Trade turnover between Russia and China is on course to hit what sounds like an impressive $80bn by 2017, Russia’s deputy economic and trade minister Alexei Gruzdev said on June 14, but this was actually an admission that things have not been going according to plan.
The trade turnover between the two former socialist rivals has seen remarkable growth over the last two decades. But just as the two would-be partners were starting to rely on each other the flow of goods and services stumbled thanks to a combination of economics and politics.
Trade turnover was a meagre $5bn-$7bn in the first decade following the fall of the Soviet Union, mainly limited to raw materials, machinery and arms, but from 2000 it began to pick up rapidly.
In 2000, the Kremlin boasted that trade turnover would increase from the $8bn that year to between $60bn and $80bn by 2010 and it hit its target: trade was $60bn at the end of the decade.
Putin set a new target for trade to hit $100bn by 2015 and Russia very nearly hit that target too: turnover grew more than six-fold reaching $95.3bn in 2014.
But then it all went wrong. The start of the Ukraine conflict, economic sanctions imposed on Russia, the start of the first recession on Putin’s watch and economic problems in China all hit business and trade between the two countries plummeted the next year back to $68bn.
After another year of treading water in 2016 when trade turnover remained at $69bn it has begun to pick up again this year and is on course to pass that $100bn mark sometime next year.
Putin has even set a new even more ambitious target of $200bn of mutual trade by 2020, which is achievable if the current trends continue, but remains a very ambitious target.
This growth has seen China climb up into the top three most important trade partners, but to put this into context the European Union remains Russia’s most important trade partner with $330bn of mutual turnover in 2014 before the fighting started. Since then, turnover with Europe has fallen to $250bn in 2015 and $228bn in 2016 – which is probably where Putin got his “sanctions have cost Europe $100bn” factoid that he threw out at his annual marathon call in on June 15. But with Europe’s economy recovering trade with Russia is expected to stabilise at this level and possibly start growing again.