The Russian economy is “addicted” to Chinese imports

What is fraught with the dependence of the domestic market on goods from the Middle Kingdom

Western experts warn Russia of a fleeting increase in dependence on imported goods from China. In terms of foreign purchases, our country is now practically no different from North Korea, whose economy has long been in bondage to suppliers from the Middle Kingdom. On the one hand, this position has many advantages – Chinese products are relatively cheap and their availability is not subject to Western political aggression. On the other hand, the situation can change at any moment and Beijing can turn from a kind-hearted partner into an economic occupier right before our eyes.

Experts from the Institute for Countries in Transition at the Bank of Finland spoke about a noticeable increase in Russia’s dependence on Chinese goods. Even at the beginning of this year, the Celestial Empire provided only about a quarter of Russian merchandise imports, but by November, the share of Chinese products had grown to about 40%. According to Scandinavian analysts, in terms of Chinese imports, our country is now in second place after North Korea.

According to the investment strategist of Arikapital Management Company Sergey Suverov, monopoly dependence in foreign trade relations mainly on one state in almost any circumstances leads to a negative and even dangerous effect for the importer’s economy. The optimal choice is the diversification of foreign purchases, which increase the possibility of choice and reduce the cost of goods. The Celestial Empire in this sense is no different from other foreign manufacturers, trade with which Russia has until recently been a priority.

Nevertheless, China has been Russia’s largest trading partner for many years. “The current situation with the growth of imports of products from this Asian state is offset by the growth of our reverse exports. This year, Russia has entered into a fierce confrontation with Saudi Arabia for the first place in the supply of oil to the Chinese market. Therefore, the balance of exports/imports between the two powers is preserved and there is no dependence on imports,” says Artem Tuzov, Executive Director of the Capital Market Department at IVA Partners Investment Company.

However, Russia is not in the mood for sentimentality right now. Several tens, if not hundreds of foreign companies with trademarks familiar to the inhabitants have left the domestic market. Whether Beijing will be able to replace the runaway suppliers with its own high-quality products is a big question.

The quality of Chinese goods, according to experts, is the latest aspect that domestic importers need to pay attention to in the current conditions. Almost all regions of the planet serve as the assembly site of the Celestial Empire, since the production assets of the Asian state are not concentrated on their own territory, but are located in most developed and developing countries. Moreover, Chinese specialists take part in the creation of many foreign brands or Chinese components are used.

“Chinese goods are no longer synonymous with poor quality. It is enough to look at electronics, in which the Celestial Empire is able to give odds to its European and American competitors. Especially in terms of price-to-quality ratio of products. For sums of money comparable to the cost of Western products, Chinese suppliers offer consumers much larger quantities than manufacturers from other countries. Alexey Fedorov, TeleTrade analyst, notes.

“Among the Russian risks of expanding partnerships with China are the same notorious Western sanctions, which may tangentially affect some companies from the Middle Kingdom, which are in close cooperation with European and American counterparties. Therefore, it is possible that even after reaching substantive agreements at the highest level, some transactions will be on the verge of failure if Chinese exporters are afraid of pressure from the West and decide to postpone expansion into the Russian market,” Suverov said.

However, the most painful blow to trade relations between Moscow and Beijing could come from the depreciation of the ruble against the yuan. Next year, due to the fall in foreign exchange earnings, the rate of the “wooden” risk is quite strong “sag”. Pessimistic analysts are even preparing for the devaluation of Russian banknotes. Therefore, in the near future, imports from China may turn from a cheap and affordable assortment into an expensive pleasure.