Russia ramps up trade with China to fight Western sanctions
Trade between China and Russia surged last year, bailing out Russia’s struggling economy and curtailing Western laws, according to a new report.
Moscow has increased technology imports and has taken part in the fighting in Ukraine, including semiconductors and microchips from China, according to a report by the Washington-based Free Russia non-governmental foundation. An increase in China’s purchases of exports from Russia, primarily energy products, more than offset the fall in major Western trading partners, including the US, the UK and some European countries.
“Given that the US, EU, UK is in charge of transactions with Russia, China has become the main trading partner of Russia by a wide margin,” the report says.
The report, based on 40 million accounts of customs revenue obtained by the Free Russia Foundation, allows for a share of ownership of Russia’s trade, which is hidden after the transfer of Western revenues. In August, Russian customs authorities suspended the publication of public opinion on exports and imports, stating, among use, that they allow “errors in estimates, speculation and discrepancies in the timing of the use of imports.” The latest data was published for January 2022.
Share of Russian imports in total access to imported goods
Source: The Wall Street Journal
China is supplying some key technologies that are of high value despite Western sanctions. China sold $3.3 million worth of unmanned aerial vehicles (drones) to Russia last year, according to the data. In the results report, deliveries of drones to Russia continued in November and December from the UAE, Hong Kong, China and Singapore.
Russia increased its imports of semiconductors and microchips by about 34% last year, mostly from China. This helped Russia boost its total chip imports to $2.45 billion in 2022, up from $1.82 billion in 2021, despite Western demands against trade compliance.
Russia and China have been providing for years, including building a $55 billion gas pipeline and expanding the use of Russia’s yuan. Economic relations have strengthened, although officials fear that Russia could become dependent on China’s economic territory.
Russia redirects flows
The Free Russia Foundation obtained data from the Madrid-based Instituto de Empresa (IE) from an external data provider that provides value chain analysis services to companies. The team behind the report included Russian economists and former deputy government officials, Russia’s defense oversight deputies, including Sergei Aleksashenko, a former central bank governor, and Vladimir Milov, a former energy minister and opposition politician.
To test validity, the authors compared the dataset with official Russian trade statistics published up to January 2022 and data from Russia’s trade partners for 2022. The report states that the data is limited due to the fact that the entries were partially edited to reflect military operations.
According to the report, from March to September last year, trade between Russia and China grew by about $27 billion compared to the same period in 2021, reaching $99 billion. The growth is primarily driven by sales patterns that Russia has begun to re-tune in China and other markets such as India and Turkey as Western countries curb purchases of Russian energy.
Russia is also increasingly dependent on Chinese goods. Between March and September, China accounts for about 36% of imports. This is a lot more compared to 21% in 2021 over the same period. After the conflict began, the US, South Korea and Japan banned the sale of high-tech products, including semiconductors consumed from Russia.
View some Russian suppliers of exclusive goods, such as Germany, the Netherlands and South Korea supply chain, imports from China more than doubled. From March to September, the value of Chinese semiconductor exports to Russia jumped from $200 million in 2021 to more than $500 million last year. The number of transactions also rose, the report says.
Russia also imports semiconductors from Turkey, Kazakhstan and Kyrgyzstan. Although these countries do not have a developed semiconductor industry, analysts say Russia can source affordable chips from local distributors.
“China can make many kinds of simple chips domestically, so it’s not surprising that Russia is buying them,” said Chris Miller, an assistant professor at Tufts University who was not involved in compiling the report.
However, he said, “Military systems use a wide variety of chips, so they may run into shortages of individual chips even if they purchase large quantities of other chips.”
Prepared by Profinance.ru by materials Wall Street Magazine
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