The share of developed countries in Russia’s imports at the end of 2023 decreased to 17%, and China increased to 45%

The share of developed countries in Russian Federation imports at the end of 2023 decreased from 47% to 17%, and China increased from 27% to 45%, which carries the risk of too high concentration of supplies from one country, economists Alexander Knobel and Alexander Firanchuk write in an article for Econs.online. Moreover, the reorientation of foreign trade to China is occurring unevenly: the increase in supplies of finished equipment is not accompanied by a comparable increase in the import of components.

China has not replaced the EU in the supply of equipment and components, says an article by Alexander Knobel, director of the Institute of International Economics and Finance of VAVT, and Alexander Firanchuk, a senior researcher at RANEPA, for Econs.online. The authors refer to “mirror” statistics from Eurostat and the General Administration of Customs of China. According to their calculations, the total import of the Russian Federation has practically returned to pre-crisis levels (in the second half of 2023 it was 9% lower than in the same period of 2021) due to an increase in imports from China by 53% and other “neutral” countries by 31 %, which almost compensated for the threefold reduction in direct import flows from “unfriendly” countries (minus 66%). At the same time, China’s share in Russian imports increased from 27% to 45%, while the share of developed countries decreased from 47% to 17%.

The contraction and growth of supplies occurred unevenly (see chart): the most noticeable changes were at the level of the product group – in the supply of equipment. Direct supplies from the EU have almost ceased, but replacement with Chinese goods is observed only in the area of ​​tractors and passenger cars, with weak growth in the supply of parts and components: we are talking primarily about the import of finished products. This indicates the limited impact of efforts to localize the production and assembly of Chinese cars, the authors note. The volume of imports of “humanitarian” European goods (medicines, vaccines, medical equipment) has remained virtually unchanged, despite logistics problems and restrictions on cross-border payments. Imports of medicines and medical equipment from China remained at an extremely low level.

This level of import concentration itself carries risks, since in any trade dispute China will have a very strong negotiating position, note Alexander Knobel and Alexander Firanchuk. For China, Russia remains a secondary market with a share of 3.4%, which increases the significance of the risks of secondary sanctions for Chinese suppliers. One of the few ways to reduce these risks remains the diversification of foreign trade and the creation of an alternative settlement architecture.

In exports, the share of “unfriendly” sales markets also decreased – from 57% to 15%, and China – increased from 13% to 28% (export sanctions began to apply later, and oil discounts made it possible to redirect supplies). As a result, trade turnover with “unfriendly” countries last year became almost balanced, with a slight excess of exports over imports, although in previous years the trade balance with this group of countries was consistently positive. Trade with China is also close to balanced, which is typical for Russian trade with this country in recent years.

The trade balance surplus of the Russian Federation ($140 billion) is now provided by other “neutral” countries, but not all of them are fully solvent. In such bilateral trade, the problem of mutual settlements is becoming increasingly important: the use of national currencies does not automatically reduce the risks of secondary sanctions, and some currencies (for example, the Indian rupee) have limited convertibility, which complicates the withdrawal of export proceeds and carries the risk of late receipt of payments. Note that the problem of “stuck” Indian rupees, according to Kommersant, has been resolved, including through the use of other currencies and gold.

Tatiana Edovina