Russia Can No Longer Do Without China

When people think of Russian industry, they might recall the textbook depiction of the Soviet-era industrial structure: “heavy industry is heavy, light industry is light.” However, this description is no longer accurate today.

Since the dissolution of the Soviet Union, Russia has struggled to transition its economy, leaving its entire industrial sector in a state of stagnation. The previously weak light industry has made little progress, while the once-powerful heavy industry continues to decline. So, where do the Russians get the industrial products they need? Of course, from China.

With its globally unmatched industrial production capability, strategic geopolitical advantages, and increasingly close bilateral relations, China has become Russia’s most important trading partner.

Chinese-made products have become essential to the everyday needs of this northern neighbor!

Lots of raw materials, few products.

Russia is vast and rich in natural resources, with the world’s largest reserves of minerals and energy resources, making it the largest exporter of oil and natural gas worldwide.

However, Russia is also a classic example of the so-called “resource curse.” Abundant non-renewable resources have hindered Russia’s efforts to adjust its industrial structure, leaving its domestic manufacturing sector relatively underdeveloped.

Currently, Russia functions like a massive raw material base, with its entire economy revolving around raw materials.

Russia’s economic development relies heavily on the raw materials sector. The largest export segment is fuel energy, with most investments directed at the extractive industry. From 2016 to 2018, the share of energy and raw material-related sectors in Russia’s industrial structure increased from 63% to 67.5%.

With abundant resources but few products, Russia’s domestic economy remains highly integrated with international trade. Essentially, Russia needs to sell its domestic raw materials to foreign countries and buy various industrial products from abroad.

Specifically, Russia predominantly sells mineral fuels, oils, and bitumen, while importing mostly machinery, electrical equipment, and transportation equipment.

Conveniently, China’s southern neighbor needs vast quantities of raw materials and has massive industrial capacity. Consequently, China has naturally become Russia’s largest trading partner.

In this regard, China has surpassed Saudi Arabia:

Covering Clothing, Food, Housing, and Transportation, China Takes the Lead.

Most of Russia’s exports to China consist of raw materials like oil and gas and their semi-processed products. What does Russia import from China? Four words—clothing, food, housing, and transportation.

First, let’s talk about clothing. In 2023, Russia imported over $3 billion worth of clothing (knitted and non-knitted) from China, accounting for more than 50% of all such imports.

In the same year, Russia imported over $3.4 billion worth of shoes from China, making up 76% of all its shoe imports. These products primarily come from Yiwu, Wenzhou, Guangzhou, and Foshan in China.

Moreover, the high-latitude Russian people cannot do without down jackets and fur coats. This warmth is provided by Changshu in Jiangsu, Taiqian in Henan, and Haining in Zhejiang.

In 2023, Russia imported over $200 million worth of down products from China, accounting for 98% of all its down product imports, as well as $500 million worth of fur and artificial fur, making up 92% of all such imports in Russia!

Now, about food. Although Russia doesn’t directly import a lot of food from China, they rely on China for the tools used in food production and daily meal preparation. Modern agricultural production cannot do without various types of agricultural machinery, and as a strong player in this field, China can produce 14 major categories, 95 subcategories, and over 3,000 different types of agricultural machinery products.

Electromechanical products are the largest category of goods China exports to Russia, accounting for 49.8% of China’s total exports to Russia. Russia has consistently been a major destination for China’s agricultural machinery exports and a significant part of Sino-Russian electromechanical trade.

Moreover, Russian tables are filled with Chinese-made tableware. In 2023, 63% of Russia’s imported tableware came from China, valued at over $1.2 billion.

As for housing, a Russian person’s room might be filled with furniture and bedding from Foshan, Dongguan, and Guangzhou in China. In 2023, Russia imported over $1.5 billion worth of furniture and bedding from China.

At the same time, Russian rooms are likely equipped with home appliances from China. Chinese brands lead in sales and revenue in Russia’s television, washing machine, and refrigerator markets. After the withdrawal of European and American brands from the Russian market, Chinese brands have become the top choice among Russian consumers.

Currently, Haier is Russia’s top television brand, closely followed by Xiaomi and Hisense. Additionally, Haier is also the top washing machine brand in Russia.

Regarding transportation, this aspect heavily influences Sino-Russian trade. In 2023, Russia imported over $20 billion worth of automobiles and parts from China, making up 80% of all such imports.

During this year, the best-selling brand in the Russian market was the domestic brand, Volga, followed by China’s Great Wall Motors and Geely.

Beyond clothing, food, housing, and transportation, Chinese mobile phones and tablets are also shining in the Russian market. Chinese brand phones hold over an 80% market share in Russia, with Redmi, Transsion, and Realme leading the pack, while Huawei has become the top tablet brand in Russia.

It’s evident that the products covering Russia’s clothing, food, housing, and transportation mainly originate from the two major economic centers in southern China—the Yangtze River Delta and the Pearl River Delta.

However, manufacturing these highly valuable Chinese goods is not enough; suitable logistics and transportation services are also needed to complete the trade process. This is where the ports in northern cities take center stage.

Machinery, electronics, and clothing are mostly transported through the Manzhouli port in Inner Mongolia. This port is the most crucial border crossing in Sino-Russian trade, handling 60% of land freight. Clothing, textiles, and consumer goods travel through the Suifenhe and Heihe ports in Heilongjiang, while chemical products reach Russia through the Erenhot port in Inner Mongolia.

Dalian and Tianjin ports are the main hubs for sea transport, with automobiles and machinery primarily entering Russia through these ports.

Additionally, the China-Europe Railway Express from Harbin to Moscow is becoming an increasingly important mode of transport for Sino-Russian trade.

Extensive Opportunities in Trade

As seen, with the deepening of Sino-Russian trade relations, China has become an indispensable partner in Russia’s economy and daily life. Whether in clothing, food, or daily necessities and technological devices, more and more products come from China to greatly meet the needs of the Russian people.

In 2023, Sino-Russian bilateral trade grew by 26.3% year-on-year, historically surpassing the $200 billion mark for the first time, reaching $240.11 billion.

Amid the geopolitical backdrop, economic cooperation between China and Russia is expected to expand into diverse areas, including high-tech, the digital economy, and new energy sectors.

China and Russia’s energy cooperation is not limited to traditional oil and gas sectors but will also extend into new and renewable energy realms.

In 2023, the two countries signed cooperation agreements on renewable energy sources, such as wind and solar power. Meanwhile, several wind and solar projects constructed by Chinese companies in Russia have commenced operations.

The railway routes between China and Russia have become important trade corridors across the Eurasian continent, and the “China-Europe Railway Express” is set to increase its transport volume further. In 2023, freight volumes through Russia grew by nearly 30%, and the logistics infrastructure between the two countries has become highly mature.

Chinese e-commerce platforms, such as Alibaba’s AliExpress, are already key players in the Russian e-commerce market, and cooperation in the e-commerce sector is expected to grow significantly in the coming years.

Few people know that outside of trade, the Russian Far East has become an important area for economic and trade cooperation between China and Russia. In 2018, approximately 2.2 million hectares of land in Russia’s Far East were used for agriculture, with Chinese involvement in the farming of around 16% of such land.

It is foreseeable that the future of the Sino-Russian economy will form an even closer, mutually dependent relationship, providing sustainable motivation for the long-term development of both countries.

Editor: Woo