Sino-Russian relations stronger than ever
Strong partnership between Russia and China continues bearing fruit: trade volumes between the two countries are growing at an unprecedented rate. China’s Belt and Road Initiative is meant to bring both Moscow and Beijing new advantages due to increased connectivity.
Businesses of all types must be ready to acclimatise to the changes that will come from Russia and China’s warmer relations, considers BRINK. When the two countries began strengthening ties in 2014, many experts predicted that the rapprochement would be short-lived, but now the partnership seems to be stronger than ever. In the first eight months of 2019, bilateral trade between Moscow and Beijing added around 4,5% reaching $70 billion mostly due to increased exports to China. Last year, trade volume surged by more than a quarter and exceeded $100 billion for the first time.
China has been Russia’s largest trade partner for nine consecutive years, and the countries are going to further intensify trade. According to Prime Minister of Russia Dmitry Medvedev, the Kremlin aims to double Russia’s trade with China by 2024 via greater cooperation in energy, high-tech, agriculture and other areas.
The relationship got a new impetus when China’s Belt and Road Initiative was launched. Besides, Moscow has already allocated about $100 billion for large-scale infrastructure projects including airports, bridges, ports, rail and road networks up to 2024. Around 10% of this money will be spent on projects that should further facilitate trade through the East-West corridor, such as the Meridian Highway, a 2,000-kilometre toll road connecting the borders of Belarus and Kazakhstan to form the Russian segment of a highway between Hamburg and Shanghai.
For Russia, turning eastward after a sharp deterioration in relations with the West in 2014 was a predictable move. Over the last few years, Chinese manufacturers have got a serious share of the Russian market previously occupied by Western producers. Yet, Western sanctions have constrained Russia’s development and brought the volatility of the ruble, which acted as an unwelcome risk factor for the country’s export business.
Thus, Moscow has taken steps toward achieving self-sufficiency in many areas, primarily in raw food and agriculture. The commitment to improving import substitution also impacts other sectors, such as tech, says BRINK, adding that soon we may see Russia’s high-tech businesses rising up the global rankings. Besides, the success of import substitution had a negative impact on non-EU exporters to Russia and banks involved in export finance. In the near future, Sino-Russian relations may increasingly force international banks and corporates to look for growth opportunities elsewhere in Central Asia.