During a state visit to China this week, Russian Prime Minister Mikhail Mishustin signed various 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 in 2022 accounted for only 2% of China’s total exports, although they are increasing. April exports of $9.62 billion represented a 153% increase over the previous year.
“Sino-Russian relations 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 biggest energy market, which was Europe, and to high-tech products (and) auto parts from western countries and what we see is that China is not compensating not entirely that. It helps, but it’s not a magic bullet,” she said. China also faces U.S. export controls to restrict its access to high-tech chips.
Trade between the two countries has long been dominated by energy, machinery, electronics and more recently cars and other transport equipment, with China essentially trading its machinery for Russian oil and gas.
In the first quarter of this year, electrical machinery and 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 has increased by more than 30% in 2022 to reach $190 billion, mainly due to Chinese purchases of Russian oil, gas and coal.
But other non-energy categories, from beer and seafood to industrial machinery, cars and household appliances, are also rising. In April, exports of cars and auto components rose more than 500% from a year ago to $2 billion.
Chinese brands, from condiments to household appliances, are increasingly appearing in Russian supermarkets. Trade in household goods rose, with mattress sales jumping 256% to $2.1 million and washing machine exports 534% to $28 million. Chinese seafood shipments also increased by more than 300% to $15 million.
Nevertheless, it will be difficult to attract Chinese private companies to the Russian market. Concerns about the Russian economy and the possibility of secondary sanctions have already put off Chinese investors.
“China-Russia economic and trade exchanges are more politically oriented, with mainly state-owned enterprises in the lead,” said Wan Qingsong, a researcher at the Center for Russian Studies at Shanghai-based East China Normal University.
“Private companies are less motivated to tap into this market due to a lack of immediate 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 highlights its fragility, Wan said.
Expanding economic ties between Russia and China would represent a shift in a relationship that has primarily been about political alignment against the West.
“The business side of the relationship has always lagged behind the strategic relationship, but since the war the business side has really accelerated,” said Joseph Torigian, an assistant professor at American University in DC who studies China and Russia.
For China, deepening economic ties could have the downside of complicating efforts to appear neutral on the war in Ukraine while supporting Moscow. In recent months, Beijing has tried to portray itself as a potential peacemaker in the conflict.
Following Mishustin’s visits, English-language articles in the state-run Global Times pointed out that Sino-Russian cooperation “has nothing to do with the Ukraine crisis.”
“For the Chinese, it’s kind of a double-edged sword in the sense that they want to benefit from economic trade, but at the same time they want to be careful not to let this trade relationship lead to conclusions in places like Europe that the Chinese are directly enabling Russian aggression,” Torigian said.