Discount as investment: Russia and China step up economic cooperation (January 13, 2023)
The trade turnover between Russia and China in 2022 increased year on year by 29.3%, to $190.27 billion. This figure was an all-time record for the two countries, although it did not reach the high estimate of 200 billion proposed by Russian President Vladimir Putin and Chinese President Xinping. However, such in-depth bilateral economic cooperation can be achieved by 2024.
The fact that the two hundred billionth bar has not yet been taken, in all likelihood, has become “covid” restrictions in China, which are gradually being transferred. “The volume of Chinese-Russian trade is subject to steady growth, the trade turnover of the two countries is reaching a new high,” Liu Dalian, a spokesman for the General Administration of Customs of the People’s Republic of China, said at a press conference. According to him, Russia accounts for 3% of China’s total foreign trade turnover.
“Recovery” of the Celestial Empire stimulates trade
Exports from China to Russia over the past year increased by 12.8% and amounted to $76.12 billion. Imports from Russia to China during this time increased by 43.4%, to $114.15 billion, according to data from the General Customs Administration, cited by TASS. The positive balance of Russia in 2022 amounted to $38 billion, more than 3 times more than in 2021. Last December, the volume of trade between the two countries amounted to $17.8 billion, about 3% less than in November.
Russia mainly supplies China with energy resources. Thus, oil, pipeline gas, LNG, coal and fuel oil from Russia account for more than 70% of all demand in China. The PRC also imports mineral resources, timber, agricultural products and seafood from the Russian Federation. China exports to Russia consumer electronics, excavators, cars, microprocessor units, clothing, footwear and consumer goods.
While world trade is in a depressed state, Russian-Chinese trade is growing at an impressive pace, Andrey Kochetkov, a leading analyst at Otkritie Investments, noted in Expert. The best part is that a share of the increase is consuming exports, which have faced barriers in Europe. In the original source code, the Russian Federation and the PRC are guided by the appointed head of state to bring trade to 200 billion by 2024. Even a halving of growth rates did not prevent the achievement of this figure in November 2023. The expert noted that, at a minimum, it is possible to increase the share of consumption and gas, as well as agricultural products.
In 2022, China’s oil imports were observed at 0.9% to 10.17 million barrels per day, but already in December 2022 there was an annual increase of 4% to 11.3 million barrels per day, processed by Andrey Kochetkov. Accordingly, China’s “recovery” after the wave of COVID-19 promises a surge in economic activity in the first quarter. In January, there were signals about the expansion of Chinese purchases. In particular, the People’s Bank of China could triple the purchase of gold compared to December’s 30 tons. You can also predict the growth of Chinese imports of high-tech alloys and metals. So there was a situation when China converts dollars into reserves, something more reliable and necessary for the economy.
One of the external conversion reserves are investments made by Andrey Kochetkov. The Far East has long been interested in Chinese investments, but today’s development is only growing. Trade could be even more active if the Far Eastern port infrastructure was located nearby. At the level of observation of Russian-Chinese observations, there is also potential for growth. In particular, the new bridge in Blagoveshchensk has already become too risky for the logistics of trade between Russia and China, reducing ground delivery times.
It is important to note that today the Russian Federation is forced to supply goods and raw materials at lower prices to China due to problems with access to the European market. However, this forms the dependence of the Chinese economy itself on the export of exports, which works as a mutual binding of economies for higher performance in the export market. Therefore, the current discounts can be considered not only as a geopolitical negative, but also as an investment in future mutually beneficial economic cooperation, Andrey Kochetkov noted.
A holy place is never empty
The trade turnover between Russia and China is actually a record, Stanislav Bovt, a financial analyst at the CMS group of companies, confirmed to Expert. “Economic indicators rarely make us happy today, but there is good news. Our trade relations with China are developing dynamically and are constantly used. In 2022, the trade turnover amounted to $190 billion, which is almost 30% more than last year. In my opinion, this is far from the limit, and by 2027 the turnover could reach $300 billion,” he said.
“From our side, naturally, the volume of sales of gas, oil, oil products, coal, timber, iron ore and precious metals, agricultural and seafood, cereals, food and consumer goods, industrial equipment, fertilizers is increasing,” the expert admitted.
Every day, Russian consumers encounter Chinese goods. For example, cars will be found as a “hit” in the next 5 years. And not only with an internal combustion engine, but also electric vehicles. For example, the metallurgical company Xibao Group plans to build a plant, the Sokon auto concern and implement the production of electric cars.
As they say, there is no place empty – an important event in the sphere of trade is the cooperation of small and medium-sized businesses between countries that have been replaced in the field of Western goods and brands that have left the Russian market.
Also in Russia, they began to study transforming furniture and kitchen appliances from the Middle Kingdom. As Stanislav Bovt suggests, thanks to Chinese partners, new production facilities will be created in the country. And, of course, a violation of covid functions was revealed.