The trade turnover between Russia and China in January-April increased by 25.9% year-on-year to $51.09 billion. In particular, imports from China to Russia increased by 11.3% and amounted to $20 billion. Exports of Russian goods to China increased by 37.8% to $31 billion. In total, the Russian Federation has a positive trade balance with China in the amount of about $10.6 billion.
What is Russia selling to China?
About 70% of spacers are oil, coal, gas, copper, wood and other raw materials. However, the prospects for such exports are unclear. According to media reports, China is trying to avoid Russian oil for a number of reasons:
- "political toxicity",
- different areas of application of previously used and Russian raw materials
- the decline in the economic activity of China in connection with the new wave of coronavirus;
- lack of storage space.
At the same time, importers of Russian raw materials are now buying its oil at a big discount due to sanctions against Russia, and the trend may continue.
What is Russia buying from China?
Important components of such imports:
- smartphones;
- industrial and specialized equipment;
- children's toys;
- shoes;
- vehicles;
- air conditioners;
- computers.
But there are problems here too. Last week, the WSJ reported that Chinese technology companies are refusing to do business in Russia under pressure from US sanctions. Lenovo and Xiaomi are among the largest Chinese manufacturers that have restricted exports to Russia. At the same time, unlike European "colleagues", Chinese companies did this without any statements.
Imports from China to Russia are falling sharply
According to the report on Chinese trade turnover, the export of Chinese products to Russia is declining:
- in January, it was at the level of $7.38 billion;
- in February - $5.24 billion;
- in March - $3.823 billion;
- in April - $3.8 billion.
And although for 4 months the import of Chinese goods to Russia increased by 11.7%, but we see that we are mainly talking about the beginning of the year, after which it began to fall and continues this trend.
Exports to China from Russia are growing
Positive dynamics in the opposite direction:
- in January, Russia supplied $7.574 billion worth of goods to China;
- in February - $6.238 billion;
- in March - $7.843 billion;
- in April - $8.89 billion.
Most likely, the demand for Russian raw materials will continue to grow as China recovers from the COVID crisis. At the same time, the bulk of Russian exports to China are raw materials, and China is now in an advantageous position and can demand more and more discounts from Russia due to the "political toxicity" of Russian raw materials. This means that the total cost of goods from Russia may remain at the same level as it is now.
In addition, Chinese companies will continue to fear Western sanctions, which may also negatively affect Chinese imports from Russia.
How will trade relations between Russia and China develop further?
Taking into account the data of the Chinese customs service, there is reason to expect a reduction in Russian imports from China against the background of a still high level of exports.
Recently, the skew of the Russian trade balance towards exports has had a positive impact on the strengthening of the ruble. It is likely to grow further, even without the intervention of the Russian regulator
But in the long term, risks remain: the shortage of goods in Russia continues to increase, which will accelerate inflation, worsening the economic situation of the country.