Jurnal Russia - China

Chinese Journal of International Review
Vol. 2, No. 1 (2020) 2050001 (26 pages)

© WSPC & SIRPA of SISU
DOI: 10.1142/S2630531320500018
Russia–China Economic Relations in the 21st Century:

Unrealized Potential or Predetermined Outcome?
by 182.2.37.5 on 11/03/22. Re-use and distribution is strictly not permitted, except for Open Access articles.
Viktor Larin
Academician, Head of the Center for Global and Regional Studies
Institute of History, Archaeology and Ethnology of the Peoples of the Far East
Russian Academy of Sciences, Far-Eastern Branch
89 Pushkin Street, Vladivostok, 690950, Russia
Chin. J. Int. Rev 2020.02. Downloaded from www.worldscientific.com
Vice-Chairman, Far-Eastern Branch of the Russian Academy of Sciences

50 Svetlanskaya Street, Vladivostok, 690950, Russia
Visiting Professor, Eurasian Studies Unit
Shanghai International Studies University, Shanghai, P. R. China
victorlar@mail.ru
Published 13 September 2020
Abstract
In the first decade of the 21st century, Moscow and Beijing made two strategic
decisions to expand and deepen bilateral economic relations. The first one was
to endorse diversified energy partnership. The second was centered on cross-
border area and has been offered in the program of regional cooperation be-
tween Russian and Chinese border regions. However, basic methodological
illogicality between estimations and expectations in Russia–China economic
relations has smashed the good intentions of both sides. Recommendations for
the governments to develop economic relations were theoretically correct, but
mostly generalized and abstract in nature. Subsequently, these relations had
not found a stable ground and were undermined by numerous internal and
outside factors, positive and negative. A narrow range of trade articles made
Russian–Chinese exchange dependent on the demand and prices for these
goods, and small mutual investments slightly influenced an economic ex-
change between two countries. In spite of a number of decisions related to
cross-border and inter-regional relations accepted at the top level, these
This is an Open Access article, copyright owned by World Scientific Publishing Company
(WSPC) and School of International Relations and Public Affairs of Shanghai International
Studies University (SIRPA of SISU). The article is distributed under the terms of the Creative
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bution and reproduction in any medium, provided that the original work is properly cited
and is used for non-commercial purposes.
2050001-1
relations are still the weakest link in bilateral ties. Mutual investments and
modern forms of economic cooperation did not flourish along the border also.
Moreover, economic troubles in Russia of 2014–2016 have hampered the cross-
border relations seriously, while Heilongjiang Province being the intermediary
between many Chinese territories and Russia has become the biggest loser on
the Chinese side. In spite of all problems in economic cooperation between
Russia and China, today, China is the no. 1 trade partner of Russia and Russia
is the no. 1 supplier of oil to China. Their energy alliance has strengthened both
countries’ statuses in their economic interaction: the position of raw material
supplier for Russia and the exporter of manufactured goods to Russia for the
People’s Republic of China (PRC). Western sanctions amplified the Chinese
high-tech goods export to Russia; China’s share in Pacific Russia’s foreign trade
increased from 29.2% in 2014 to 33.4% in 2017 and the peoples’ mood in this
region moved in favor of China. However, by the end of second decade of the
21st century, Russia’s and China’s favorable “economic complementarities”

and geographic proximity happened to remain a virtual product of academic’s
intellectual exercises and have not transformed into the genuine economic
cooperation. This is because, on the one hand, the philosophy, political and
cultural infrastructures of Russia–China economic relations did not change
much since 1990s, and, on the other hand, of some domestic and international
factors that prevented this transformation.
Keywords
Russia; China; economic relations; cross-border cooperation.
1. Estimations and Expectations

The structure and background of Russia–China economic exchange that
spontaneously arose in the 1990s, till today remain the weakest sphere of
bilateral relations and persistently impede their development. That was the
system in which the barter trade and exchange of low-quality goods
dominated, where smuggling, “gray imports”, “shuttle trade” and specu-
lative transactions flourished. That system created the ideology, habits and
infrastructure of relations (including social and bureaucratic ones) which
still harmfully influence the minds and actions of both countries’ authorities
and peoples. Quite naturally, the parties had an ardent desire to part with
this burdensome “legacy of the past” but have never found sufficient
political will, management skills and sufficient instruments to succeed.
Since 1990s, three issues dominated the academic, political and
bureaucratic discourses related to Russia–China economic exchange:
(1) “High degree of complementarity” (Marantz, 1993, pp. 33–34) between

