Why China-Russia economic ties will emerge from the coronavirus pandemic stronger than ever

In addition to robust bilateral trade, projects such as the Amur Gas Chemical Complex which will supply polythene and polypropylene to China, the Power of Siberia pipeline and de-dollarisation efforts by both countries bode well for the future

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Russian President Vladimir Putin (right) and Chinese President Xi Jinping raise a toast prior to the Conference on Interaction and Confidence Building Measures in Asia in Dushanbe, Tajikistan, on June 14, 2019. Photo: AP

Published: 9:45pm, 25 Aug 2020Updated: 10:22pm, 25 Aug 2020

Moscow and Beijing have been working on strengthening economic ties in recent years, and even the pandemic could not offset these plans. With China rebounding from its Covid-19 lockdown and recording a world-beating growth rate, bilateral exchange could increase faster than predicted.

In December, Russia and China concluded their eleventh consecutive year of growth in trade. The turnover totalled US$110.75 billion and increased by 3.4 per cent in annual terms. Although the rise is much lower than the 20.8 per cent recorded in 2017 and the 27.1 per cent in 2018, it stands out in contrast to the 14.6 per cent decline in US-China turnover in 2019 due to the trade war.

Disruption of supply chains and lockdown measures due to the pandemic did have an impact on Russia-China economic relations. Trade volumes during the first two quarters decreased by 5.6 per cent year on year, the sharpest decline since the 2007-2008 financial crisis. But the slump turned out to be less dramatic than anticipated, while the situation has been gradually improving.

China’s gross domestic product growth of 3.2 per cent in the second quarter is a sign that imports from Russia are likely to return to or closely approach pre-pandemic levels in annual terms by the end of the year.

Russia’s GDP decline of 8.5 per cent in the second quarter, at the peak of the pandemic, also turned out to be lower than predicted. The Russian Ministry of economic development had anticipated a decrease of 9.6 per cent and the central bank a decline of 9.5-10 per cent. Overall, Russia’s economy contracted 3.6 per cent in first half 2020, which is also better than expected.

A police officer approaches two women at the Red Square in downtown Moscow on April 13, during a strict lockdown in Russia to contain the spread of the Covi-19 coronavirus. Photo: AFP