China and Russia have promised to boost trade. Can they?

Chinese and Russian leaders pledged this week to expand economic cooperation in everything from sports to agriculture, predicting that trade between the two countries will hit a record high this year, similar to China-Russia. Relations are still elevated to a “high level”.

Expanding economic ties would further strengthen Beijing’s role as an economic lifeline for Moscow, increasingly isolated as the war in Ukraine continues. Yet despite the authorities’ lofty ambitions, particularly outside energy, its scope may be limited.

on a Official visit to China this weekRussian Prime Minister Mikhail Mishustin signed various agreements to deepen investment cooperation in trade services and export more Russian agricultural products to China. He said bilateral trade would reach or exceed $200 billion this year.

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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 they are increasing. Exports at $9.62 billion in April were 153 percent higher than last year.

“China-Russia relations are growing but in the grand scheme of things, they are quite small,” said Agathe Demaris, director of global forecasting at the Economist Intelligence Unit in London.

“Russia has lost access to its biggest energy market, which was Europe and high-tech products, car parts from Western countries, and what we see is that China is not fully prepared for that. “It’s helping but it’s not a magic solution,” he said. China too It faces US export controls to limit its reach. to high-tech chips.

Trade between the two countries has been dominated by energy, machinery, electronics, and more recently cars and other transportation equipment, with China primarily trading its machinery for Russian 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 is expected to grow more than 30 percent to $190 billion in 2022, largely as a result of Chinese purchases of Russian oil, gas and coal.

But other non-energy categories, from beer and seafood to industrial machinery, cars and appliances, are also growing. Exports of cars and auto parts rose more than 500 percent to $2 billion in April from a year ago.

Chinese brands, from spices to appliances, are increasingly appearing in Russian supermarkets. Home goods trade increased, with mattress sales up 256 percent to $2.1 million and washing machine exports up 534 percent to $28 million. Chinese seafood shipments also increased more than 300 percent to $15 million.

Still, it will be difficult to attract private Chinese enterprises to the Russian market. Concerns about the Russian economy and the possibility of secondary sanctions have already deterred Chinese investors.

“Sino-Russian economic and trade exchanges are more politically oriented, with mainly government institutions leading the way,” said Wang Qingsong, a research fellow at the Center for Russian Studies at Shanghai-based East China Normal University.

“Private companies are less motivated to tap this market because of the lack of immediate profits. Without enough investment, it will be difficult for China and Russia to expand beyond what they have,” he said. ‘ They said.

The fact that the trade boom is due to 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 been primarily about political alignment against the West.

“The trade side of the relationship has always lagged behind the strategic relationship, but trade has really picked up since the war,” said Joseph Toregian, an assistant professor at American University in D.C. who researches China and Russia.

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For China, strengthening economic ties could be the downside of a complex effort to appear neutral on the Ukraine war while supporting Moscow. In recent months, Beijing has sought to portray itself as a potential peacemaker in the conflict.

After visits to Michigan, English-language articles in the state-run Global Times He stressed China-Russia cooperation. “Nothing to do with the Ukraine crisis.”

This is a double-edged sword for the Chinese in that they want to benefit from economic trade, but at the same time they want to be careful not to allow this trade relationship to come to a conclusion in places like Europe. . that the Chinese are directly enabling Russian aggression,” Torijian said.

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