Chinese and Russian economies that later had to be reinforced by
2050001-2
Russia–China 21st-Century Economic Relations: Unrealized Potential or Predetermined Outcome?
Moscow–Beijing “strategic partnership”. In aggregate, these two truly

big advantages had to provide “the bright perspectives” of Russia–
China economic cooperation.
(2) Origins and causes of low-level1 and “anachronistic structure”
(Afanas’ev and Logvinov, 1995, p. 57)2 of bilateral economic exchange.
(3) Recommendations to overcome economic, political and other obstacles
to make these relations booming, modern and successful.3
Numerous experts shared general assumption that “serious efforts and

fundamental strategic decisions” had to be taken on both Russian and
Chinese sides (Potapov, 1998, p. 229) to achieve the goal. Two countries’
leaders more than once announced their sincere wish to “promote coop-
eration in major strategic projects in economy and trade, investment, en-

ergy, high technology, aviation and aerospace, infrastructure construction,
people’s livelihood and other fields”, like it had happened at their meeting
in May, 2014 (Ministry of Foreign Affairs of the People’s Republic of
China, 2014). In the first decade of the 21st century, Moscow and Beijing
have even made two strategic decisions to expand and deepen bilateral
economic relations. The first one was to endorse diversified energy part-
nership, which, according to Sergei Lavrov, should become “the main load-
bearing structure of cooperation”.4 This cooperation extended not only to
1 At the turn of the 20th century, Russian–Chinese economic relations were much inferior to
China’s ties with its main political opponents — the US and Japan. In 2000, the volume of
Russian–Chinese trade amounted to $8 billion only, while the US trade with China (in-
cluding Hong Kong) was $116 billion (Lum and Nanto, 2007) and the Sino-Japanese one was
$110 billion (Japan Statistical Association, 2002, pp. 412–415).
2 At the turn of the 20th–21st centuries, Russian accumulated direct investment in China
amounted to about $200 million, and Chinese to Russia was about $100 million (Larin, 2006,
pp. 108–111). At the same time, direct US investments in China (including Hong Kong)
amounted to about $40 billion, while Chinese investments in the US amounted to $277
million (United States Census Bureau, 2015, pp. 828, 831); and Japanese to China was about
$2 billion (available at the official website of Japan External Trade Organization, https://
www.jetro.go.jp/en/reports/statistics/).
3 A huge amount of such recommendations was made by provincial scientists in Hei-
longjiang and Jilin at the annual conferences and published in the provincial scientific
magazines and conference proceedings.
4 In an article by the Russian Foreign Minister Sergei Lavrov in Renmin Ribao, July 15, 2011.
The same can be referred to from the official website of the Ministry of Foreign Affairs
of Russian Federation: http://www.mid.ru/bdomp/ns-rasia.nsf/1083b7937ae580ae432569e
7004199c2/c32577ca00174586c32578ce0022e15a!OpenDocument.
2050001-3
long-term agreement to supply China with Siberian oil5 and gas,6 but also
to the coal, nuclear and hydropower. The second strategic decision was
centered on cross-border area and has been offered in the program of re-
gional cooperation between Eastern Siberia and the Russian Far East (RFE),
on the one hand, and the Northeast territories of China, on the other hand,
adopted in September 2009 by Dmitry Medvedev and Hu Jintao.
This paper emphasizes on the trends and peculiarities of Russia–China
economic relations in the second decade of the 21st century, taking them as
the outcome of a strange combination of bilateral economic relations’
habits, the governments’ latest regulations and global economic
environment.
2. Russia–China Economic Exchange

The trends and results of Russia–China economic relations in the first one
and a half decades of the 21st century look diametrically opposite to the
discouraging period of 1990s. While as in 1992–1999 the volume of Sino-
Russian trade fluctuated between $5.1 billion and $5.7 billion, since 1999 it
demonstrated a stable growth and by the beginning of 2015, had enlarged
by almost 17 folds, from $5.72 billion to $95.3 billion (see Figure 1). Mos-
cow’s and Beijing’s common actions against shuttle trade, smuggling and
“gray imports” as well the start of strategic cooperation in energy field
played a major role in the rapid expansion of trade. The euphoria of
“warm” political relations and fast trade growths had urged (in 2011) the
then Russian President Dmitry Medvedev and Chinese Leader Hu Jintao to
announce a mutual goal to achieve $100 billion in bilateral trade by 2015
and $200 billion by 2020.7
5 On January 1, 2011, the Skovorodino–Mohe pipeline was put into service officially, and
during the first year of operation, 15 million tons of oil were delivered to China through this
pipeline. In 2015, Russia exported 42.4 million tons of crude oil to China through this
pipeline and the Kozmino Port on the Pacific coast.
6 In May 2014, in Shanghai, Russia and China signed a long-awaited gas deal. The gas will
be delivered to China from two gas fields in Eastern Siberia, Kovykta and Chayanda, via the
new Sila Sibiri pipeline, which will pump 38 billion cubic meters of gas annually until 2030.
7 News conference following the Russian–Chinese talks, June 16, 2011. The same can be
accessed from the President of Russia website: http://en.kremlin.ru/events/president/tran-

