Russia plans to annually update trade records with China

Russia and China have set an ambitious goal: to almost double the volume of mutual trade in five years. If in 2018 it only crossed the psychologically important mark of $100 billion a year, by 2024 it will reach $200 billion annually. The task has been set at the highest level, and for its implementation a road map will be developed for the high-quality development of Russian-Chinese trade in goods and services by 2024.
The document has not yet been published, but observers predict that the main “points of growth” of bilateral trade will be traditional exploration and trade in energy resources, such new areas as trade in agricultural products, as well as the organization of interaction between medium and small enterprises.

In fact, the parties will have to increase their trade turnover by an average of $20 billion annually in the next five years. “This is a very realistic goal,” says Professor Alexei Maslov, Head of the HSE School of Oriental Studies. He points out that a powerful impetus to the physical growth of trade this year will be given by the start of Russian gas supplies to China. Deliveries of “blue fuel” will start on December 1 via the Power of Siberia gas pipeline. It will export 38 billion cubic meters of natural gas to China over 30 years. Negotiations are currently underway on the second – western – route of Russian gas supplies, the construction of a new gas transmission line with a capacity of 30 billion cubic meters per year may begin in the near future.

What’s on the counter?
Energy trade has traditionally been the driving force behind the growth of Russian-Chinese trade. Thus, for the third year in a row, Russia has been the largest supplier of oil to China, providing about 15.7% of the supply of this hydrocarbon fuel to China. This is evidenced by the report of the China Association of Oil Companies. Last year, Russia exported 71.5 million tons of “black gold” to China, with deliveries growing by 19.7%.

Energy supplies are one of the “pillars” of the bilateral strategic partnership. It was important for Russia to diversify the directions of hydrocarbon exports, for China – to guarantee the stability of its supplies against the backdrop of growing dependence on energy imports. According to analysts, China’s dependence on oil imports will reach 72% in 2019. China’s dependence on natural gas imports will exceed 50% by 2035, the China National Petroleum Corporation predicts.

Speaking about the prospects for cooperation in the energy sector, Premier of the State Council of the People’s Republic of China Li Keqiang noted at the 24th regular meeting of heads of government held in September: “We are interested in participating in the upstream sphere – we are talking about the exploration and production of hydrocarbons in Russia, which, I am sure, will allow us double our trade.” Prime Minister of the Russian Federation Dmitry Medvedev, in turn, called cooperation in the development of hydrocarbon resources in the Arctic promising.

We already have experience of cooperation in this area. The Yamal LNG project has become a pioneer in this direction, in which the Chinese side owns almost 30% of the shares: the Chinese CNPC owns 20%, the Chinese Silk Road Fund another 9.9%. It was in China that heavy equipment for the project was produced: 36 modules with a total weight of 180,000 tons were built in the port city of Qingdao. Supplies of liquefied natural gas from Yamal LNG to China began in the summer of 2018. The Chinese side will also take part in the Arctic LNG-2 project: a deal to sell its 20 percent stake to CNPC and CNOOC corporations was concluded this year.

Today, energy trade provides up to 70% of the total volume of Russian-Chinese trade. However, energy cooperation is far from the only point of growth in bilateral trade relations. Trade in agricultural products is called a promising direction. In 2018 alone, food exports from Russia to China increased by 42%, well above the overall bilateral trade growth rate of 27.1%. At the September regular meeting of the heads of government, the Russian Prime Minister noted: “We have good opportunities for cooperation in agriculture: the implementation of the Cooperation Plan for the cultivation and supply of soybeans has begun. Similar plans are being prepared for livestock and crop production, they involve the abolition of a number of restrictions on mutual supplies of agricultural products.”