Russia-China Trade Corridor Volumes Push Ahead of EU Nations

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ruble-yuanWith Russia-China trade set to reach €70 billion this year and showing growth of around 30 percent, it is prescient to examine how this compares with other nations, including those of the European Union (EU). Russia is under sanctions from the EU, which has seen its trade with Russia drop significantly, yet at the same time placing Russia as a direct competitor against the EU for China trade. The table below shows Russia’s emergence as a direct competitor for trade with China against the five largest EU economies – it has almost immediately outstripped all of them except Germany.

Trade Partners Bilateral Trade Volume (€, Billions)
EU-China 360
Germany-China 170
Russia-China 70
France-China 61
UK-China 67
Italy-China 42
Spain-China 22

This emergence of Russia as a major trade partner with China can be expected to develop. They have already reached the trade target set for 2018 a year early, and have plans to develop trade to €170 billion – the same as Germany today – by 2020.

Chris Devonshire-Ellis of Dezan Shira & Associates comments, “The effects of sanctions on Russia have had an immediate and long lasting impact on Russia’s trade with China and Asia. What used to be, for example, EU supplied public transport infrastructure, such as buses and trains are now from Chinese or Korean manufacturers. Russia is also emerging as a competitor to the EU for China trade as a result, and has overtaken the UK’s trade volume with China this year, despite the UK having considerably more advanced trade institutions such as the China-Britain Business Council in place. Russia has no such equivalent, meaning its trade dynamics are based on organic necessity rather than lobbying.

With China close to signing off a Free Trade Agreement with the Eurasian Economic Union of which Russia is the largest member, these bilateral trade figures can be expected to skyrocket over the coming years. When China signs off the EAEU FTA it may be time for EU based businesses to consider setting up Russian subsidiaries to compete for China market access.”


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