China was able to compensate for only 23% of Russia’s lost supplies from the EU

The turn to the East does not allow Russia to make up for what was lost in the West. And it’s not just a landslide drop in supplies to the European market of oil and gas, which Russia almost lost by starting a war in Ukraine.

No China can replace the lost Western goods. Yes, he was able to increase supplies to Russia last year. But in monetary terms, this increase turned out to be 4.4 times less than what it lost as a result of a reduction in imports from the European Union.

Exports from China to Russia rose 13% last year to $76.1 billion, according to China Customs Administration data released on Friday, Bloomberg reports. In monetary terms, the increase was $8.75 billion. This is less than a tenth (9.1%) of pre-war deliveries from Europe to Russia: in 2021, European exports amounted to 89.3 billion euros ($96.4 billion at the current exchange rate), according to Eurostat.

But in 2022, European countries sharply reduced cooperation with Russia after its invasion of Ukraine. In the first 10 months, according to estimates by the Bruegel analytical center based on the latest data from Eurostat, the EU sold goods to Russia for only $49.58 billion. At the same time, deliveries stabilized at about $4.2 billion per month in July-October. If we assume that they were the same in the last two months of last year, the annual volume can be estimated at about $58 billion.

Thus, due to the war, Russia could not receive more than $38 billion worth of goods from Europe last year. That is, an increase in purchases in China managed to compensate for less than a quarter of what was lost in the EU.

At the same time, Russia lost some goods completely. Thus, due to sanctions, supplies from the EU of transport equipment (except for cars), telecommunications, sound recording, office equipment, automatic data processing devices collapsed to almost zero already in March-April. China has not been able to make up for these losses, according to Bruegel’s calculations: its exports of these types of equipment remained at the level of recent years, falling in the first half of 2022 and increasing in the following months.

In general, according to Bruegel, deliveries from 34 countries, which account for 75% of Russian trade, fell in the first 10 months of last year to $130 billion from $170.3 billion in the same period in 2021, i.e. by 31%.

More impressive are the data on the purchase of Russian goods by China: an increase of 44% compared to 2021 to $114.1 billion. For comparison: purchases in the world as a whole increased by only 1.1%.

But this is largely due to a jump in prices for energy resources, which remain Russia’s main export to China (as they used to be the main export to Western countries), as well as an increase in their supplies. According to Gazprom, pumping through the Power of Siberia pipeline increased by at least 50% in 2022 (at the same time, total exports fell by 45.1% over 11.5 months). Crude oil exports to China rose by 10% in the first 11 months to almost 80 million tons.

At the same time, activity decreased markedly in December, Reuters calculated: purchases from Russia increased in dollar terms by 8.3% compared to December 2021 against an increase of 28.5% in November. This may be due to a sharp increase in COVID-19 cases (which hit demand), as well as a drop in the price of Russian oil after the embargo on its supplies to Europe was introduced on December 5. According to Argus Media, in December the price of Urals, which accounts for about two-thirds of Russian oil exports, was $43.4-44.3 per barrel in the ports of Primorsk and Novorossiysk (against $62-89 in June-November).


Add a Comment