Column by Kristina Borovikova on the consequences of turbulence in global trade

As follows from Chinese customs statistics published late last week, trade between Russia and China continues to grow and accelerate. In September, China’s supplies to the Russian Federation increased in annual terms by 21%, to $9.6 billion (after an increase of 16% in August), as a result, trade turnover for the month reached a maximum since the beginning of the Russian military operation in Ukraine, and has increased since the beginning of 2023 by 29.5%, to $176.4 billion. Russian customs statistics are closed, but the Russian authorities recognize the increase in trade with China: at a September meeting with Vice-Premier of the State Council of China Zhang Guoqing, President Vladimir Putin predicted that by the end of the year its volume would reach $200 billion

The rapid growth of China’s trade with Russia, we note, is being recorded against the backdrop of a continuing decline in China’s turnover with developed countries. For example, with one of the main trading partners – the United States – it decreased by 14% in the first nine months of the year, to $495.9 billion. Sluggish dynamics are also observed in China-EU trade. Weak trade statistics continue to make adjustments to the forecasts of international organizations, in particular the IMF and the World Bank, which do not expect significant growth in the Chinese economy by the end of the year.

The local situation on the world market is beneficial to the Russian Federation, as it allows it to fill the domestic market, which is in short supply after the departure of Western suppliers, and inexpensively. The decrease in import prices due to the restructuring of logistics chains is also confirmed by Russian analysts – it is recorded in the latest macroeconomic review of the Center for International Economic Cooperation. The pause in the growth of world trade may drag on, which means that the window of opportunity for Russia will remain open for some time.

This, however, has two important circumstances. Thus, the TsMAKP admits: the reduction in the cost of imports is the result of increasing supplies of “less expensive “non-branded” goods” (if we perceive a brand as a way to protect intellectual property – read “less technologically advanced”). Considering that in the conditions of adaptation to sanctions we are also talking about the import of industrial equipment, this circumstance, as noted at the Higher School of Economics (see Kommersant on October 10), along the chain leads to the simplification of its own industrial products, determining the vector of technological development of the Russian business in the near future. The second circumstance follows from the first: when the commodity hunger is satisfied, there will be a need for modern technologies and equipment, the source of which remains the developed world. They have already become radically more expensive due to sanctions and the need to purchase through third countries, and in the end they will cost the Russian Federation even more: the slowdown in Chinese exports to the EU and the USA, in particular, means that some of this equipment simply will not be produced.