Agriculture as fastest-growing segment of Sino-Russian trade

The relations between China and Russia are on the rise, and agriculture is one of the most promising areas of the two countries’ partnership. While Beijing intends to diversify and secure its food imports, Moscow aims to access new promising markets with high capacity.

Sino-Russian agricultural ties will emerge stronger than ever thanks to a number of factors including Western sanctions, considers Asia Times. Despite Beijing’s plans to increase the productivity of its $1,7-trillion agricultural sector, the country’s food security still raises concerns. China is currently the world’s biggest consumer of meat, as average meat consumption of the Chinese has increased sixfold since 1978. As for grain consumption, it has more than tripled since the mid-1970s. Such a spectacular shift in consumption habits coupled with disruptions to global supply chains pushed China to move towards a sustainably focused circular economy and reliable agricultural imports.

China’s agricultural sector performed well in the first quarter of 2020, but according to the Chinese Academy of Social Sciences, the country may face a grain supply gap of about 130 million tonnes by the end of 2025 due to increasing urbanisation and an ageing rural workforce. Since 1949, China has already lost one-fifth of its arable land. Only about 10% of its land is currently suitable for agriculture.

At the moment, China imports over 20% of its foodstuffs. This year, fears of food shortages and unexpected natural disasters have boosted food prices. In July, they increased by more than 13% and in August — by 11,2% from a year earlier. The government, which announced the release of 62,5 tonnes of rice, 50 tonnes of corn and 760,000 tonnes of soybeans from its strategic reserve, is ready to increase imports of wheat, soybeans and meat significantly.

Russian-Chinese talks in Moscow, June 2019. Photo: kremlin.ru

While China’s trade volumes with the US are decreasing as a result of trade wars, Moscow keeps expanding its trade relations with Beijing beyond energy exports. Last year, China approved major wheat imports and soybean imports from Russia shortly after imposing a 25% tariff on US soybeans in response to American tariffs on a range of Chinese products.

In 2019, Sino-Russian trade turnover totalled $110,75 billion with agriculture emerging as the fastest-growing segment. For instance, of record 207,000 tonnes of poultry exported worldwide last year, 62,600 tonnes worth $143,4 million were supplied to China. As a result, poultry exports to China surged by 65% in monetary terms and totalled unprecedented $329 million, according to the Russian Ministry of Agriculture’s data.

Sino-Russian agricultural ties keep strengthening despite the COVID-19 pandemic. For example, in August, Beijing proposed a “soybean industry alliance” with Moscow aimed to offset threats of decreasing supplies from Western nations. If Russia asserts itself as a reliable, even indispensable partner for China’s food security, Russian companies will enjoy access to the promising market.

By Anna Litvina