scripts/11594.
2050001-4
Figure 1. USSR (1990–1991) and Russian (1992–2018) Trades with China (in Billion USD,
Chinese Statistics, the Trade via Hong Kong Included).
100
90
80
70
60
50
40
30
20
10
0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Figure 2. Oil Price and Russia–China Trade Dynamics.
The surge in oil prices also contributed to this growth. The comparison
of two dynamics of 2000–2016 — the world oil prices and Russia–China
trade — leads to quite obvious deduction about direct dependence of the
second on the first one (Figure 2).
However, basic methodological illogicality between estimations and
expectations in Russia–China economic relations has smashed the good
intentions of the two countries’ leaders. While the obstacles to their de-
velopment were precisely seen in physical issues such as undeveloped
border infrastructure, unfavorable investment climate and anti-Chinese
sentiments in Russia, as well as the actual unwillingness of Russian
bureaucracy to overexert their efforts, the recommendations for the
2050001-5
governments, especially from the Chinese side, were theoretically correct,

but mostly generalized and abstract in nature. The experts suggested de-
veloping relations in the fields of agriculture, tourism, scientific and tech-
nical exchange, “implementation of major projects”, etc. As a rule, the
overall state of two economies and multi-vector trends of these economies’
development remained behind the brackets of the discussions.
Subsequently, Russia–China economic relations had not found a stable
ground and were always in threat to be suddenly undermined by nu-

merous internal and outside factors. The first bell about their weakness
rang in 2009 as a reaction to the world financial crisis. That year, the
Russian–Chinese trade decreased by 30%, from $56.8 billion to $39.5 billion.
A year later, the trade recovered to its previous level, and afterwards, the
start of Siberian oil supplying to China has made the declared goal of $100
billion trade achievable. However, significant cut of oil prices followed by
ruble devaluation and the fall in Russians’ purchase abilities in 2014–2015
once again demonstrated the vulnerability of existing basis. In 2015, the
Russia–China trade decreased by 28.6%, from $95.3 billion to $68 billion
(according to Chinese statistics),8 while the Russian exports to China
dropped by 20%, the imports from China decreased by 35.4%.
Some optimists declare that the crises stimulated changes in the trade
structure, inspired growing export of Russian high-tech and agricultural
goods to China and tried to assure that the volume of trade in tonnage even
continued to increase.9 However, the real changes are tiny and did not stop
the shut down in Russian exports to China. In 2016, it continued to decrease
and fell from $33.3 billion to $32.2 billion. Both countries’ budgets and
business circles lost substantially in hard currency revenue and taxes. In
2017, Russia’s exports to China began to recover and the next year it finally
exceeded $50 billion.
Just like 20 years ago, a narrow range of trade articles makes the
Russian–Chinese exchange dependent on the demand and prices for these
goods. The nomenclature of exchange has changed somewhat, but the
8 The Russian statistic which takes worst account of “gray imports” and smuggling, year
after year provided smaller amounts for the Russia–China trade. For 2014, the figure of
trade was $89.8 billion and that for 2015 was $64.5 billion.
9 Indeed, the Russian shipments of crude oil to China surged nearly a quarter over 2015 to
about 1.05 million barrels per day, at the end of 2015 Russia overtook Saudi Arabia as the
biggest crude exporter to China (Chen and Meng, 2017).
2050001-6
Source: Official website of Russian Customs, http://www.customs.ru.

Figure 3. The Structure of Russia’s Trade with China (2016, in Billion USD).
limitations of trade articles remained. By now, energy resources form

two-thirds of Russian exports to China, while machine tool and
equipment substituted clothes and food as the main articles of Russian
imports from China (Figure 3).
Investment statistic is highly controversial.10 In 2015, the PRC’s Ministry
of Commerce detected the bum in China’s direct investments (DIs) in
Russia ($2.96 billion, 367% increase in comparison with previous year), so
China’s accumulated DIs in Russia have reached $14 billion (Ministry of
Commerce of the People’s Republic of China, 2016a, p. 93). The next year,
the ministry officials informed that in 2016, the non-financial direct
investments of Chinese enterprises in Russia were $14 billion (Ministry of
Commerce of the People’s Republic of China, 2016b). However, according
to other Chinese sources, by the end of 2016, China’s accumulated direct
investments in Russia reached $9.487 million only.11 Moreover, the Russian
data does not verify Chinese enthusiasm. According to the Central Bank of
Russia, Chinese direct investments in the country were four times smaller
10 Not surprisingly, the ITP Group’s special study on China’s investment activity in Russia
turned out to be very superficial and mean (See: China’s investment activity in Russia:
development of a relationship. Moscow: ITP Group, 2016).
11 For more details, see the official website of Russia Trade Mission in China: http://www.
russchinatrade.ru/ru/ru-cn-cooperation/investment.
2050001-7
Source: The Central Bank of Russian Federation statistics, http://www.cbr.ru/eng/statistics/.

Figure 4. Accumulated Foreign Direct Investments (FDIs) in Russia (January 1, 2017).
Source: The Central Bank of Russian Federation statistics, http://www.cbr.ru/eng/statistics/.

