between Russia and Ukraine. But Russian President Vladimir Putin is putting his hopes on China. The question on the table is whether China could step in as Russia's primary trading partner if the Europeans cut business ties.
The European Union is still Russia's biggest export market by far. A third of all Russian goods are delivered to the EU. By comparison, China's share of Russian exports is half that. But in the past five years, that gap has been narrowing.
Russia's most important export is Natural gas. The EU imports 200 billion cubic meters of Russian gas per year: making Europe Russia's most important gas customer. China currently buys only 38 billion cubic meters of Russian natural gas. But demand in China is growing and more gas pipelines to China are already being built.
And financial markets have tumbled in Europe and Asia as the tension between Russia and Ukraine increases, signaling worries among investors of the widespread economic impact of a potential conflict.
The trading day began with losses in Tokyo, Hong Kong and Mumbai, as the US government warned that an Russian attack on Ukraine could be imminent.
Bad news across Europe too. Germany's DAX fell over 3 percent on open. Even the Stoxx 600 of top companies across Europe dropped.
And Russia's domestic focused MOEX also fell, whereas the foreign focused RTS index tumbled a massive 5 percent shortly after starting trading this morning. The only thing to rise was oil, with investors worried a conflict could hamper Russian oil production.
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