During a state visit to China this week, Russian Prime Minister Mikhail Mishustin signed several pacts on deepening cooperation on investment in trade services and exporting more Russian agricultural products to China. Bilateral trade, he said, would reach or exceed $200 billion this year.
While China is Russia’s largest trading partner, Russia is a small market for China. Exports to Russia accounted for only 2 percent of China’s total exports in 2022, although it is on the rise. April’s exports of $9.62 billion were up 153 percent from the previous year.
“Tieties between China and Russia are growing, but overall they remain quite small,” said Agathe Demarais, Global Forecasting Director at the Economist Intelligence Unit in London.
“Russia has lost access to its largest energy market, Europe, and high-tech products,[and]auto parts from Western countries and what we see is that China is not fully making up for that. It helps, but it’s not a magic fix,” she said. China is also facing US export controls to restrict access to high-tech chips.
Trade between the two countries has long been dominated by energy, machinery, electronics and more recently cars and other means of transportation, with China effectively trading its machinery for Russia’s oil and gas.
In the first quarter of this year, machinery and electrical equipment accounted for 60 percent of China’s exports to Russia, while energy and mineral resources accounted for 79 percent of China’s imports from Russia.
Bilateral trade will increase more than 30 percent to $190 billion by 2022, mainly due to Chinese purchases of Russian oil, gas and coal.
But other non-energy related categories, from beer and seafood to industrial machinery, cars and appliances, are also on the rise. In April, exports of cars and auto parts jumped more than 500 percent from a year ago to $2 billion.
Chinese brands, from spices to appliances, are increasingly appearing in Russian supermarkets. Household goods trade grew, with sales of mattresses rising 256 percent to $2.1 million and exports of washing machines rising 534 percent to $28 million. Chinese seafood shipments also rose more than 300 percent to $15 million.
Still, it will be difficult to attract private Chinese companies to the Russian market. Concerns about the Russian economy and the possibility of secondary sanctions have already deterred Chinese investors.
“China-Russian economic and trade exchanges are more politically oriented, with mostly state-owned companies at the forefront,” said Wan Qingsong, a research fellow at the Center for Russian Studies at Shanghai-based East China Normal University.
“Private companies are less motivated to tap into that market due to a lack of direct returns. If there is not enough investment, China and Russia will find it difficult to go beyond what they have now,” he said.
The fact that the trade boom is driven by an external crisis also underscores its fragility, Wan said.
Expanding economic ties between Russia and China would represent a shift in a relationship that has primarily revolved around political alignment against the West.
“The trade side of the relationship has always lagged behind the strategic relationship, but since the war, the trade side has really accelerated,” said Joseph Torigian, an assistant professor at American University in D.C. who studies China and Russia.
For China, strengthening the economic relationship could have a downside, as it complicates efforts to appear neutral about the war in Ukraine while supporting Moscow. Beijing has been trying in recent months to present itself as a potential peacemaker in the conflict.
After Mishustin’s visits, English-language articles in the state-run Global Times stressed that China-Russia cooperation “has nothing to do with the crisis in Ukraine”.
“For the Chinese, it’s kind of a double-edged sword in the sense that they want to profit from economic trade, but at the same time they want to be careful that this trade relationship doesn’t lead to conclusions in places like Europe that the Chinese are directly enabling Russian aggression,” Torigian said. .