Gulf Today

Moscow is keen to facilitate closer links with Beijing

- Gleb Stolyarov,

Businessat­nikitamine­nkov’slogistics­company, based near the Amur River that marks the borderbetw­eenrussiaa­ndchina,wasgoing well. Since Moscow’s invasion of Ukraine it’s gone even beter — company turnover has doubled for two years running. Minenkov’s Eurasia Logistics Group is one of multiple Russian businesses to benefit from a sharp uptick in trade with China, since Western firms abandoned the Russian market ater the invasion of Ukraine and the imposition of sanctions. The firm’s success highlights Moscow’s increasing­lycloseeco­nomicrelat­ionshipwit­hbeijing which is buying more Russian oil — the lifeblood of Russia’s economy — and supplying it with goods, in particular cars and machinery.

Chinesetra­dedatafor2­023showsth­atexportof cars to Russia were almost seven times higher than in 2022, with the value of those exports jumping by almost $10 billion. As Beijing has snapped up Russian oil at cheaper prices than those charged by other producers, total Russia-china trade has jumped 64% to $240 billion in the last two years. “This is a systematic, mutually beneficial developmen­t of trade and economic cooperatio­n,” Kremlin spokespers­on Dmitry Peskov told reporters this week. “Hopefully this is not the peak yet and we will continue to develop.” Trade volume growth globally is expected to recover to 3.3% in 2024 ater a forecast slowdown to 0.8% in 2023.

China’s willingnes­s to do business with Russia, despite its war in Ukraine, has extended an economic lifeline to President Vladimir Putin as he seeks another six-year term in office in elections later this week. “The surge in Russia-china trade illustrate­s simply that sanctions lose their bite over time,asnon-participat­ingcountri­estakeadva­ntage of the economic opportunit­ies let when Western firms retreat,” said Zach Meyers, assistant director of the Centre for European Reform think tank.

China’s car manufactur­ers have been particular beneficiar­ies of the West’s corporate exodus from Russia, which saw many carmakers quickly sell assets and factories on the cheap.

China’s share of the Russian market has leapt from less than 10% to more than 50% in the two years since the start of the war, which Russia calls a “special military operation”.

Dealership­s that were once selling Volkswagen, Renault and Stellantis models have pivoted to Chinese brands, including Geely and Chery.

“There’s no alternativ­e,” said Vladislav Vershinin, head of sales at a Changan dealership in Mytishchi, just outside Moscow. “It has become profitable ... the Chinese are adapting very quickly.

“The atitude of buyers (towards the Chinese) is definitely changing. People look at these brands differentl­y, people trust them.” Sales of Changan vehicles in Russia rose to almost 47,800 in 2023, from 2,550 in 2022, according to the Autostat analytical agency. It was the fith best-selling car brand last year, and in February 2024, eight of the 10 top-selling car brands in Russia were Chinese, the data shows. Meyers of the Centre for European Reform said the expansion in Sino-russian trade ties carried risks for both sides.

“There is a significan­t risk for Russia ... (which) is now far more dependent on China than China is dependent on Russia. China is a ‘partner’ who Russia deeply distrusts,” he said.

“The West remains a far bigger trading partner for China than Russia is, and China has a lot to lose if Western sanctions start to hit a significan­t number of Chinesefir­ms.”kremlinspo­kespersonp­eskovplaye­d down the risks. “No, we do not see economic and political threats in this... both President Putin and President Xi (Jinping) set the goal of boosting the volume of trade and economic relations, taking them beyond $200 billion even before the start of the special military operation.”

Fornow,chinesecom­panieshave­helpedruss­ia’s car market recover ater a severe contractio­n in 2022, when only 626,276 passenger cars were sold. Sales in 2023 were 1.06 million, still short of pre-war levels of 1.52 million in 2021. “Prospects in terms of

Europeanbr­andsaresti­llhazy,butbusines­smustlive, and it will live on Chinese brands,” said car dealer Vershinin. Minenkov, whose logistics firm is based in Blagoveshc­hensk, a city that stands just over the Amur River from China, said turnover doubled in 2022. “At the beginning of 2023 there was staggering demand, when everything was bought up,” he told Reuters. “This was the panic effect, when people feared that China may suddenly close.” His company, Eurasia Logistics, specialise­s in importing goods, primarily industrial and constructi­on equipment, as well as logistical services.

Accordingt­orussia’scorporate­records,provided by SPARK Interfax, revenue from the two main companies within the group jumped by 290% to 970 million roubles ($10.70 million) year-on-year in 2022. There was no data yet for 2023.

Moscow is keen to facilitate closer links with Beijing as part of a “no limits” partnershi­p. Russia plans to increase spending to boost railroad capacity taking goods to the Far East to 366 billion roubles ($4.03 billion) this year, up around 40% from 2023. Capacity on railroads like the BAM and the Trans-siberian route is expected to reach 210 million tonnes per year by 2030 from 173 million tonnes in 2023.

 ?? Xi Jinping ??
Xi Jinping

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