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Ukraine Crisis: How Much Trade Does Russia Do with China?

How Much Trade Does Russia Do with China?

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Following Russia’s invasion of Ukraine, key commercial partners such as the European Union and the United Kingdom have imposed sanctions on the country.
Could China, on the other hand, assist Russia economically?

Will sanctions on Russia affect trade?

Russian President Vladimir Putin has said that China would “continue to have regular trade co-operation” with Russia.
However, several Russian financial institutions have now been barred from using the Swift international payment system. This is widely used for financial transactions all over the globe, and it is expected to make it more difficult for the country to pay for its exports.
As a consequence, China has lately been forced to reduce some of its imports from Russia due to difficulties in obtaining financing from dealers in the country.
In recent years, both nations have made significant attempts to build their own alternative payment systems in order to lessen their dependency on dollar-based systems such as the Swift transaction network.
In Russia, there is the System for Transfer of Financial Messages (STFM), and in China, there is the Cross-Border Interbank Payment System (CIPS), and both of these systems work in their respective countries’ respective currencies.
Following Russia’s invasion of Ukraine, key commercial partners such as the European Union and the United Kingdom have imposed sanctions on the country.
Could China, on the other hand, assist Russia economically?

Will sanctions on Russia affect trade?

Russian President Vladimir Putin has said that China would “continue to have regular trade co-operation” with Russia.
However, several Russian financial institutions have now been barred from using the Swift international payment system. This is widely used for financial transactions all over the globe, and it is expected to make it more difficult for the country to pay for its exports.
As a consequence, China has lately been forced to reduce some of its imports from Russia due to difficulties in obtaining financing from dealers in the country.
In recent years, both nations have made significant attempts to build their own alternative payment systems in order to lessen their dependency on dollar-based systems such as the Swift transaction network.
In Russia, there is the System for Transfer of Financial Messages (STFM), and in China, there is the Cross-Border Interbank Payment System (CIPS), and both of these systems work in their respective countries’ respective currencies.
During President Putin’s visit to Beijing last month, the two countries announced that they would increase their bilateral commerce to $250 billion by the end of the decade.
In terms of exports, China is presently the single largest market for Russian products such as crude oil, natural gas, coal, and agricultural goods. And it is undeniable that Russia has begun to sell much more to China in recent years than it did before.

However, the European Union as a whole is by far Russia’s most important commercial partner. In 2021, the overall value of trade between the two countries was almost twice as large as the value of trade between China and Russia.

Could China buy more Russian gas?

Russia’s economy is primarily reliant on the sale of oil and natural gas, and the current sanctions have not touched those industries as of yet.
According to media sources, Russia was China’s second-largest oil supplier and third-largest gas provider last year, with exports totaling $41.1 billion for oil and $4.3 billion for gas, respectively.
Mr. Putin recently announced new Russian oil and gas agreements with China, which are expected to be worth $117.5 billion.
However, the EU continues to be Russia’s largest energy market by a wide margin, with the country supplying 40 percent of the EU’s gas and around 26 percent of its oil.
In the case of oil, according to the most recent International Energy Agency (IEA) figures, China accounted for just 20 percent of Russia’s exports last year, with the vast bulk of the country’s oil flowing to European markets.
“For the last five years, Russian oil and gas exports to China have increased at a pace of more than 9 percent each year on average. This is a tremendous development, but even so, China’s market for Russian oil is just half as large as the EU’s market for Russian oil “Dr. Harding expresses his views.
Germany, which is Russia’s primary natural gas export destination, has declared that it will postpone the construction of the new Nord Stream 2 gas pipeline in response to Russia’s invasion of Ukraine. According to one estimation, supplies via a new pipeline agreed upon by Russia and China (the Power of Siberia 2) would have barely a quarter of the capacity of the Nord Stream 2 pipeline. Furthermore, it is unclear when the new gas pipeline from Siberia will be put into operation.
However, in the long run, China may wish to increase its imports of Russian natural gas even more in order to lessen its heavy reliance on coal and achieve its commitments to reduce greenhouse gas emissions.

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