Silver lining to China-Russia trade clouds

China-Russia trade has downshifted, rising only 0.5 percent so far in 2013, and concern is growing that trade for the whole year might not grow at all from 2012.

With December's data not due till January, a sharp slowdown of bilateral trade this year is almost certain.

China-Russia trade value in Jan.-Nov. stood at 81 billion U.S. dollars, up 0.5 percent. The growth rate is more than 10 percentage points down on a year ago, according to China's general customs administration.

During the period, exports to Russia reached 44.56 billion US dollars, up 11.3 percent while Russian exports to China stood at 36.52 billion U.S. dollars, down 10.1 percent.

"The global economic situation is the major cause of the slowdown," said Li Jianmin, a researcher on Russia, Eastern Europe and Central Asia studies at the Chinese Academy of Social Sciences (CASS).

External factors began to effect what was 88.2 billion US dollars of trade in 2012, a record year. Growth that year of 11.2 percent, however was far below the dizzy heights of 42.7 percent and 43.1 percent in 2011 and 2010. The first half of 2013, saw the first contraction of trade since the global financial crisis in 2008, down 1.2 percent. Things have picked up slightly since.

Li said that the industrial structure of Russia has not improved for many years and the economy lacks new growth points. Russian exports also fell in the first 11 months and a 3-percent slide in the Russian economy in 2013 is expected.

Meanwhile, China's economic transition goes on apace, switching from the old investment-led model to one more concerned with domestic demand, she said.

"It is difficult to see any real change in the short term before a significant improvement in the global economy," Li said.

It's not all bad, according to Sun Zhuangzhi of Shanghai Cooperation Organization studies, who reckons energy will be of strategic importance because of its mutual benefits and complementary nature.

Energy cooperation means better guarantees and greater diversity for energy supplies to China and new markets for Russia in the Asia-Pacific, Sun said.

Russia will supply 46 million tonnes of oil to China each year in the next 25 years, according to agreements signed between the two countries.

Apart from traditional goods, China's non-financial direct investment in Russia totalled 4.42 billion US dollars in 2012, an average of 40 percent growth in the previous ten years, according to the Commerce Ministry.

In April, Russian First Deputy Prime Minister Igor Shuvalov told his Chinese counterpart, Vice Premier Zhang Gaoli, in Beijing that Russia is open to Chinese investment. He welcomed Chinese companies to Russia, saying his country is working on a quality environment for foreign investors.

In early December, the city of Suifenhe in northeast China's Heilongjiang Province became the first Chinese city to use the rouble.

Li Jianmin said that this was important for bilateral financial cooperation not only to invigorate trade in border regions, but to help formulate an exchange rate mechanism between the yuan and rouble.