Chinese exports to Russia grew by 46.9% last year

Chinese exports to Russia grew by 46.9% last year, according to data from the General Administration of Customs of the People’s Republic of China. In the opposite direction, supplies also increased – by 12.7%, and the trade balance remained positive for Russia. Rapid growth was observed against the background of a surge in consumer activity in the Russian Federation and the reorientation of its imports to China as the most accessible market for the purchase of equipment. For Chinese suppliers, the Russian market became one of the few destinations where supplies grew; exports to the USA and Europe decreased by more than 10% over the year.

The turnover of trade between the Russian Federation and China in goods in 2023 increased by 26.3%, to $240.11 billion, according to Chinese customs statistics published on Friday. China’s exports to Russia increased over the year by 46.9% (to $110.97 billion), imports from the Russian Federation – by 12.7% (to $129.14 billion). As a result, the balance in favor of Russia fell by about half over the year, to $18.17 billion. In 2022, trade turnover with China, we recall, increased by 29.3%, including imports by 12.8%, exports by 43 ,4%.

These data are radically different from the dynamics of total Chinese trade: the country’s exports over the past year decreased by 4.6%, imports by 5.5%, but supplies abroad still significantly exceed imports ($3.38 trillion versus $2.56 trillion ), and the trade surplus fell by only 6% compared to 2022 (to $823 billion). At the same time, supplies to Russia grew more significantly than anywhere else: Chinese exports to Africa increased by 7.5%, to India – by 0.8%, in all other directions there was a decline, including to EU countries – by 10 .2% (including in Germany – by 13%), in the USA – by 13.1%.

Generalized data do not allow us to assess the effect of increased tariffs and other restrictions on imports from China (they have been widely applied in the United States since 2018); in the euro area, the main factor in the decline in imports from China was probably the weakening of domestic demand, including in industry ( PMI indicator values ​​remain in the negative zone), while in the US demand remained stronger, even despite the tightening of monetary policy, but the reduction in imports from China could be affected by the transfer of assembly production to countries such as Vietnam and Mexico. China’s trade with Taiwan also fell sharply (Chinese exports down 16%, imports down 15.4%) amid worsening conditions (the removal of benefits and increased investigations into trade restrictions).

Chinese supplies to Russia are growing against the background of tightening sanctions and increased control by the G7 countries over the circulation of dual-use products and a sharp increase in consumer demand while maintaining easier conditions for access to the Russian market (parallel imports). According to Russian data, over ten months the total volume of imports to the Russian Federation increased by 15.6% (from Europe and the USA it decreased by about 10% by 2022, from Asia it increased by 35%), while exports dropped by 28.8%. . Note that the supply structure is not currently published (the Federal Customs Service published trade data for January-September and January-October, but broken down only by macro-region – Europe, Asia, etc.), but the head of the service, Ruslan Davydov, in an interview with Kommersant at the end 2023 noted that the structure of supplies has not yet changed much, and when it comes to imports, this concerns primarily finished products – in particular, automobile and construction equipment. During Prime Minister Mikhail Mishustin’s visit to Beijing in December, the parties discussed the prospects of increasing annual trade turnover to $300 billion.

In 2024, China’s statistics are again unlikely to demonstrate a rapid expansion of trade – the World Bank predicts a slowdown in global economic growth to 2.4% from 2.6% in 2023 (the bank considers the risk of a global recession less likely). In China itself, GDP growth rates are also expected to slow down (the World Bank expects a decline from 5.2% at the end of last year to 4.5% this year and 4.3% next year), which will also affect global trade — it will grow at half the rate it was a decade before the pandemic. This, in turn, may affect the dynamics of energy markets, but such a forecast was given by the International Energy Agency for the medium term – China previously provided more than a third of the growth of the global economy, as well as two-thirds of the growth in oil consumption in the world and a third of the growth in natural gas consumption . Last year, China increased oil imports in physical volumes (plus 11%), but in monetary terms, supplies decreased by 7.7% due to lower prices.

Indirectly, the deterioration of the country’s economic prospects is evidenced by the dynamics of portfolio investments: according to the Institute of International Finance, there has been no net inflow of funds from foreign investors into the Chinese stock market since July last year, and into debt instruments since June.

Tatiana Edovina