Column by Sovecon director Andrei Sizov about the Chinese food market

Russia’s growing interest in the Chinese food market is explained not only by its status as the world’s largest food importer, but also by the current geopolitical situation. The state is implementing a strategy of increasing friendship with China, and the growth of agricultural exports fits into it. But it is important to understand that Russia, as China’s partner, has no particular advantages in this area.

There is often talk about a common border between the two countries and a land corridor. But the key logistics centers purchasing food from China are in the southern part, close to seaports. Sea transport is the cheapest, and China thus successfully imports, for example, Ukrainian corn through terminals on the Black Sea. The Russian regions bordering China cannot yet boast of developed agriculture, and the main grain production is concentrated near the terminals of the same Azov-Black Sea basin.

World media write about China’s growing demand for food purchases from other countries; the share of imports in the country’s market is growing and is already estimated at 30%. But the Chinese leadership remains concerned about its own food security. Many people in China remember the Great Chinese Famine of 1959–1961. Therefore, the country’s authorities actively support local farmers, including with programs aimed at preventing a reduction in the area of ​​main crops.

The bulk of Russian food exports to China – fish and seafood – will likely remain important, given the proximity of fishing areas to the market. There is also potential to increase the supply of oil and fat products.

However, recent statements about the opening of the Chinese market for Russian pork still look too optimistic. One important stage has been passed, but real supplies are still probably a long way off, and their volume, given the intense competition, may be quite modest.

Otherwise, Russia’s role in food supplies to China is still extremely small. For example, almost all of Russia’s soybean exports, amounting to about 1 million tons, go to China. While the Russian Federation’s share in the total volume of Chinese soybean imports is only about 1%.

Wheat, the largest component of Russian agricultural exports as a whole, remains an unresolved problem in relations with the PRC. When the admission of Russian wheat to the Chinese market was loudly announced in February 2022, this affected only spring varieties. In Russia, two-thirds of the harvest falls on winter wheat, which forms almost all exports. Grain from the Russian Federation could successfully compete with American and European grain for Chinese importers. But, apparently, the need for this culture is not so acute, and it is more profitable for Russia to consider the issue of lifting restrictions as an element of politics and bargaining. As practice shows, China’s promises do not always lead to the effect expected by its partners, market access does not protect against problems, and the country is constantly looking for better conditions for itself.

Thus, farmers in Kazakhstan, where Chinese President Xi Jinping announced the “One Belt, One Road” initiative in 2013, had high hopes for grain supplies to China with the help of the PRC COFCO corporation. And after the start of trade wars with the United States, Beijing became interested in corn supplies from Brazil, which came out on top in food supplies to China, pushing aside the United States. From a practical point of view, the effort may be worth spending on other potential buyers in Asia.

Andrey Sizov, director of the Sovekon analytical center