Winners & Losers

The strengthening of the China-Russia strategic partnership creates distinct winners and losers across various sectors and geographies. China and Russia stand to benefit from showcasing a united front, enhancing their leverage globally. Companies involved in energy deals between the two nations, such as the expanded gas supply agreements between Gazprom and China's national energy company, will likely see increased business. Nations seeking alternatives to Western-led structures may also find support within this evolving bloc. Conversely, Western economies and companies face potential negative impacts through reduced market access, supply chain disruptions, and heightened regulatory scrutiny. Hong Kong's financial sector, despite its role as a gateway for Chinese firms, remains vulnerable to geopolitical shifts affecting China-Russia relations, and global financial stability could be impacted by increased market volatility.

Action Timeline

Immediate: Businesses should undertake immediate reviews of their supply chain resilience, identifying and mitigating over-reliance on single regions or suppliers, particularly those with exposure to China or Russia. Investors should consider diversifying portfolios across geographies and asset classes.
Short-term: Explore strategic partnerships in sectors less affected by Western sanctions or those focused on developing alternative technological ecosystems. Identify and engage with emerging alternative economic or technological frameworks promoted by the China-Russia bloc to secure first-mover advantages.
Long-term: Re-evaluate global market strategies and operational footprints to adapt to a multipolar world order. Integrate evolving geopolitical landscapes into long-term strategic planning for sustained resilience and opportunity.

Risk Assessment

Regulatory Risks: Companies operating in or with ties to China and Russia may face increased regulatory scrutiny, potential sanctions from Western governments, and heightened compliance burdens.
Market Volatility Factors: The amplified geopolitical tensions and challenges to the established global order are significant drivers of market volatility, impacting investor confidence and asset valuations worldwide.
Geopolitical Tensions: The deepening strategic alignment between China and Russia exacerbates existing geopolitical tensions, particularly between this bloc and the US/Western allies, increasing the risk of escalation in various global hotspots and cyber warfare.

Key Indicators