Bank of Russia’s Chief, Elvira Nabiullina, allowed the emergence of new global settlement platforms that will be created to reduce the risks of vulnerability of the financial infrastructure of countries, according to Russian state media TASS. China has emerged as a top partner for Russia since its full-scale invasion of Ukraine with analyses of Chinese customs data showing that in 2023, 90 percent of dual-use goods deemed “high priority” and used to make Russian weapons came from China.
Elvira Nabiullina noted that ensuring international payments is difficult work with partners, since the decision on cooperation lies not only on the side of the Bank of Russia, but also on the side of the partners, “who are under extreme increasing pressure”
Worried about being targeted by U.S. secondary sanctions, China’s big banks have begun to limit their cross-border transactions involving Russia and Russian firms, with Chinese companies that trade with Russia instead moving to smaller banks or underground financing channels that are difficult to track and have less exposure to the international financial system.
“I think that some global platforms will gradually emerge, because countries look at our experience and understand the vulnerability of the financial infrastructure and the vulnerability in case they are included in only one existing system, such an understanding is gradually coming,” Nabiullina said at the Financial Congress of the Bank of Russia.
She noted that ensuring international payments is difficult work with partners, since the decision on cooperation lies not only on the side of the Bank of Russia, but also on the side of the partners, “who are under extreme increasing pressure.” That is why, according to Nabiullina, a plurality of solutions is needed, for example, the emergence of new global settlement platforms.
The Chinese Foreign Ministry had already preemptively hit back over Western pressure, saying on June 11 that it will take all necessary measures to “firmly safeguard the legitimate rights and interests of Chinese enterprises,” in response to warnings from Washington and its partners about the links between smaller Chinese banks and Russia.
The United States and its partners have so far been reluctant to go after Chinese financial institutions over their Russian links, particularly the major banks because sanctions could have ripple effects across the global economy and increase tensions between Beijing and Washington.
Amid the growing economic connections between Moscow and Beijing, the annual value of bilateral trade has reached $240 billion, according to Chinese customs data. Chinese exports to Russia in 2023 exceeded $111 billion: 67 percent more than in 2021.
In 2023, the gross domestic product (GDP) of China amounted to around 17.7 trillion U.S. dollars, according to Observatory of Economic Complexity. In comparison to the GDP of the other BRIC countries India, Russia and Brazil, China came first that year and second in the world GDP ranking. The stagnation of China’s GDP in U.S. dollar terms in 2022 and 2023 was mainly due to the appreciation of the U.S. dollar. China’s real GDP growth was three percent in 2022 and 5.2 percent in 2023. In 2023, per capita GDP in China reached around 12,514 U.S. dollars.
China-Russia Trade: In 2022, China exported $45.7B to Russia. The main products that China exported to Russia were Broadcasting Equipment ($4.11B), Computers ($2.59B), and Large Construction Vehicles ($1.71B). Over the past 5 years the exports of China to Russia have increased at an annualized rate of 94%, from $1.66B in 2017 to $45.7B in 2022.
In 2022, China did not export any services to Russia.
Russia-China Trade: In 2022, Russia exported $42B to China. The main products that Russia exported to China were Crude Petroleum ($51B), Coal Briquettes ($9.64B), and Petroleum Gas ($9.5B). Over the past 5 years the exports of Russia to China have increased at an annualized rate of 67.7%, from $3.17B in 2017 to $42B in 2022.
In 2020, Russia exported services to China worth $2.62B, with Transportation ($1.02B), Construction services ($617M), and Other business services ($436M) being the largest in terms of value.
Comparison: In 2022, China ranked 22 in the Economic Complexity Index (ECI 1.12), and 1 in total exports ($3.73T). That same year, Russia ranked 47 in the Economic Complexity Index (ECI 0.43), and 12 in total exports ($486B).
In May 2024, China exported $9.09B and imported $10.7B from Russia, resulting in a negative trade balance of $1.64B. Between May 2023 and May 2024 the exports of China have decreased by $-181M (-1.96%) from $9.27B to $9.09B, while imports decreased by $-578M (-5.11%) from $11.3B to $10.7B.
TRADE
In May 2024, the top exports of China to Russia were Cars ($397M), Computers ($276M), Telephones ($242M), Delivery Trucks ($235M), and Large Construction Vehicles ($180M). In May 2024 the top imports of China from Russia were Crude Petroleum ($4.32B), Coal Briquettes ($1.49B), Petroleum Gas ($967M), Refined Petroleum ($358M), and Sawn Wood ($170M).
ORIGINS
In May 2024 the exports of China were mainly from Zhejiang Province ($1.43B), Guangdong Province ($1.36B), Shandong Province ($778M), Jiangsu Province ($728M), and Anhui Province ($555M), while imports destinations were mainly Beijing ($2.97B), Heilongjiang Province ($2.35B), Shandong Province ($1.63B), Shanghai Province ($724M), and Jiangsu Province ($498M).
In May 2024, the decrease in China’s year-by-year exports to Russia was explained primarily by an decrease in product exports in Telephones ($-416M or -63.2%), Computers ($-158M or -36.3%), and Commodities not elsewhere specified ($-50.6M or -44.5%). In May 2024, the decrease in China’s year-by-year imports from Russia was explained primarily by an decrease in product imports in Refined Copper ($-306M or -72%), Copper Ore ($-65.8M or -59.5%), and Sawn Wood ($-57.6M or -25.3%).
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