Figure 5. Structure of Chinese Direct Investments in Russia (January 1, 2017, in Million USD
and %).
($2.3 billion) and constituted less than 1% of the FDDI in Russia12

(Figure 4). On the other hand, Russian investments to China were $986
million only.
Besides, Chinese direct investments are primarily concentrated in the
non-productive spheres of Russian economics (Figure 5) and have slighter
influence on the economic exchange between two countries.
In spite of a number of accepted top level’s decisions about cross-border
and inter-regional relations, they happened to become the weakest link in
bilateral economic relations and hampered the most.
12 Formore details, see Nakopleno Inostrannykh Investitsii (Accumulated Foreign Investment)

available at: http://www.fedstat.ru/.
2050001-8
3. Pacific Russia–China Economic Relations

The fast growth in trade between Pacific Russia13 (PR) and China has
happened since 2005, four years before Medvedev and Hu Jintao wiggled
the program of regional cooperation between Eastern Siberia and the
Russian Far East, on the one hand, and the Northeast territories of China,
on the other hand. The progress took place in parallel with growing trade
with two other main trade partners of the Far East Federal District (FEFD),
in particular, and Pacific Russia, on the whole, that were Japan and South
Korea (Figure 6).
Two things must be said about the above-mentioned program of
Medvedev and Hu. A lot of fair criticism was expressed toward this
Source: Official website of Federal Customs Service, Far Eastern Customs Administration,
http://dvtu.customs.ru.
Figure 6. Far East Federal District’s Foreign Trade (in Million USD).
13 The area of Pacific Russia did not have any formal verification, though in Russia’s ad-
ministrative and economic discourse this part of Russian Federation embodied nine terri-
tories of Far Eastern Federal District and three territories of Siberian territorial district
(Republic of Buryatia, Transbaikal territory and Irkutsk Oblast) from Baikal Lake to the
Pacific coast, that have been voluntary integrated in the nominal “Russia’s Far East and
Baikal region”. However, not only geography but some other common features like this area
(significant geographical and temporal distances from Russia’s political, economic and
cultural center as well as its economic orientation toward Pacific Ocean) allow to define the
unit as already existing semi-administrative and semi-economic region — Pacific Russia (see
Larin, 2017, pp. 24–30). In November 2018, Buryatia and Zabaykalsky Krai were added
officially to the Far Eastern Federal District.
2050001-9
bureaucratic document. Unlike energy projects, it turned out to be

poorly — from both economic and financial points of view — prepared and
worked out, and its vague content predetermined inefficiency and failure of
the program (Cheng, 2018). However, the project played an undoubtedly
positive role: it improved the political landscape and atmosphere for cross-
border and inter-regional cooperation and has forced regional bureaucracy
of both countries to be more active and responsible in promotion and
support (at least on words) of cross-border relations. In part, thanks to

political encouragement from the top, cross-border and inter-regional
relations quickly recovered from the impact caused by the financial crisis of
2008 and began to grow rapidly. From 1999 to 2013, the trade between
Russian Far East Federal District and China has jumped 20 folds, from $545
million to $11 billion (Figure 7). Russia’s oil export through Far Eastern
customs contributed to this growth substantially: in 2014, oil and mineral
fuels formed 60.6% of FEFD’s exports to China.
Ruble devaluation and oil prices decline became two main causes of the
following cut down in trade. The first one substantially decreased the
purchasing ability of Russian people; the second hit on the export potential
of Pacific Russia. The shock was more painful for PR than for Russia as
a whole. The decrease in FEFD’s trade with China in 2015 was 36.4%
(in Sino-Russian trade: 28%). FEFD’s imports from China dropped by 46.7%
(Russian imports from China: 31.3%). Though in 2016 the FEFD’s exports to
Figure 7. Far East Federal District’s Trade with China (in Million USD).
2050001-10
Table 1. The Structure of FEFD’s Exports to China (2004 and 2016).
2004 2016
Value Value Value

(Million Percentage (Million Percentage Increase
Article of Trade USD) of Export USD) of Export (Folds)
Oil and mineral fuels 780 52 1,280 31.8 1.6

Food (including fish
180 12 1,000 25.1 5.6

and seafood)
Wood 420 28 720 18.5 1.7
Added-value goods 75 5 520 13.0 6.9
Other goods 45 3 480 11.6 10.7
Total export 1,500 100 4,000 100 2.7
Source: Official website of Federal Customs Service, Far Eastern Customs Admin-
istration, http://dvtu.customs.ru.
China almost stabilized, regional imports from this country decreased by

