China, Russia can do more to support companies affected by Western sanctions, says Consul General Anatoly Kargapolov

This is the eighth in a series of interviews with consuls general of emerging and belt and road economies with which Hong Kong is keen to build ties. Here are the previous ones.

Russian companies have faced difficulties accessing Hong Kong’s banking services following Western sanctions, but the country’s top envoy to the city has brushed off the impact on bilateral trade.

Consul General Anatoly Kargapolov said growing ties between China and Russia had opened up new opportunities for collaboration with the city, urging the financial hub to host economic forums with former Soviet states.

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He spoke to the Post in an exclusive interview days before leaders Xi Jinping and Vladimir Putin said on the sidelines of the 16th Brics summit in Kazan, Russia, last week that both countries were committed to boosting cooperation for a “fair world order”.

Since Russia invaded Ukraine in February 2022, it has faced a slew of sanctions from the United States, the European Union and other Western countries. It was also cut off from Swift, the main international payment messaging network.

Some Russian companies experienced difficulties with banking services in Hong Kong, but Kargapolov said that “was never critical for developing bilateral trade”.

He said US sanctions on dozens of Hong Kong companies for their alleged ties to Russia were meant to “negatively influence” Russia-China trade.

While the affected companies had to navigate the challenges they faced themselves, he added that Moscow and Beijing should support the business community.

In September, the US Treasury Department’s Office of Foreign Assets Control sanctioned 26 Hong Kong companies and another based in the city and mainland China. That followed sanctions last December on eight companies in the city.

On a visit to Hong Kong in July, Ukraine Foreign Minister Dmytro Kuleba urged Chief Executive John Lee Ka-chiu to prevent Russia from using the city to evade Western restrictions.

Lee assured Kuleba that the city adhered to global sanctions and local laws.

Kargapolov called those sanctions “illegal”, saying: “The global economy is grossly distorted by the methods that the West is using to punish those who do not follow its ‘rules’, which are steeped in neocolonialism, and to wipe out its competitors.”

He added that Western countries tried to use the same method against Russia-China trade and Hong Kong in particular, in their attempts to undermine the city’s status as a global financial centre.

Despite the challenges, Russia’s relationship with Hong Kong was part of its “comprehensive partnership and strategic cooperation” with the mainland, which was experiencing “remarkable growth” and opening up new opportunities for deepening cooperation, he said.

He also highlighted the city’s role as the largest source of offshore yuan, which Russia had increasingly turned to for foreign trade in recent years.

Hong Kong’s bilateral trade with Russia climbed to US$5.8 billion last year, up 50.9 per cent from 2022, according to official data. Exports surged by 123 per cent, while imports were up 11.2 per cent.

To boost trade and business ties further, Kargapolov hoped Hong Kong could host economic events focused on member countries of the Commonwealth of Independent States (CIS), which comprised most of the former Soviet Union states in Central Asia and Eastern Europe.

He noted the Hong Kong government had begun paying more attention to countries in the Asean bloc, or the Association of Southeast Asian Nations, and the Middle East, and said that Russia could also supplement the development of the city.

“This will help to extend the economic cooperation between CIS countries and Hong Kong, and with Russia in particular,” he said.

Dmytro Kuleba, Ukraine’s foreign minister, in July urged Chief Executive John Lee to prevent Russia from using Hong Kong to evade Western restrictions. Photo: Reuters

Russia’s exports to the city mainly consisted of precious metals such as silver and platinum, as well as pearls and other precious stones, according to Trade Development Council data.

Kargapolov said there was “huge interest” from Russian companies hoping to send agricultural and food products to the city for re-export to Asean countries and the mainland.

Hong Kong also had unique advantages within the framework of the Greater Bay Area, linking the city with Macau and nine cities in Guangdong province, including its international connectivity, financial infrastructure and common law legal system.

Kargapolov said Hong Kong’s position as a research and development hub also offered new opportunities for cooperation in areas including artificial intelligence and fintech such as banking software.

Lighter side

What surprised you most about Hong Kong when you first arrived?

I was surprised that on such a small piece of land you managed to build great transport infrastructure and business infrastructure. It is a city that combines and embraces everything active people would wish to have.

In a small area everything is accessible. In 20 minutes I can go from the office to the trail to go hiking. I also can enjoy the seashore.

Do you have a favourite local dish?

I like the seafood. Sometimes I go to the wet market, buy some fish and cook it myself. In Moscow, we have mostly frozen products.

But here, you can have a fresh catch and I can treat my family to some dishes.

Where do you usually take guests when they visit Hong Kong?

No 1, we take them to The Peak. No 2, we take them to the [Big] Buddha. No 3, we take them to Tai Kwun because it is an iconic place – the architecture, heritage, cuisine.

If this is not enough, we take them to Tai Po, the fishing village, and we take a boat ride to see the dolphins. We are not lucky every time, but I have seen them.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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