China and Russia promote new world order: What does it mean for the global economy?

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"The start of the trading week was supposed to be all about the August inflation report, but Kyiv's sudden momentum has many hoping that this moment is a turning point with the war against Russia," related Edward Moya, senior market strategist at OANDA. Over the past few days, Ukrainian military forces have retaken nearly all of the Kharkiv region that Russian forces had occupied since the start of the war on Feb. 24, and now appear to be moving ahead carefully and consolidating their gains. While the Russians still have the ability to regroup and hit back, the lightning offensive forced Moscow to make a hasty retreat and could weigh on the morale of Russian troops.

Economically speaking: It's still early to tell how sanctions and economic warfare will affect the outcome of the war in Ukraine, but there will be a clear divide and decoupling for years to come. The EU now recognizes it must have an energy grid that is independent from Russia supply, while the West won't be pouring any foreign investment into the country for the near future. The new dynamics are also playing out on the global stage, with old alliances being cemented into place, as well as calls for some new ones.

In fact, President Xi Jinping this week is traveling outside of China for the first time since the pandemic, to meet Vladimir Putin at a scheduled meeting at the Shanghai Cooperation Organization. The gathering will take place on Thursday in Samarkand, Uzbekistan, and comes at a time that the two are becoming increasingly reliant on each other for goods and services. China has been buying record imports of low-priced Russian crude, and in Q2, 81% of Russia's new car imports were Chinese and Xiaomi was its top-selling smartphone maker.

New global order: The two nations touted a "no-limits” partnership following their last meeting earlier this year, but this time around things may go to the next level. "The Chinese side is willing to work with the Russian side to continuously implement high-level strategic cooperation between the two countries, safeguard common interests and promote the development of the international order in a more just and reasonable direction," declared Yang Jiechi, foreign affairs chief of the Communist Party. "The relationship between the two countries has always been on the right track, and both sides firmly support each other on issues relating to their core interests."

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