another 10%.
Price jumps in no small measure affected the structure of the export–
import operations of Pacific Russia. In general, the range of exports and
imports has not changed a lot; however, some substantial alterations have
happened. First, the nomenclature of Russian export expanded: the share of
“other goods” increased from 3% to 12%, and their volume amplified 10.7
folds, while the value of exported mineral fuels and wood increased by only
1.6–1.7 folds (Table 1). Second, in spite of typical mourning about the raw
nature of Russian export, “added-value goods” article spurred from 5% to
13% in share and from $75 million to $520 million (6.9 folds) in volume.
Even more significant changes have occurred in the commodity struc-
ture of Pacific Russia’s imports from China. The volume of FEFD machinery
imports from China has jumped 12 folds, from $98 million in 2004 to $1.2
billion in 2016, so the share of industrial goods in these imports increased
from 15% to 40% (Figure 8). Chinese machines and equipment are gradu-
ally replacing those of Japan and Korea on the Pacific Russia market.
Two regions — Primorye territory and Irkutsk Oblast — control more
than a half (57.6%) of Pacific Russia’s trade with China and 8.4% of Sino-
Russian trade (Figure 9).
Mutual investments and modern forms of economic cooperation did not
donate to this growth. According to official statistics, Chinese direct
2050001-11
Figure 8. The Structure of FEFD’s Imports from China (2004 and 2016, in %).
Figure 9. Leaders in Trade with China (Shares of Pacific Russia’s Trade with China).
investments in FEFD arose from $90 million in 2009 to $247 million in 2013,
Transbaikal region collected another $278 million (see footnote 12). In sum,
this amount of money could not seriously impact the scale and structure of
cross-border cooperation between Russia and China.
4. On the Chinese Side of the Border

The growth rates of Chinese-side border territories’ trade with Russia were
two times lower than those of their Russian counterparts. From 2000 to
2014, the trade of four close-to-Russia regions (Heilongjiang, Jilin, Liaoning
2050001-12
Table 2. Four Close-to-Russia PRC Provinces’ Trade with Russia (2014, Million USD).
Trade with Russia Export to Russia Import from Russia
Share in Share in Share in

Province Province Province
Volume Trade Volume Export Volume Import
Heilongjiang 23,283.2 60% 9,003.46 51.9% 14,279.72 66.2%

Jilin 577.45 3.3% 448.39 7.8% 129.05 0.6%
Liaoning 2,430.95 2.1% 1,178.86 2.0% 1,252.09 2.3%

Inner Mongolia 3,054 21% 650 10.17% 2,404 29.46%
Four provinces 29,345.6 11,280.71 18,064.86
PRC trade with 95,270.45 53,676.94 41,593.51
Russia
Share in PRC trade 30.8% 21.0% 43.4%

with Russia
Source: China provincial statistics.
Provinces and Inner Mongolia) with Russia increased 11 folds, from $2.7
billion to $29.3 billion. At the first glance, these four territories played a
significant role in Sino-Russian economic exchange as in 2014 they con-
tributed about 31% of bilateral trade, in general, and consumed 43% of
China’s imports from Russia, in particular (Table 2).
In fact, it was Heilongjiang Province which secured the lion’s share (79%)
of cross-border exchange, one-fourth (24.4%) of Sino-Russian trade and
one-third (34.4%) of China’s imports from Russia. Heilongjiang quite suc-
cessfully served as an intermediary between many Chinese provinces and
Russia.
Economic troubles of the next two years have hampered this province
the most. Its trade with Russia dropped 2.5 times, from $23.3 billion in 2014
to $9.2 billion in 2016 (Figure 10). Heilongjiang’s export to Russia fell 3.8
folds in 2015, from $9 billion to $2.4 billion, and to $1.7 billion in the next
year slightly exceeding the level of 2003. The other regions did not suffer so
much: Liaoning and Jilin Provinces somewhat even increased their eco-
nomic exchanges with Russia. As a result, these four territories’ share in
PRC’s trade with Russia has jumped down from 30.8% in 2014 to 23.7%
in 2018.
It is worthy to mention that for the same years these regions’ declared
investments to Russia have increased substantially. According to Heilongjiang
2050001-13
Source: China provincial statistics.

Figure 10. Dynamics of China’s North and Northeast Territories’ Trade with Russia (in
Billion USD).
officials, the province’s investments to Russia arose from $510 million in 2013
to $1.48 billion in 2014 and to $4.17 billion a year later (Su, 2016).14 Jilin
Province reported about $2 billion being invested in Russia in 2015 (Ministry
of Culture and Tourism of the People’s Republic of China, 2016). However,
PRC’s Ministry of Finance has fixed $146 million of Heilongjiang’s invest-
ments into Russia in 2015 (Ministry of Commerce of the People’s Republic of
China, 2016a, p. 137), and Central Bank of Russia estimated the total amount
of accumulated Chinese direct investments in Russia to be only $2.27 billion
as on January 1, 201715 and to be $2.61 billion as on January 1, 2019,16 so the
provincial optimism looks very arbitrary.
Anyhow, the matching of the dynamics in Russia–China cross-border
trade and investments demonstrates the absence of direct dependency
between these spheres of bilateral economic exchange.
14 However, according to experts, the statistics of Chinese investment is extremely inaccu-

rate. These investments are represented in the region mainly in micro-, small- and medium-
businesses, which are difficult to control (Institute of History, Archaeology and Ethnology of
the Peoples of the Far East, pp. 5–9).
15 See the official website of the Central Bank of Russian Federation for more information on
the statistics: https://www.cbr.ru/Eng/statistics/?PrtId=svs.

