Russia pivots to trade with China and India as western sanctions hit economy

Wed 9 Nov 2022
Posted by: Phillip Adnett
Trade News

Russia exports - China now favoured trading partner

Russian trade has pivoted towards China as western sanctions have hit its economy and Moscow has sought alternative sources of imports.

Figures from the Kiel Institute for the World Economy show that Russian imports for June to August were 24% down on last year, equating to a drop of $4.5bn.

Trade with the EU was down 43% due to sanctions but trade with China was up 23%, making it Russia’s top trading partner, reports the FT.

Limited options

“The sanctions imposed by the western alliance are apparently hitting the Russian economy hard and noticeably limiting the population’s consumption options,” said Vincent Stamer, head of the Kiel Trade Indicator.

Russian goods exports and imports contracted in October, according to Kiel, falling 2.6% and 0.4% respectively month on month.

Russo-Chinese trade

Alarabiya reports that as Western nations have shunned Russia, China’s senior diplomat Wang Yi told his Russian counterpart Sergei Lavrov that China is willing to deepen its relationship with it.

Bilateral trade surged to $153.94bn in the January-October period, up 33.1% from a year earlier.

Shipments of Chinese goods to Russia rose 34.6% from a year earlier in dollar terms – the fourth monthly double-digit growth in a row. This is in contrast to the falling demand for Chinese goods in Europe and the US as inflation, interest rates and economic slowdown dents demand.

China remained the primary destination for Russian oil in October despite shipments falling slightly to an average of 904,000 barrels per day (b/d) in September.

India trade up

Oil shipments to India rose to a record high of 883,000 b/d in October as its refiners continue to snap up discounted barrels of Russian oil, reports S&P Global.

China and India accounted for 58% of all seaborne Russian crude exports in October in the wake of the Ukraine war.

India’s foreign minister S Jaishankar is visiting Russia for talks with his counterpart Lavrov as trading ties between the two giant nations continue to grow dramatically, reports Splash 247.

Bilateral trade between India and Russia hit a new high value of $18.2bn from April through to August, versus $13.1bn reported for the whole of fiscal year 2021-22.

Payment issues

However, Indian firms are struggling to get paid for their trade with Russia due to western financial sanctions, according to the Financial Express.

Indian engineering export promotion body EEPC India has called for guidelines on how banks deal with Russian payments.