{"id":70702,"date":"2022-02-23T14:45:17","date_gmt":"2022-02-23T03:45:17","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=70702"},"modified":"2022-03-09T14:32:30","modified_gmt":"2022-03-09T03:32:30","slug":"chinese-market-wont-dampen-the-effects-of-economic-sanctions-on-russia","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/chinese-market-wont-dampen-the-effects-of-economic-sanctions-on-russia\/","title":{"rendered":"Chinese market won\u2019t dampen the effects of economic sanctions on Russia"},"content":{"rendered":"
<\/figure>\n

Russia and China are making much of their strategic partnership as a counterbalance to their stresses with the West, but the European Union is still much more important economically to Russia than is China, and Australia comprehensively trumps Russia as a supplier to China.<\/p>\n

There\u2019s no realistic prospect of China becoming an alternative market to Europe for Russia in the face of fresh sanctions targeting its exports.<\/p>\n

Nor does the obviously warm relationship between Russia\u2019s President Vladimir Putin and China\u2019s President Xi Jinping bring any relief from China\u2019s continuing dependence on Australia for raw materials.<\/p>\n

While the numbers have bounced around from one year to the next, particularly during the pandemic, the EU and the UK combined take a little over a third of Russia\u2019s exports compared with China\u2019s 15%.<\/p>\n

Energy is by far Russia\u2019s biggest export to Europe. It delivers 40% of Europe\u2019s gas supplies and about 27% of its oil. Around 70% of Russia\u2019s oil exports go to Europe, compared with 18% to China.<\/p>\n

The highlight of the meeting between Xi and Putin ahead of the Beijing Winter Olympics was a deal under which a second pipeline would be built from Siberia to supply China with an additional 10 billion cubic metres a year of gas later this decade.<\/p>\n

Russia currently supplies China with 38 billion cubic metres a year; however, Russian gas sales to the EU are five times greater. The pipeline would have just a fifth the capacity of the Nord Stream 2 pipeline under the Baltic, from Russia to Germany. The project has been completed but was awaiting certification by Germany before deliveries could start. Following Russia\u2019s actions this week in eastern Ukraine, German Chancellor Olaf Scholz announced that approval of the pipeline had been halted.<\/p>\n

Russia\u2019s finance minister, Anton Siluanov,\u00a0said last week<\/a>\u00a0that Russia would reroute Europe\u2019s gas supplies elsewhere if sanctions were imposed, but there are neither pipelines nor ready alternative markets.<\/p>\n

Russia\u2019s economic relationship with China bears some resemblance to Australia\u2019s, although it\u2019s much smaller in scale. It sells minerals and food and buys manufactured goods. For both Russia and Australia, 95% of goods exports to China are either primary goods or lightly processed products like aluminium and wood pulp.<\/p>\n

One exception for Russia has been its supply of military equipment to China, although this trade is understood to be waning as China becomes a major arms supplier to world markets itself.<\/p>\n

China\u2019s exports to both Russia and Australia are dominated by mobile phones, computers, clothing and machinery. Russia gets more Chinese motor vehicles and fur goods than Australia, but both markets are small from China\u2019s perspective, ranking 12th\u00a0and 13th\u00a0among its export destinations. Australia accounts for 2.1% of China\u2019s exports and Russia slightly less at 2.0%.<\/p>\n

Australia is much more important as a supplier of essential inputs to the Chinese economy, accounting for 6.6% of China\u2019s goods imports in 2020, making it the fourth largest supplier behind Japan, Korea and the US. Russia ranked ninth with 3.3% of its imports.<\/p>\n

The burgeoning relationship between Russia and China may, at the margins, come at some cost to Australia. Australia\u2019s gas sales to China have remained solid amid the campaign of economic coercion targeting many of Australia\u2019s other exports. China overtook Japan as Australia\u2019s principal LNG customer last year, with deliveries rising by 7.1%.<\/p>\n

However, both Russia and the US have been boosting their gas sales to China and may take market share over coming years. For the moment, LNG is in short supply globally and anything not sold to China could readily be placed elsewhere, particularly in Europe.<\/p>\n