16 See https://www.cbr.ru/statistics/macro itm/svs/ for more details.
2050001-14
5. Mutual Dependency
The figures unequivocally demonstrate that Russia’s economics is much
more dependent on the economic relations with China than China’s need of
the interactions with Russia. In 2010, the Russian share in China’s foreign
trade did not exceed 2%, and the portion of Russian investments in China
was less than 0.5% of the accumulated foreign investment in this country. In
2014, in spite of fast growth in bilateral trade, Russia was only the ninth
largest trade partner of China. By the end of the next year, a significant
reduction in trade relocated Russia to the sixteenth place among China’s
trade partners. In 2016, China’s trade with the US, Japan and South Korea
surpassed its exchange with Russia by 7.5, 4 and 3.6 times, correspond-
ingly. However, a year later, thanks to 21% growth in Russia–China trade,

Russia returned to the tenth position among China’s trade partners (the
same 2% of PRC’s foreign trade).
For Russia, the PRC is a much more important companion. In 2011,
China became Russia’s no. 1 trade partner and holds this position indubi-
tably. From 2013 to 2018, PRC’s portion in Russia’s foreign trade increased
from 11% to 15.9%. Russia takes more than one-fifth (22.1%) of imported
goods from China and exports 12.7% of its production to this country
(Table 3).
The energy alliance has strengthened both countries’ statuses in their
economic interaction: the position of raw material supplier for Russia and
the place of exporter of manufactured goods for China. In 2013, Russia
exported to China $1.2 billion worth of “machinery and equipment” only
(4.2% of exports to China), and imported more than $20 billion worth of
products of this item (52% of imports).17 However, in spite of fast growth of
Russian oil export to China, there are no reasons to talk about their deep
energy interdependency. As for Russia, China buys one-fifth of Russia’s
exported oil (52.5 million tons in 2016 and 59.7 million tons in 2017) and
together with Netherlands was allocated the first position among foreign
retailers of Russian oil (Figure 11). As for China, the Middle East remains
the main source of “black gold” for the country, and Russian share in
China’s oil import did not exceed 15% (14.7% in 2016 and 14% in 2017).
17 See
the website of Russian Federation Customs Statistics for more details, http://www.
customs.ru.
2050001-15
Table 3. Russia’s Top Trade Partners (2018, Million USD).
Total Trade Export Import
Percentage Percentage Percentage

Country Volume of RF Trade Country Volume of RF Exports Country Volume of RF Imports
China 109,658.6 15.9 China 57,058.1 12.7 China 52,600.5 22.1

Germany 59,606.8 8.7 Netherlands 43,471.0 9.7 Germany 25,510.5 10.7
Netherlands 47,164.3 6.9 Germany 34,096.3 7.6 USA 12,516.0 5.3
Belarus 33,999.0 4.9 Belarus 21,819.8 4.8 Belarus 12,179.0 5.1
Italy 26,986.0 3.9 Turkey 21,345.0 4.7 Italy 10,580.3 4.4
Turkey Republic of Korea France
2050001-16
25,561.0 3.7 17,832.2 4.0 9,558.3 4.0
USA 25,021.7 3.6 Poland 16,540.2 3.6 Japan 8,819.2 3.7
Republic of Korea 24,841.1 3.6 Italy 16,405.7 3.2 Republic of Korea 7,009.0 2.9
Poland 21,681.4 3.2 Kazakhstan 12,923.3 2.9 Ukraine 5,461.2 2.3
Japan 21,272.6 3.1 USA 12,505.7 2.8 Kazakhstan 5,295.9 2.2
Source: Russian Federation Customs Statistics, http://www.customs.ru.

Figure 11. Leading Foreign Retailers of Russian Oil (2016, in Percentage of Volume).
Saudi Arabia remained the second with 52.18 million tons and 12% of
China’s oil imports (Chen, 2018).
At the same time, growing competition around energy resources (among
consumers as well as among suppliers) and deterioration of the situation in
the Middle East and North Africa, make the Russian–Chinese strategic
energy partnership crucial for both parties.
On the other hand, Western sanctions amplified Chinese high-tech goods
export to Russia. As a result, “from passenger vehicles to complex IT sys-
tems, Russia’s process of transferring its technological partnerships from
the West to China has already begun in earnest” (Gabuev, 2016, p. 23). By
2016, China became the no. 1 supplier of machine tools, equipment and
transportation means to Russia (Figure 12).
Bilateral ties are important and, in some parts, crucial for bordering
territories of both Russia and China. In 2014, China’s share in Pacific
Russia’s foreign trade was 29.2%, more than the portions of South Korea
(21.7%) and Japan (24.6%). Serious changes in PR’s economic environment
that happened in 2014–2016 have made serious impact on PR’s economic
relations with its main partners.18 China’s share in this region’s foreign
trade increased to 30% in 2016 and to 33.4% in 2017. Relations with China
18 In
terms of value, in 2015, FEFD’s trade with China suffered the most, declining by 36.4%
compared to the previous year, while the economic exchange with RK reduced by 33.1%
and with Japan by 29.3%.
2050001-17
Source: Russian Federation Customs Statistics, http://www.customs.ru.

