Russia and China: current problems of trade interactions and the long-term prospects for economic cooperation

Abstract

The study is devoted to the analysis of features and current problems of trade and economic interactions between Russia and China during the COVID-19 pandemic and sanctions against the Russian economy. Based on this analysis, the author identified possibility of cooperation between the economies. It was found that for 2022, China's customs data was reliable for determining the value of Sino-Russian trade. Differentiated response in the costs of transporting goods between these countries during the pandemic was determined: invariant - from China to Russia; more than doubling costs – from Russia to China. The pandemic and sanctions contributed to an increase in exports from China to Russia. It was revealed that the main source of increasing imports from Russia to China was fuel and energy goods, due to an increase in prices and volumes of supplies. At the same time, for the Russian companies, redirection of goods to China was forced, and their subsequent expansion of these goods into the Chinese market requires significant investments. Along with the existing endogenous and exogenous risks, for the Russian companies targeting the Chinese market could generate negative effects from monopsony, as well as a decrease in export revenue. In the future, we can expect: an increase in supplies to Russia by the regional-level Chinese companies, an increase of cross-border trade and a reduction in mutual tariff barriers; development of the Chinese market by Russian business, as well as attracting Chinese investment and expanding settlements in national currencies.