Trade turnover between Russia and China has reached a record high

The trade turnover between China and Russia, according to preliminary estimates of the Russian Federation, reached $220 billion for the first time in 11 months of 2024. According to the PRC, it amounted to about 225 billion dollars. This is a significant increase compared to previous years.

From 2021 to 2023, the trade turnover more than doubled: in 2020 – 107.8 billion dollars, in 2021 – 146.9 billion dollars, in 2022 – 190.3 billion dollars and 240.1 billion dollars in 2023. There are several factors that determine this dynamic.

“Under the influence of Western sanctions against Russia, the geography of our foreign trade has changed dramatically,” says Sergey Tsyplakov, professor at the Faculty of World Economy and World Politics at the National Research University Higher School of Economics. – The European Union has long been Russia’s main trading partner. Russia’s trade and economic ties with it have been frozen in many areas, and a number of Western companies have left the Russian market. EU countries began to abandon purchases of Russian energy resources, primarily gas, and reduced imports of other goods. Under these conditions, Russia was forced to make a “turn to the East.” China has become the “second economy in the world” and the only country with a full range of industrial production facilities.”

Currently, Russia supplies China with oil, coal, natural gas, certain types of metals, chemical products, wood, potash fertilizers and some types of agricultural products (fish, seafood, oilseeds, vegetable oil). According to Chinese customs data, Russian companies are in first place in terms of oil exports and second in terms of coal sales to China.

The main import items from China are industrial products, spare parts, electronics, components and consumer goods. “The share of Chinese goods in Russian imports significantly exceeds 40%. There are certain risks of dependence, but at the same time, it should be recognized that there is no real alternative to China in the current situation. In addition, trade is a two-way street, and the resulting dependence is mutual,” the expert explained.

Sergey Tsyplakov noted that he does not see global changes in the structure of trade between the two countries in the next two years: “Russia’s opportunities to redirect its energy exports to other markets besides China look very limited. The Chinese market will remain the main one for Russian companies. The cost of exports will be determined by the dynamics of world prices for oil, gas and metals. Different scenarios are possible here, but much will depend on the state of the Chinese economy, its growth rate, and its ability to create demand.”

The actively developing cooperation faces a number of challenges. Among them are concerns about secondary sanctions against many Chinese enterprises and difficulties related to financial transfers between our countries. These issues were also raised during a video call between Russian President Vladimir Putin and President of the People’s Republic of China Xi Jinping on January 21. The two leaders agreed that Russian-Chinese cooperation plays a stabilizing role on the world stage.

According to Alexey Maslov, director of the Institute of Asian and African Studies at Lomonosov Moscow State University, in particular, it will not be possible to reach the level of 2023 due to the fact that some of the products were supplied from China to Russia through the territories of third countries (Kazakhstan, Kyrgyzstan, Belarus, Uzbekistan, Turkey). Therefore, the withdrawal of this part “from the shadows” will give a percentage increase in bilateral trade.

“Against the background of a generally very stable increase in the volume of bilateral trade, our investment cooperation is still “sagging,” Maslov added. And although many Chinese investors are afraid to invest in Russia, the task for the future now is to develop specific investment projects in those areas in which the Chinese side is clearly interested.

First of all, according to the professor, these are joint farms and enterprises, including the production of furniture or equipment, as well as large infrastructure projects. By creating enterprises on its territory, Russia will be able to receive Chinese investments along with technology.

In recent years, the transition to settlements in national currencies between the Russian Federation and China has been actively discussed. Alexey Maslov noted that this issue is now equally relevant for both countries: “More than 95% of payments are made in the ruble-yuan pair, although the yuan is noticeably predominant here. Dependence on the dollar in Russian-Chinese trade has now been almost completely overcome. As for the alternative financial settlement system, it is technically not difficult to create it. However, it is important that other countries show interest and join it.”

The expert explained that this decision concerns not only Russia and China, but also the largest partners in Asia, Africa and Latin America. He suggested that the platforms of the SCO, BRICS, EAEU and other international associations will be used for its implementation. As an alternative, Maslov mentioned the use of digital assets, various settlement systems and international drawing rights. They will create a dollar-free circuit and allow for secure settlements between multiple countries.

During the videoconference, Vladimir Putin and Xi Jinping discussed, in particular, the prospects for cooperation between Moscow and Beijing with Washington. There is an assumption that if the United States sharply restricts the access of Chinese goods to its market, Chinese companies will be forced to look for alternatives and, accordingly, will promote their products to developing countries and countries with growing markets. Russia is one of them.