Machine tools do not go towards oil – Newspaper Kommersant No. 165 (7366) of 09/08/2022
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In the eight months of 2022, Russian exports to China grew by 50% (to $72.9 billion), while imports from this country grew by only 8.5% (to $44.2 billion), according to the Bureau of Customs Statistics of China. As a result, the trade surplus with China quadrupled over the year, mainly due to Russia’s increase in supplies of raw materials and energy carriers as part of the “pivot to the East.” Judging by the speech of the PRC representative at the Eastern Economic Forum, Russia should not expect an acceleration of counter deliveries of Chinese equipment needed by the Russian Federation for import substitution.
In August, Russia’s trade with China showed an acceleration – Russian exports to the country grew by 59% year-on-year (after 49% in July), deliveries from China to Russia increased by 26.5% after 22% in July.
In general, over eight months, Russian exports to China grew by 50% (to $72.9 billion), imports from this country – by 8.5% (to $44.2 billion).
As a result, the surplus in trade with China amounted to $28.7 billion, quadrupling over the year (from $7.3 billion).
The total volume of China’s total exports for eight months amounted to $2.375 trillion (an increase of 13.5%), imports – $1.815 trillion (plus 4.6%). The share of Russia in the trade turnover of the PRC, thus, amounted to 2.75%. At the same time, the share of deliveries from the Russian Federation in total Chinese imports since the beginning of the year increased to 4% (2.9% in 2021), the share of deliveries to Russia in China’s exports decreased to 1.9% (2% in 2021).
Thus, for Russia, the importance of China as the main trading partner is only growing: if in 2002 China accounted for 5% of Russian imports, then in 2021 – 25%. The Roscongress Foundation’s review released for the WEF notes that “the planned increase in the share of both imports and exports in the light of the current large-scale restructuring of Russia’s foreign trade gives every reason to predict a further expansion of China’s presence.” According to Vladimir Putin, at the plenary session of the forum on Wednesday, September 7, trade with China could reach the $200 billion threshold this year.
However, the structure of Russia’s exports to China is one of the least diversified among all Russia’s trading partners, the Roscongress review notes.
Goods of the 27th group of the commodity nomenclature of foreign economic activity (oil, oil products, gas, coal, lignite, etc.) account for 68% in value terms of the volume of deliveries and 78% in quantitative terms, while “the physical commodity flow of Russian energy carriers to China is stable is expanding.” Significant Russian goods for China are products of low value added: according to data for 2021, this is frozen fish – 29.6% of all its imports to China, fertilizers (28%), timber products (16.7%). Russian oil accounted for 16% of its purchases by China – and it is obvious that now this share is growing.
China is in no hurry to intensify its supplies to the Russian Federation. “It is not uncommon for Chinese banks to be extremely cautious about their clients from Russia,” Alexei Dakhnovsky, Trade Representative of the Russian Federation in the PRC, who spoke at the WEF, explained on Wednesday. “Understanding the origins of this approach, nevertheless, we are convinced that both Russia and China need to intensify the relevant work … to work towards the creation of a cross-border payment mechanism that is not subject to hostile sanctions,” the trade representative said.
It should be noted that the chairman of the Standing Committee of the National People’s Congress Li Zhanshu (the third-ranking official in the unofficial hierarchy of the leaders of the PRC) during the WEF session mainly spoke about the development of regional cooperation with the Far East and that “it is necessary to eliminate trade barriers, ensure a safe and the smooth functioning of value chains”, “to create a more sustainable, secure and free environment for investment and trade, and thereby re-energize economic globalization”. To do this, the Chinese official called for “adhering to the concept of common, comprehensive, joint and sustainable security, abandon the zero-sum game and the mentality of the cold war.”
An indirect confirmation of the fact that there is no acceleration in the supply of Chinese equipment to the Russian Federation comparable to the growth of Russian exports can also be the conclusions of analysts from the Central Bank’s Research and Forecasting Department from the study “What Trends Say” published on Wednesday: a gradual decline in the production of goods dependent on investment imports , which has decreased due to external restrictions, for Russia so far looks like a more realistic scenario than active import substitution.
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