Ukraine War

• Russia set a deadline of 5 am Moscow time this morning for Ukraine to surrender the besieged port city of Mariupol and for Ukrainian troops there to lay down their arms, but Ukraine refused both demands.
• Before that deadline, Russia reportedly bombed a school in Mariupol that was sheltering 400 civilians (Russia again denied targeting civilians). Ukraine also claims that Russian troops forced civilians in Mariupol to evacuate the city for Russia, rather than for other Ukrainian cities or friendlier neighbors.
• Russia’s military continues to struggle in Ukraine. Western intelligence estimates that 1,000 Russian troops are being killed or injured each day, and Ukraine said its troops killed the deputy commander of Russia’s Black Sea Fleet yesterday. Analysts worry that Russia will lash out in frustration at its stalled progress and escalate attacks on civilian targets—or perhaps use chemical weapons.

End Game

• In his daily video update, Pres. Zelensky told his fellow Ukrainians that the next found of talks with Russia could take place in Israel, thanks to Israeli PM Bennett’s efforts to negotiate peace. (However, Bennett also criticized Israel for not doing enough to sanction Russia during a virtual address to Israeli lawmakers yesterday). We’ll see how plans for talks unfold.

Global Impact

• The UN is warning that Russia’s war in Ukraine will affect global food insecurity, with an additional 7.6 to 13.1 million people going hungry due to food price increases. Global wheat and barley prices are up 21% and 33%, respectively, and Ukrainian farms that produce a sizeable segment of the world’s wheat and barley exports (10% and 18%) look likely to miss their planting and harvesting seasons this year, which will further exacerbate shortages.

Libya

• Ukraine’s Defense Ministry claims that Libyan commander Khalifa Haftar visited Moscow last week and offered to send Libyan fighters to support Russian forces in Ukraine—perhaps as a token of gratitude for Russian support for his side in Libya. That’s a tall claim: it would be extremely risky for Haftar to wade into the Ukraine war on Russia’s side since the West would probably further sanction him for doing so.

China

• Reuters wonders whether economic reasoning will push China to side with the West and deny Russia the military and economic support it reportedly asked China for. See article pasted below.
• U.S. Indo-Pacific commander Adm. John Aquilino says China has fully militarized at least three of the islands it built in disputed parts of the South China Sea, adding high-tech military gear like anti-ship and anti-aircraft systems.
• Aquilino also said China repeatedly ordered the U.S. P-8A Poseidon reconnaissance aircraft that captured photos of this new military equipment to leave what the Chinese callers called China’s territory, suggesting that China sees the islands as firmly Chinese and has no intent to withdraw from them.
• Separately, China appears to be approaching the spread of the BA.2 Omicron subvariant more pragmatically than before. Instead of the expensive zero-tolerance approach it adopted in the past, Pres. Xi instructed officials to aim for containment policies that achieve “maximum effect” with “minimum cost.” This pivot implies that China is recognizing the extraordinary expense of a zero-COVID policy.

DRC

• Suspected CODECO militants attacked a displaced people’s camp in Ituri on Saturday, hacking 14 people—half of whom children—to death.
• Meanwhile in nearby Beni, ADF rebels ambushed and killed four “young people.”
• The ADF and CODECO are distinct and unrelated militant groups: the ADF is a jihadist group motivated (at least in part) by Islamist ideology; CODECO was born out of ethnic rivalries.

Aviation

• A China Eastern Airlines Boeing 737 crashed en route from Kunming to Guangzhou with 132 people aboard. It’s not clear how many survived the crash, but Boeing stock also crashed on the news: its shares are down 6% in pre-market trading.

Pressed to choose sides on Ukraine, China trade favors the West (Reuters)

U.S. President Joe Biden's warning of "consequences" for any aid China may give to Russia's Ukraine war effort could force Chinese President Xi Jinping to choose between a longstanding lucrative trade relationship with the West and a growing strategic partnership with Moscow.

Based on trade flows alone, Beijing has a lot at stake following Biden's nearly two-hour video call with Xi on Friday, with the White House confirming that sanctions on China were an option.

Despite growing trade ties to Southeast Asia and an economy that is less dependent on trade over the past decade, China's economic interests remain heavily skewed to Western democracies, trade data reviewed by Reuters showed.

Siding with political ally Russia would make little economic sense for China, according to analysts, as the United States and European Union still consume more than a third of China's exports.

"On the pure economic question, if China were to have to make the choice - Russia versus everyone else - I mean, it's a no-brainer for China because it's so integrated with all of these Western economies," said Chad Bown, a senior fellow at the Washington-based Peterson Institute for International Economics think tank who tracks China trade closely.

China's ambassador to the United States, Qin Gang, on Sunday emphasized China's close relationship with Russia.

"China has normal trade, economic, financial, energy cooperations with Russia," Qin told the CBS program "Face the Nation" when asked if Beijing would provide financial support to Moscow. "These are normal business between two sovereign countries, based on international laws, including WTO (World Trade Organization) rules."

Targeting Beijing with the type of broad economic sanctions that have been imposed on Russia would have potentially serious consequences for the United States and globally, given that China is the world's second-largest economy and the largest exporter. As China's economy has ballooned to $16 trillion in the past 20 years, its dependence on trade with other countries for its economic well-being has diminished.

As Chinese citizens become wealthier, domestic consumption and services are playing a bigger share in China's economy.

However, China is still more dependent on trade, at about 35% of GDP, than the United States at 23% or Japan at 31%.

The wealthy G7 countries that form the heart of an anti-Russia alliance following last month's invasion of Ukraine still consume more than a third of China's exports. That is a drop from almost half of China's exports nearly two decades ago, but a relatively steady share since 2014, when Russia annexed Ukraine's Crimea region.

The share of China's exports to Association of Southeast Asian Nations (ASEAN) countries, with which China recently has forged new trade agreements, has doubled to about 15%, eclipsing Japan in importance. But China's January-February 2022 trade data showed that exports to the European Union grew the most at 24%.

OIL FOR CELLPHONES

Russia's overall trade with China has grown since the West first imposed sanctions on Moscow in response to its annexation of Crimea.

But China's exports to Russia have remained between 1% and 2% for the past 20 years.

Russian imports from China track those of many other countries, with electronics and consumer goods including cellphones, computers, apparel, toys and footwear topping the list.

China exported 10 times as many cellphones, by value, to the United States alone, at $32.4 billion in 2020, based on UN Comtrade data.

China's imports from Russia are dominated by oil. At $27 billion in 2020, crude oil and other petroleum dwarfs all other imports from Russia, mainly commodities including copper, softwood lumber, liquefied natural gas, coal, metals and ores.

Although the United States has banned Russian energy imports, Western sanctions have not specifically targeted Russia's oil and gas exports. But the U.S.-led sanctions on Russian banks that prohibit dollar transactions have hampered China's ability to provide trade finance for oil Russian oil cargoes.