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On the way to $200 billion: in the three months of 2023, trade between Russia and China increased by almost 39%

Photo by Nuno Alberto on Unsplash

During the first three months of 2023, trade between Russia and China increased by 38.7% compared to the same period of 2022 and reached $ 53.84 billion, the General Administration of Customs of China reported on Thursday, April 13.

According to the agency, from January to March shipments of Russian products to the Asian republic increased by 32.6% – up to $ 29.77 billion. Beijing, meanwhile, increased the supply of goods to Moscow immediately by 47.1% – up to $ 24.07 billion.

The observed increase in trade volumes was largely expected, said Alexei Maslov, director of the Institute of Asian and African Studies at Moscow State University. According to him, a large number of deals were made back in mid-2022. Then, against the background of unprecedented sanctions, Moscow began to actively re-direct exports from the West to the East and replace imports from the US and Europe.

“First, we started shipping more oil and gas to China, as well as agricultural products, especially crops like grain and rapeseed. Secondly, the export of goods, for which the added value is formed on the territory of Russia, has increased. For example, we expanded the range of timber products: if previously only sawn timber was going to China, now we have added furniture boards,” the interlocutor said.

In addition, China began to buy pulp and paper products, metals, agricultural raw materials and chemical products from Russia more often, Vladimir Kovalyov, an analyst at TeleTrade, told . According to him, China’s economy is recovering today after the lifting of quarantine restrictions. Against this background, the volume of production in the country increases and the need for various resources, including Russian ones, grows.

“China is one of the world’s leading economies, with which we have great opportunities to both sell and buy a wide range of goods. For us it is a huge market, especially considering its scale and needs, as well as the presence of common borders. In this case, the Celestial Empire can really replace the supply of modern Western products to us to a greater extent than other countries,” Kovalev explained.

As the expert noted, Russian companies are now importing from China, including through parallel import, various equipment, clothes, shoes, chemical products and metal products. In addition, according to Alexei Maslov, recently there has been a significant increase in the supply of electronics, gadgets, home appliances and vehicles.

“Separately, I would like to note the increased imports of cars: there are supplies of both finished cars and components. This year we should still see the joint development of knowledge-intensive technologies, which require intellectual investments from both the Chinese and Russian sides,” Maslov added.

It is noteworthy that the volume of Russian-Chinese trade is growing ahead of schedule. Previously, Moscow and Beijing agreed to increase their mutual trade turnover to $200 billion in 2024. However, given the current pace, the target could be reached as early as 2023, as Russian President Vladimir Putin said in March when Chinese President Xi Jinping visited Russia.

“Despite the consequences of the pandemic and the sanctions pressure, trade turnover in 2022 reached a historical record of $185 billion. This year, Russia and China are expected not only to reach the $200 billion trade volume (which we had agreed with our friends several years ago), but to surpass this threshold,” Putin stressed.

Moreover, in the future, the two sides plan to increase trade to $250 billion. Moreover, as trade volumes increase, Russia and China increasingly prefer to settle accounts with each other in their national currencies.

“According to the results of the first three quarters of last year, the share of ruble and yuan in mutual commercial transactions reached 65% and continues to grow, which allows us to secure mutual trade from the influence of third countries and negative trends in global currency markets,” Putin added.

According to Alexei Maslov, today there are reliable ties between Russian and Chinese suppliers, and the quality of goods supplied from China continues to grow steadily.

Further development of trade relations should help Russia to recover faster from the sanctions losses of 2022, Vladimir Kovalyov is sure.

“Supplies of raw materials and other export goods to China support their production in our country. Increased imports of necessary products largely meet the needs of the Russian market of consumer goods and means of production while replacing the declining imports of Western products with them,” Kovalyov explained.

Recall that last year, against the backdrop of economic restrictions imposed by the West, Russia’s GDP fell by 2.1%. However, in 2023, the figure may return to the growth trajectory and add from 0.7 to 1%. This is stated in the forecasts of the International Monetary Fund and the Central Bank of Russia.

Moreover, already in March of this year the growth of business activity in the manufacturing and service sectors of Russia accelerated to the maximum since August 2020. Such a conclusion was made by the experts of S&P Global.

In general, as noted by analysts, after the departure of a number of Western brands from Russia, the freed market niches began to be occupied by companies from friendly countries, especially the Chinese. Nevertheless, according to experts, Moscow today needs to rely not only on the substitution of American and European goods with Eastern analogues, but also to actively develop domestic production.

“Too strong a binding to one trading partner can lead to some difficulties in a number of industries, where previously business could choose between a large number of suppliers. That is why it is important for us now to transfer a number of technological processes to Russia, so that our competences will emerge here and we could in the future produce ourselves a whole range of products needed for the needs of our economy,” concluded Alexei Maslov.

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