Figure 12. Main Suppliers of Machine Tools, Equipment and Transportation Means to
Russia (2016, in Billion USD and Percentage of Russian Imports of this Item).
are extremely important for the continental regions of Russia [Transbaikal

region, Amur Oblast and Jewish Autonomous Oblast (JAO)], vital for
Primorye and Khabarovsk territories and — surprisingly — for distant
Chukotka, but insignificant for Magadan, Kamchatka, Sakhalin and Sakha-
Yakutia (Table 4). We can also watch the growing Chinese economic in-
fluence in Irkutsk Oblast and Khabarovsk territory.
If we look at the issue through the prism of local industries’ interests, it
becomes obvious that economic ties with China are important for a very
limited number of export-oriented enterprises. In 2014–2015, about 90% of
FEFD’s exports to China consisted of oil and mineral fuels (60.6% of exports
in 2014 and 44.2% in 2015), fish and seafood (16.8% and 24.8%) and wood
(14.7% and 17.7%, correspondingly). China purchased more than 80% of
RFE’s exported wood, 50% of coal and 43% of fish and seafood.
In spite of some speculations on the topic (Rozman, 2014; Man-
koff, 2014), Pacific Russia is neither a meaningful supplier of energy to
China, nor this supply is crucial for local economics. In 2015, China’s share
in the FEFD oil and mineral fuel exports did not exceed 14% in value and
21% in volume, while Japan’s share was 47% and 36%, and South Korea’s
36% and 35% in value and in volume substantially.19 As Korolev (2015)
concluded, “if it [the Russian Far East. – V.L.] is an energy appendage at all,
it is that of South Korea and Japan, but not China”. Moreover, oil export to
China primarily does not have Pacific Russian origin. The oil that China
19 For
more details, see the official website of Federal Customs Service, Far Eastern Customs
Administration, http://dvtu.customs.ru.
2050001-18
Table 4. Pacific Russian Territories’ Trade with China (2014–2017).
Value (Million USD) Share (in Percentage of the Territory’s Total Trade)
Territory 2014 2015 2016 2017 2014 2015 2016 2017
Primorye territory 3,941.6 3,402.7 2,917.2 3,282.5 52.4 54.0 54.8 48.1
Irkutsk Oblast 2,978.0 2,425.0 2,686.0 3,627.6 34.6 32.6 41.4 48.8
Sakhalin Oblast 1,759.7 989.2 992.3 1,170.1 9.8 7.8 9.3 9.8
Khabarovsk territory 915.7 694.0 1,069.9 1,646.3 41.1 43.3 55.0 61.8
Amur Oblast 670.4 525.2 445.7 454.6 87.5 92.8 91.4 88.1
Sakha Republic (Yakutia) 648.2 483.0 428.5 756.4 12.7 12.3 9.6 15.3
2050001-19
Transbaikal territory 607.1 540.3 589.0 699.5 90.6 94.9 79.0 79.8
Republic of Buryatia 590.8 254.7 275.1 317.8 41.7 15.9 27.0 37.9
Kamchatka territory 207.2 230.1 210.1 283.0 34.1 37.3 31.9 35.0
Chukotka Autonomous Okrug 154.1 101.2 111.5 135.4 57.2 62.1 75.4 75.3
JAO 89.4 76.7 59.9 150.7 94.5 98.2 97.4 97.8
Magadan Oblast 24.1 25.5 33.6 40.5 5.6 13.7 12.2 8.6
Pacific Russia 12,586.3 9,747.6 9,818.8 12,579.2 29.2 27.3 30.2 33.4
receives via Skovorodino–Mohe pipeline and Kozmino Port on the Pacific

coast was primarily delivered from Siberia. The Power of Siberia gas
pipeline, the first to connect Russia and China, will not start pumping gas
from Chayanda fields in Sakha-Yakutia before December 2019.20 The
Gazprom plan to build a pipeline to deliver Sakhalin gas to China via
Primorye has been stuck because of the uncertainty of gas reserves.
However, this statement cannot be applied for each PR territory. Some of
them view PRC as the principal energy partner. In 2015, Amur Oblast
exported 97% (3.3 billion kW/h of 3.4 billion kW/h) of electric power to
China, and that was 45.6% of Amur Oblast’s export to China and 42.6% of
its total export that year. The same year, 4 million tons of coal from Sakha-
Yakutia (61% of this region’s exported coal) have been sent to China also.
China’s weight in RFE’s imports was much higher and has reached 44%
in 2014. Four articles — added-value industrial goods, food, agricultural
and chemical products — constitute more than two-thirds of goods
imported from China. PRC dominates in the supply of textiles, footwear,
food, chemicals and metal products to the Russian Far East (Figure 13).
Total amount of Chinese investments in Pacific Russian territories con-
stituted less than 2% of China’s direct investments in Russia (see footnote
12). Only two territories — Transbaikal region and JAO — had reasons to
acknowledge Chinese money as an important source for their economic
and social development as they constituted 55% of foreign direct
Figure 13. China’s Share in FEFD’s Imports (2016, in Percentage of Volume).
20 For
more information, see the official website of Gazprom, http://www.gazpromexport.ru/
en/partners/china/.
2050001-20
investment in the first region and 22.5% in the second. Republic of Buryatia
had the biggest share of Chinese direct investments in Pacific Russia (65.5%
of FDI in this territory), however, in absolute figures this money was very
small — $8.7 million only. Investments from China constituted 14.2% of
foreign direct investments in JAO ($17.8 million), 11.2% in Magadan ($17
million) and 9.4% in Primorye territory ($65 million) (see footnote 12).
In spite of statements that the officials of Ministry for Far East Develop-
ment used to make about “increasing flow of Chinese investments” into

