Trade and Economic Cooperation Between Russia and China: Beyond Ice Cream and Soybeans

In recent years, two popular words related to Russia have appeared on the Chinese Internet: ice cream and soybeans.

Russian ice cream has gained popularity thanks to Russian President Vladimir Putin. During his visit to China in September 2016, he presented President Xi Jinping an original gift - a box of Russian ice cream. News about this aroused great interest among Chinese Internet users. People asked each other: “Where can we buy Russian ice cream?”

Now this question is no longer relevant, because the cold Russian dessert, produced by various Russian manufacturers, is available throughout China. The export growth rate is impressive: from some regions of Russia, it’s 3-5 fold in a year.

Incidentally, the ice cream that Vladimir Putin presented to Xi Jinping was bought in Vladivostok.

In recent months, another product from Russia has been actively discussed on the Chinese Internet – soybeans. But the credit belongs to US President Donald Trump, because it was the trade war he unleashed that forced Chinese companies to sharply reduce purchases of American soybeans. And since China opened its market to soybeans produced throughout Russia in August, Chinese consumers are expecting genetically unmodified soybeans from Russia.

Currently, the volume of imports of Russian soybeans is small. According to Russian forecasts, this year the figure may reach 3.7 million tonnes. Meanwhile, the prospects for exports to China should not be underestimated. China's annual need for imported soybeans reaches 90 million tonnes, a third of which China previously purchased from the United States. Now Russia can take this market share.

Russia's consistent policy on the development of the Far Eastern region creates new opportunities for enhancing trade and economic cooperation with China and other Asian countries. Representatives of both the scientific and business circles of the PRC are enthusiastic about this: they are ready, in cooperation with Russian partners, to further use the potential of the region to expand the horizons of bilateral cooperation in trade and the economy.

Last September, Chinese President Xi Jinping attended the Eastern Economic Forum for the first time. Then he unequivocally declared: China will always be an active supporter and participant in cooperation with the Russian Far East.

This is confirmed by two statistical indicators. The first is that China, for many years, has remained the main trading partner of the Russian Far East and the largest source of foreign investment in the region. The trade volume of the Far Eastern Federal District with China in the first half of the year reached $4.88 billion and is expected to increase by 16.4% annually. At the same time, Russian exports to China reached $3.6 billion; this indicator is also growing, having posted an annual increase of 12.7%.

The second indicator is that about thousand guests at last year's Eastern Forum came from China, despite the fact that the Forum only attracted a little more than six thousand guests.

When speaking about trade and economic cooperation between the two countries, experts are paying more and more attention to agricultural cooperation. This is no coincidence, because the current scale of cooperation in this area does not correspond to its potential at all – with respect to the possibilities for Russian exports and China’s need for imports.

According to statistics from the Ministry of Commerce of China, last year China imported agricultural products worth $ 127 billion, and Russia accounted for only $ 3.2 billion, or less than 2.5% of this figure.

It is no secret that Chinese consumers have a negative attitude towards genetically modified products. Food from Russia (not only soybeans, but also wheat, vegetable oil, and corn) is considered reasonably environmentally friendly and safe. This is a huge competitive advantage for Russia in the Chinese market; therefore it is Chinese consumers who are most interested in expanding the interaction of countries in this area.

I am deeply convinced that in the future, the parties will realise the still-poorly-utilised potential of bilateral cooperation. Along with the improvement of the investment environment in Russia, more and more Chinese and Russian companies will develop investment cooperation in agriculture. China has the largest market in the world, and Russia has huge resources for agricultural production. By cooperating in this area, the countries complement each other. It is plain to see that such interaction is beneficial to both parties.

And finally, I want to remind you that last year the trade between Russia and China exceeded $ 100 billion, but this is not the limit, the next goal is to bring the figure to 200 billion by 2024. The Russian Far East is an important platform for expanding cooperation at the regional level; it should play its exclusive role in the further development of cooperation between China and Russia in trade and the economy.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.