Op-Ed by Chris Devonshire-Ellis
Bilateral trade between Russia and China significantly improved during 2016 as China began to step into place as an alternative supplier to the European Union as sanctions continued to bite. President Putin has used the opportunity wisely and in fact lessened Russian dependence on EU imports. He has also paid down Russia’s debt at the same time. The damage caused by sanctions have impacted instead rather more on the EU. New public transport infrastructure in Moscow and St.Petersburg such as buses and trains for example are now sporting Korean and Chinese manufacturer logos instead of European. GDP growth is returning in 2017, with the World Bank anticipating a 1.5% growth this year, coincidentally the same growth rate as can be expected in the EU. In fact the Russian economy is now expanding, while the EU’s is contracting. The sanctions have also been a boom for Sino-Russian trade, which has significantly picked up over 2016.
As can be seen in the attached graph, Russian trade and exports plummeted following the introduction of sanctions, but is now recovering to pre-sanctions levels. The EU’s loss has been China’s gain.
It is also worth recalling that the World’s Premier, and wealthiest sporting event will take place in Russia next year – the 2018 World Cup Soccer Finals. Russia is spending USD15 billion to host them, and I would expect sanctions to be lifted well before then.
Russia also has commodities that China wants – oil, gas and vast tracts of agricultural land – all areas in which it can out-compete with the United States and EU for generating China trade and investment. 2017 may well usher in a period of increased Russian trade and investment with China, with simple options for Russian companies, such as establishing “Foreign Invested Commercial Enterprises” (FICE) requiring limited investment capital, yet being eligible for Import-Export licenses between Russia and China now being increasingly sought after.
- An Introduction to Doing Business in China 2016
Doing Business in China 2016 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates in June 2016, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies who already have a presence here and want to keep up-to-date with the most recent and relevant policy changes.
- Establishing & Operating a Business in China 2016
Establishing & Operating a Business in China 2016, produced in collaboration with the experts at Dezan Shira & Associates, explores the establishment procedures and related considerations of the Representative Office (RO), and two types of Limited Liability Companies: the Wholly Foreign-owned Enterprise (WFOE) and the Sino-foreign Joint Venture (JV). The guide also includes issues specific to Hong Kong and Singapore holding companies, and details how foreign investors can close a foreign-invested enterprise smoothly in China.
- Tax, Accounting and Audit in China 2016 (8th Edition)
This edition of Tax, Accounting, and Audit in China, updated for 2016, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China operations. It is used by the Guanghua School of Management, Peking University as course reference material.