China-Russia trade grows despite coronavirus pressure but braces for shrinking Russian demand

By Yang Kunyi Source:Global Times Published: 2020/3/25 12:48:24

A subway worker cleans the handrails as a part of the disinfection procedure in Moscow, Russia, on March 16, 2020. (Photo by Evgeny Sinitsyn/Xinhua)

 The trading volume between China and Russia has shown robust growth in the first two months of this year despite the coronavirus outbreak which is set to weigh on global trade. Industry insiders noted the growth could be hampered in the short term if Russia's demand continues to shrink, and China's major exports to Russia including industrial machinery could be hit.

During the first two months of 2020, China's trade with Russia grew 5.6 percent year-on-year, hitting $17.1 billion despite an 11 percent drop in China's total foreign trade, according to data from China's General Administration of Customs (GAC).

The growth is largely attributed to China's increasing imports from Russia, which grew 21.7 percent in January and February, GAC said. However, China's exports to Russia, totaling $6.01 billion in the first two months, have dropped 15.4 percent year-on-year.

Many heavy industrial machinery exporters are concerned that as Russia levels up is restrictions on transportation and logistics to contain the coronavirus, its diminished demand will further impact their orders in the near future.

Heavy industrial machinery is an important Chinese export to Russia, according to China's Ministry of Commerce. Peng Hui, general manger of the Sunward Equipment Group based in Changsha, Central China's Hunan Province, told the Global Times that new orders from Russia in the last two months have diminished by over 50 percent, and she expects to see even greater losses from April.

"The confidence of our Russian clients has been hit hard by the pandemic," Peng said. "Some are worried about the long-term impact on the industry and are significantly cutting their order numbers."

The pressure on cross-border trade also results from the increasing restrictions on travel and transportation. Russia closed all 16 of its land border crossings with China at the end of January, and all goods have since had to be transported by sea.

Sea transportation has increased the cost of logistics by half and is twice the overall price of land transport, said Peng.

ACME Group, another manufacturer of industrial equipment, is also facing grim prospects for its Russian orders. The company's general manger Liu Zhibiao said its trade with Russia accounts for 15 to 20 percent of the firm's total business, but since the outbreak of the coronavirus there have been very few customer enquiries from Russia, despite the fact that most customers are long-term partners.

"We have fully resumed our operations," Liu said. "We are at full production capacity. But the problem is that the international market, including Russia, is shutting down. As a result, we are expecting a drop of at least 30 percent in our international business."


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