Russia is also an iron ore producer. Although it uses most of its output in its own steel mills with exports of only around $2 billion, it has large reserves and Chinese exploration teams are active in Siberia.<\/p>\n

A 2020 report by the US-based\u00a0Center for International and Strategic Studies<\/a>\u00a0notes that the trade routes between Russia and China are relatively underdeveloped. Despite the two countries sharing a 4,000-kilometre border, there are only a few rail crossings and just 25 road crossings in total. China\u2019s Belt and Road Initiative includes projects for upgrading infrastructure along these routes.<\/p>\n

China and Russia are both parties to a trade agreement through the Russia-sponsored Eurasian Economic Union, which incorporates Armenia, Belarus, Kazakhstan and Kyrgyzstan along with Russia in a common customs union. But the trade agreement with China, which came into force in 2019, doesn\u2019t include any tariff reductions and is focused on harmonised customs procedures. It did include some sectoral plans aimed at fostering joint investment projects.<\/p>\n

Actual investment flows between Russia and China are weak. Chinese investors are responsible for just 1.6% of foreign direct investment in Russia, compared with 25.4% coming from members of the EU, plus another 8.6% from the UK and 6.4% from the US. Russia is also a very minor investor in China; data from the\u00a0UN Conference on Trade and Development shows it\u2019s responsible for just 0.4%<\/a> of all FDI in the country (Australia\u2019s share, by contrast is 1.1%).<\/p>\n

Russia became a member of the World Trade Organization in 2012 but has never made its presence felt in international trade negotiations. Other than deals with former members of the Soviet Union, it doesn\u2019t have any comprehensive bilateral trade agreements.<\/p>\n

The 5,400-word partnership\u00a0document<\/a>\u00a0released following the meeting of Putin and Xi was mainly focused on strategic rather than economic issues. Where it did touch on trade, it reflected China\u2019s agenda, declaring support for the multilateral trading system centred on the WTO and opposition to \u2018unilateral approaches and protectionism\u2019. It criticised the implementation of \u2018unilateral sanctions, and\u00a0extraterritorial application of\u00a0jurisdiction, as\u00a0well as\u00a0the\u00a0abuse of\u00a0export control policies\u2019.<\/p>\n","protected":false},"excerpt":{"rendered":"

Russia and China are making much of their strategic partnership as a counterbalance to their stresses with the West, but the European Union is still much more important economically to Russia than is China, and …<\/p>\n","protected":false},"author":955,"featured_media":70706,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[52,1193,1025,163,379,365],"class_list":["post-70702","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-china","tag-economy","tag-european-union","tag-russia","tag-sanctions","tag-trade","dinkus-russia-ukraine-war"],"acf":[],"yoast_head":"\nChinese market won\u2019t dampen the effects of economic sanctions on Russia | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/chinese-market-wont-dampen-the-effects-of-economic-sanctions-on-russia\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chinese market won\u2019t dampen the effects of economic sanctions on Russia | The Strategist\" \/>\n<meta property=\"og:description\" content=\"Russia and China are making much of their strategic partnership as a counterbalance to their stresses with the West, but the European Union is still much more important economically to Russia than is China, and ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.aspistrategist.ru\/chinese-market-wont-dampen-the-effects-of-economic-sanctions-on-russia\/\" \/>\n<meta property=\"og:site_name\" content=\"The Strategist\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ASPI.org\" \/>\n<meta property=\"article:published_time\" content=\"2022-02-23T03:45:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-03-09T03:32:30+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2022\/02\/GettyImages-1237580369.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"683\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"David Uren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:site\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"David Uren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.aspistrategist.ru\/#website\",\"url\":\"https:\/\/www.aspistrategist.ru\/\",\"name\":\"The Strategist\",\"description\":\"ASPI's analysis and commentary site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.aspistrategist.ru\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-AU\"},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/www.aspistrategist.ru\/chinese-market-wont-dampen-the-effects-of-economic-sanctions-on-russia\/#primaryimage\",\"url\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2022\/02\/GettyImages-1237580369.jpg\",\"contentUrl\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2022\/02\/GettyImages-1237580369.jpg\",\"width\":1024,\"height\":683,\"caption\":\"07 January 2022, Mecklenburg-Western Pomerania, Lubmin: View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline. 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