Import, import... We looked carefully - China!
Volumes are growing, indicators are also...
Recently, in connection with Western sanctions, Russia has been looking for ways to import necessary, including strategically irreplaceable, goods from friendly countries. One of these countries, which became the main exporter of a number of types of products to Russia, was, as one might expect, China.
What can such close cooperation, which is already turning into dependence, result in, and in general, how friendly is China to Russia? Even taking into account the fact that in 2023, Russia’s foreign trade with China experienced a real boom. It is more beneficial to China than to Russia.
The volume of trade turnover increased by 26,3% compared to the previous year, amounting to $240,11 billion. Many politicians and economists in Russia took this very positively. At the same time, there is one fly in the ointment: the commodity structure of exports and imports. Russia exports to China more than 70% of its total hydrocarbon exports: coal, gas, oil and petroleum products.
While the structure of imports is dominated by industrial equipment, cars and components, electronics and household appliances. Among the segments of imports from China, the auto industry generally showed a phenomenal increase compared to 2022: 3,5 times, amounting to $22,5 billion.
Russian exports and Chinese principles
Of course, energy resources can and should be exported, as long as Russia has a surplus of them. The Persian Gulf countries, located in a barren desert, have built their richest economies on oil. Russia's availability of raw materials is, of course, its advantage. But the buyer countries, that is, the sales markets, must be diversified.
China has long been accustomed, ever since it became a world leader in assembling everything, to work with its trading partners according to two principles.
First – you give us raw materials, and we give you goods, recently primarily high-tech products.
Second principle – use technologies from other countries very widely. It is the second fact that is the main reason why former US President Donald Trump imposed extremely harsh sanctions on Chinese electronics. In Russia, the largest business that makes money from energy resources is apparently not against such a work scheme.
Separately gas, separately imports?
In not so distant times, when Russia’s foreign economic policy was actually personally determined by Anatoly Chubais of ill memory, export orientation was mainly to the West. Who could have known that Russia would be pitted against Ukraine and imposed with twelve packages of sanctions at once?
China did not play a big role in Russian foreign trade at that time. Unless small businesses supplied to the Russian market, given the low purchasing power of the majority of the population at that time, various cheap products from the Middle Kingdom, mainly low-quality electronics, clothing, and jewelry.
But even later, when the economy was already leveling out, the orientation of energy exports remained predominantly to Europe - until sanctions began in 2014 and the question of import substitution arose. In particular, Gazprom supplied 85% of its products there before the well-known events.
At the same time, among European countries, the main buyer of Russian hydrocarbons was Germany, which has been virtually a vassal of the United States since the time of the NATO occupation of Germany. This was clear to everyone, but for some reason no one thought about the consequences.
As a result, using the anti-Russian hype as a pretext, the United States decided to take away the Russian share of the large European energy consumption market. Only then did Gazprom become concerned about the problem of insufficient gasification in Russia itself. Such carelessness is unforgivable.
What mistakes do you learn from?
But let's move on to the issue of imports.
In a number of segments, for example, mobile phones, China dominated the Russian market even before the sanctions. After the sanctions, the list of goods in the industrial products and industrial equipment segments from China has expanded significantly.
The process has acquired such a large scale that officials are seriously concerned that China Mobile and Huawei will become monopolists in the Russian mobile communications and smartphone market and will divide the market among themselves. If such a strategy is made long-term, it will mean a loss in the global technology market for the country that is the successor of the Soviet Union, which, by the way, launched the world’s first satellite.
In the worst-case scenario, this is fraught with a complete loss of the country’s technological sovereignty. There is no strategic sense in such one-sided import substitution - with a change of importer from the West to China. Moreover, this is extremely harmful for the country’s economy, and shows that mistakes teach neither Russian big business nor foreign trade departments anything.
This means that the process must be intervened at the very top, forcing both state corporations and private businesses to diversify foreign trade. As long as “effective” management goes where the wind blows, Russia will remain a resource-based economy.
60 percent hope?
Yes, indeed, Russia has completed the import substitution task by 60%. But most, for example, semiconductors and electronics are supplied from China, the total import turnover from which is about 30%.
China is showing the same interest in other EAEU countries as part of the “One Belt, One Road” strategy. But the position and role of the EAEU countries in the Chinese strategy is quite different.
For example, Belarus has nothing to fear, since it does not have a common border with China. Well, the Chinese cannot lay claim to the natural resources of our allied republic, unlike, for example, the situation in Kyrgyzstan: everything is being developed on their own.
In Russia, China has long been expanding its labor resources in the Far East, which it has long considered a priori its own. And it is quite possible that through barter he may demand a lease for the territories there, and for a long-term lease, as far as possible.
Well, for the sake of national security, we must not forget that this is the most dangerous possible outcome of such a lack of diversification of foreign trade.
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