Trade turnover between Russia and China grew by 40% in the first half of 2023

The trade turnover between China and Russia in the first half of 2023 increased by 40.6% compared to the same period in 2022 and amounted to $ 114.54 billion, according to data from the General Administration of Customs (GCC) of China on July 13. According to them, Chinese exports to Russia increased by 78.1% and amounted to $52.284 billion, and Russian exports to China increased by 19.4% to $62.263 billion.

At the same time, the overall dynamics in the published indicators of China is not so positive. The total volume of the country’s foreign trade in the first half of 2023 decreased by 4.7% compared to the same period a year earlier to $2.918 trillion. Exports fell to $1.663 trillion – by 3.2%, while imports fell to $1.255 trillion (-6.7%).

But in yuan, the situation looks different. GTU fixes the growth of foreign trade by 2.1% to 20.1 trillion yuan, which is due to the weakening of the national currency against the dollar.

The leaders in trade with China in the first half of 2023 were ASEAN, the European Union and the United States. At the same time, China’s trade with the EU amounted to $399.172 billion, with ASEAN – $447.326 billion, with the United States – $327.264 billion. Compared to the first half of 2022, trade with the United States fell by 14.5%. In 2023, China exported goods to the US for $239.35 billion (-17.9%), and the US to China for $87.91 billion (-3.7%).

According to Reuters, in June 2023, China’s exports fell in dollar terms by 12.4% compared to the same period last year (in May, the decline was 7.5%). This is the biggest drop since the start of the COVID-19 pandemic in 2020. Imports in the first summer month of 2023 decreased by 6.8% (in May 2023 – a drop of 4.5%). These indicators are much worse than analysts’ forecasts, the agency writes.

The decline in exports, analysts say, is due to the general problems of the global economy and a drop in global demand, while imports are declining due to limited domestic demand, on which the country’s authorities largely relied after the cancellation of the “zero tolerance” policy for coronavirus.

China’s GTU representative Lu Dalian also believes that “a weak global economic recovery, a slowdown in global trade and investment, as well as an increase in unilateralism, protectionism and geopolitics” are to blame for the poor export performance. Diplomatic tensions with the United States are also cited by Reuters as the reason for the reduction in trade between the two countries.

“The increase in trade between Russia and China is not surprising, since the PRC has become Russia’s main trading partner. Now the trade balance has begun to level off – Russia has begun to import more from China. Last year, trade grew mainly due to energy supplies from Russia,” says Sergey Lukonin, head of the Chinese economics and politics sector at IMEMO RAS.

The Chinese government is trying to look for ways out of negative trends, as exports still occupy a significant place, despite long-standing talk about the need to build an economy focused on domestic demand, the expert adds. In particular, the government is trying to support Chinese exports by reducing taxes, increasing tax deductions, and reducing individual payments to regional and central budgets.

Sino-Russian trade turnover has also increased due to the fact that many Chinese companies are now actively replacing Western ones, says Andrey Karneev, head of the Higher School of Economics School of Oriental Studies. This can be seen even in the increase in the number of Chinese car brands in Russia, he adds.

According to the expert, despite the trade war and mutual restrictions, China and the United States still have a very high trade turnover. China’s exports have recently faced some problems, as a number of Western countries, in particular the United States, have begun to limit investment in China. But the main problem is related to the increase in the cost of Chinese labor – entrepreneurs now prefer to look for new markets with cheaper labor costs, Karneev adds. China is now rapidly moving away from the status of a producer of cheap and medium value-added goods to the production of more high-tech goods and is in search of a new development model, the expert concludes.