As Sino-US economic and trade relations are undergoing hardships, Russian scholars estimate that there will be new development opportunities for Sino-Russian ties and an increase in the trade volume between the two countries by 28-30 percent this year.

This year is the 70th anniversary of the establishment of diplomatic relations between China and Russia. The pragmatic cooperation between the two countries boasts broad prospects and has been enhanced, with the foundation for closer cooperation getting stronger and stronger. Bilateral trade volume is also growing rapidly.

Four major growth points in Sino-Russian trade

On May 15, Rossiya Segodnya International Information Agency held a video meeting inviting Moscow and Beijing to discuss the topic: "70th Anniversary of the Establishment of Diplomatic Relations between Russia and China: Positive Experiences in the Development of Economic Relations between the Two Countries". Guests from both countries reviewed and summarized their bilateral cooperation history and looked forward to future development prospects.

During the meeting, Sergei Luzyanin, director of the Institute of Far Eastern Studies of the Russian Academy of Sciences, said that Sino-US economic and trade relations being currently in a difficult situation has generated new opportunities for Sino-Russian relations and Sino-Russian trade can partially compensate for the resulting trade imbalance. China and Russia are obliged to work together to increase bilateral trade by ramping up investment between them. To achieve that, it is necessary to strengthen cooperation under the China-proposed Belt and Road Initiative and the framework of Russia's Eurasian Economic Union to jointly develop markets in Eurasia.

Luzyanin believes that Sino-Russian trade still has broad room for growth in liquefied natural gas, military industry, e-commerce and agricultural products. Cooperation in these four sectors will bring new sources of Sino-Russian trade volume growth. He predicted that there will be additional growth points in 2019 enabling the bilateral trade volume to reach $130 billion at a growth rate of 28 to 30 percent.

"The market for e-commerce in China is already very huge and this will boost exports to Russia. For example, light industrial products such as clothing are being traded between citizens of the two countries through e-commerce platforms." Luzyanin pointed out that the electronics business will also become an important promoter of the increase in Sino-Russian trade volume.

Nicholas Trickett, a researcher at AKE International, a political risk analysis and consulting firm, said that 90 percent of the goods that are entering the Russian market through online retail platforms are from China, and Chinese companies are involved in most of the Russian e-commerce supply chains.

From 2011 to the present, Russia's cross-border e-commerce transactions have been on the rise. According to data released by Russia's Association of Internet Trade Companies in 2017, the first half of 2016 saw the Russian e-commerce market increase 26 percent to hit ₽405 billion (about $6.3 billion), including ₽143.1 billion (about $2.2 billion) due to cross-border e-commerce trade development, up 36 percent year-on-year. Russia uses two major Chinese e-commerce platforms - JD and AliExpress - which have helped conduct Russia's cross-border e-commerce business, half of which is between the two countries.

Russia's textile and apparel market enjoys great potential

Guo Chenglong, deputy director of the Research Institute of Economic and Trade Law of the CCPIT Electronics & Information Industry Sub-council, said in an interview with media last year that the China-Russia comprehensive strategic partnership of cooperation has been developing at a high level, and the regular meeting mechanism between prime ministers of the two countries has continued for more than 20 years, all driving factors behind the cooperation between China and Russia in the field of trade and investment. (CCPIT stands for the China Council for the Promotion of International Trade.)

"We can tell that Sino-Russian economic and trade relations are currently at their best in history." Guo said.

According to statistics from China Customs, the trade volume between China and Russia in 2017 was approximately $84 billion, a year-on-year increase of 20.8 percent. China exported $42.9 billion to Russia with a year-on-year increase of 14.8 percent while imports from Russia were valued at $41.2 billion, a year-on-year rise of 27.7 percent. According to statistics from the Russia’s Federal State Statistics Service, in 2017, the import and export volume of Russian and Chinese goods soared to $86.96 billion thanks to an increase of 31.5 percent. Russia's deficit with China was $9.12 billion, a decrease of 9.6 percent.

These figures show that China is Russia's largest export market and the largest source of imports. In 2018, bilateral trade in goods jumped 24.5 percent to $108.28 billion.

Russian statistics show that mineral products, wood and related products, and mechanical and electrical products are Russia's main exports to China.

The main commodities imported by Russia from China are mechanical and electrical products, textiles and raw materials, base metals and related products.

In 2017, the combined imports of the above three categories accounted for 67.5 percent of Russia's total imports from China, at $25.45 billion, $3.57 billion and $3.41 billion respectively, up 26.2, 16.6 and 33.4 percent. These products accounted for 32.9, 4.7 and 7.1 percent respectively of the Russian import market. In addition, the volume of leather products and bags imported by Russia from China increased a significant 44.8 percent.

Customs statistics in Russia show that in 2018 Russia imported $26.45 billion worth of mechanical and electrical products from China, an increase of 3.9 percent, which accounted for 50.7 percent of Russia's total imports from China.

China ranks first in the import market in Russia's seven major categories - mechanical and electrical products, base metals and related products, textiles and raw materials, miscellaneous products such as furniture and toys, plastic rubber, shoes and umbrellas, watches and clocks, and medical equipment - occupying 36.0, 23.8, 34.7, 47.9, 17.2, 53.9, and 17.3 percent of Russia's import market of similar goods.

In the field of textiles and clothing, the trade relationship between China and Russia is close too. An online survey about Russian clothing retail chains shows that Russian clothing imports increased by 57 percent to 336,000 tons in 2017. The figure was only 251,000 tons in 2014 before the Russian financial crisis. As the market recovers, apparel imports from China, Bangladesh, Belarus and other countries are increasing.

Some analysts pointed out that such a high import volume indicates that the Russian clothing retail industry is recovering. But it also warned that import substitution industrialization has a long way to go because of the fact that the Russian clothing import volume increased by 57 percent in 2017 against the backdrop of the country's domestic clothing production only increasing by 3.8 percent. Realizing import substitution will be a fairly long process. According to the RBC’s market research, the share of imported products in the Russian clothing and accessories markets is rather high, reaching 79.6 percent.