Without High-Tech Sector, Russia Doomed to China Trade Imbalance

Without High-Tech Sector, Russia Doomed to China Trade Imbalance
Russian Foreign Minister Sergey Lavrov is greeted by Chinese President Xi Jinping during a meeting at the Great Hall of the People in Beijing, Feb. 2, 2015 (AP photo by Rolex Dela Pena).

Russia’s trade with China continues to grow despite the precipitous collapse in the value of the Russian ruble and the unprecedented Western economic sanctions imposed on Russia last year following Moscow’s annexation of the Crimean Peninsula. Indeed, China’s economic importance to Moscow has increased as Russia’s commercial relations with Europe, the United States and Japan stagnate. Yet the Russia-China economic relationship is imbalanced, with Russia sending mostly natural resources to China and importing mostly Chinese consumer goods. As a result, the two countries will find it difficult to deepen their economic cooperation much further unless it expands to encompass high-value economic sectors, such as arms and civil nuclear technology.

According to the Chinese government, Russia-China trade amounted to $95.3 billion 2014, a 6.8 percent increase over the 2013 figure of $89.2 billion. China imported $41.6 billion worth of Russian goods, a 4.9 percent rise over the previous year, while it exported $53.7 billion worth of goods to Russia in 2014, an 8.2 percent increase over the 2013 level. These figures made China Russia’s leading trading partner, even as Russia ranked only ninth on the list of China’s largest trade partners. Notwithstanding these large figures, some 80 percent of this trade consisted of the exchange of raw materials such as oil, wood and minerals.

Unless major changes occur, Russia could become even more of a one-dimensional resource supplier to China. During the past year, Russian and Chinese representatives have negotiated several major energy deals that could see a surge in Russian oil and gas flowing eastward into China. These include a 2013 contract between Rosneft, Russia’s largest oil firm, and the China National Petroleum Corporation (CNPC), and a May 2014 agreement by Gazprom, Russia’s main natural gas exporter, to supply $400 billion worth of gas to China over a 30-year period. Gazprom is expected to finalize another gas deal with China, using a different pipeline network, sometime this year.

Keep reading for free!

Get instant access to the rest of this article by submitting your email address below. You'll also get access to three articles of your choice each month and our free newsletter:

Or, Subscribe now to get full access.

Already a subscriber? Log in here .

What you’ll get with an All-Access subscription to World Politics Review:

A WPR subscription is like no other resource — it’s like having a personal curator and expert analyst of global affairs news. Subscribe now, and you’ll get:

  • Immediate and instant access to the full searchable library of tens of thousands of articles.
  • Daily articles with original analysis, written by leading topic experts, delivered to you every weekday.
  • Regular in-depth articles with deep dives into important issues and countries.
  • The Daily Review email, with our take on the day’s most important news, the latest WPR analysis, what’s on our radar, and more.
  • The Weekly Review email, with quick summaries of the week’s most important coverage, and what’s to come.
  • Completely ad-free reading.

And all of this is available to you when you subscribe today.

More World Politics Review