Why Russia’s growing dependence on China should worry President Putin

President Vladimir Putin may have touted close ties between the two countries, but economists warn that Russia could become too dependent on China for trade.

After Western countries imposed sanctions on Russia as punishment for the war that Putin started in February 2022, Russia has divided the world into friendly and unfriendly countries, with the former group having oil and gas as its most important exports. The company offered favorable trade terms for its products.

China is officially neutral and a friend of Putin’s war, announcing in December that trade between the two countries would reach a record level in 2023. This amounted to $218 billion from January to November, more than the whole of the previous year.

Part of the trade expansion between the two countries is the construction of the ESPO (East Siberia-Pacific) oil pipeline connecting Russia and Asia, the Power of Siberia gas line, and the important opening of the Yamal LNG (liquefied natural gas) project. It was due to Chinese investment.

Russia is also a major supplier of agricultural products such as wheat. As a result, China increased its imports of Chinese consumer goods and industrial products, such as automobiles, that had previously been imported from Western suppliers.

But Russian economists Alexander Knobel of the Gaidar Institute and Alexander Filanchuk of the RANEPA Center for International Trade Research say that if China has to choose between the West and Russia, it will not be in Russia’s favor. he warned.

The report, released on December 30, shows how China’s major trading partners, including the EU, US, Japan and South Korea, are unfriendly to Russia and sell more products to China than Russia. Iruka pointed out.

Although China provides almost a third of Russia’s trade, Russia’s share of China’s trade (5.1% in imports and 3.3% in exports) is much smaller than that of major unfriendly countries. , there is a risk that trade will decrease in the case of secondary sanctions. ”

“China’s dependence on supplies of industrial products from unfriendly countries significantly exceeds its dependence on imports of Russian raw materials,” the report said. “There is a risk of secondary sanctions affecting mutual trade between China and Russia, especially if imposed against individual companies.”

said Chris Wiefer, CEO of Macro Advisory, a strategy consultancy focused on Russia and Eurasia. newsweek After a decade of pivoting to Asia, Russia is as dependent on China for trade as Western countries were in 2014.

The increase in sales helped save Russia’s economy in the face of war-related sanctions, but many Russian officials and business leaders believe the deal is far more favorable to China than Russia. Are concerned.

“China is avidly buying energy and materials and selling Chinese products to the Russian market, all of which is good for the Chinese government, but very little investment is coming into Russia and Western companies are leaving. There is certainly not enough to make up for the investment lost from investors. ”

Moscow Mayor Sergei Sobyanin spoke at the Moscow Economic Forum in October, expressing concerns about a pivot to the East after sanctions cut off Russia’s access to Western trade, investment and technology. Told.

Sobyanin said that in the East, “no one wants to provide technology, whether it’s mechanical engineering, aircraft manufacturing or microelectronics.”

On the other hand, some in Russia are calling for the expansion of BRICS in order to reduce dependence on China. [Brazil, Russia, India, China and South Africa] For one thing, Russia could potentially diversify its trading partners.

“Oil, gas and other materials arriving at Chinese ports could be subject to suspension or blockade in the event of a major conflict with a G7 country,” Wiefer said. But China now gets enough critical supplies directly from Russia to at least maintain trade.” The economy is working. ”

Following a year in which the Russian president met with the Chinese president in both Moscow and Beijing, and underscoring the close ties between the two countries, President Xi sent a New Year’s message of solidarity to Putin, saying, “Mutually beneficial cooperation will lead to new achievements.” We continue to achieve this.”