Pacific Russia, authorized Russian statistics is forced to dispel these illusions.
According to the Central Bank of Russia, by 2017 the volume of Chinese
direct investments in FEFD reached $250 million, and that was only three
million more than in 2013. The growth occurred completely at the expense of
Primorye Krai (from $65 million to $138 million), while the other territories
have lost Chinese money. In Transbaikal region Chinese DI dropped to
miserable $3 million, and in JAO to $14 million. Moreover, the statistics did
not fix Chinese investments in Buryatia and Magadan regions at all.
6. Perspectives
Putin–Xi Joint Statement signed at Moscow Summit in July 4, 2017 contains
slightly modernized set of measures designed to “improve quality and
increase the volume of Sino-Russian economic ties”. The leaders agreed to
facilitate trade development, expand mutual investment, push forward the
implementation of major projects, actively build strategic partnership in
energy, promote cooperation in renewable energy sources, coal, hydro-
electric development and other areas, drive transportation and infrastruc-
ture construction, deepen cooperation in such fields as science, technology,
innovation, aviation, cyber-security, commercial manufacturing, commu-
nication, agriculture, finance, environmental protection and Arctic affairs
and also propel security cooperation (President of Russia, 2017a). Both
parties’ intention to boost the “Belt and Road Initiative” and Eurasian
Economic Union conjunction as well as to use the tools of “more open
global economy”, suggested by Xi Jinping at G20 in Hangzhou (Ministry of
Foreign Affairs of People’s Republic of China, 2016) and confirmed in
Moscow in July, 2017, has become the highlight of their current attempts
(President of Russia, 2017b).
“High degree of complementarities” between Chinese and Russian
economies and “huge potential for cooperation” disappeared neither from
2050001-21
the official nor from the academic discourses (Wang, 2017). It looks like the
Chinese keep this mantra as an amulet or obligatory attribute in order to
not lose faith in the possibility of positive change in the economic relations
with Russia.
Local authorities and people on both sides of the border also demon-
strate a life-size enthusiasm on the case. According to an opinion poll of
2017, which has been conducted in four Russian territories along the Pacific
coast, people in Primorye view China as the most preferable country to

develop economic relation with, while the respondents of Sakhalin, Kam-
chatka and Magadan territories ranked it second just after Japan (Larin and
Larina, 2018). It is no accident that the former governor of Primorye ter-
ritory Alexander Tarasenko called his region “geopolitically oriented to-

ward China” (Tarasenko, 2018), while the Comprehensive plan for the social
and economic development of the Trans-Baikal Territory until 2030 suggests “to
disclose the unrealized cross-border potential” of her region on the basis of
intensification of economic interaction with the People’s Republic of China
(Zhdanova, 2017). From the other side, leaders of border provinces of
China repeatedly confirm their concern on the economic relations with
Russia (Li, 2018; Zhang, 2017).
On February 7, 2018, a biennial for inter-regional cooperation between
Russia and China was launched officially. Beijing official comments on this
occasion reported about “vigorous development” of Sino-Russian regional
cooperation in recent years and optimistically predicted its further ener-
getic growth (State Council Information Office, 2018). At first glance, these
predictions seem to be justified. In 2018, Russia’s trade with China in-
creased by 24.8% compared with 2017, while the Russian exports grew by
44.2%, the imports grew by 8.9% (Russian Foreign Trade, 2018). However,
if you pay attention to the facts that three-fourth of Russian exports are fuel
and energy resources, that about 80% of this export value falls on these
resources and that since summer 2017 the oil prices have risen by 50%, then
optimism sharply reduces.
7. Conclusion
Despite sincere wishes and big intentions of both Russian and Chinese
sides, by the end of second decade of the 21st century, Russia’s and
China’s favorable “economic complementarities” and geographic proximity
2050001-22
happened to remain a virtual product of academic’s intellectual exercises

and have not transformed into a genuine economic cooperation. The
structure of trade has somewhat changed, but the nature of relations is
mostly the same. The realities of Russian economics and bureaucracy which
have buried many worthy ideas and undertakings are the main cause of
such poor fallouts.
Heilongjiang Province and Inner Mongolia on the Chinese side of the
border and Transbaikal region, Amur and Jewish Autonomous Oblasts on

the Russian side, as well as big energy corporations are the most interested
and active stakeholders to develop economic ties between the two coun-
tries. However, each of them has very specific and narrow interests to
sustain deep and full-scale economic cooperation.

The philosophy, political and cultural infrastructures of Russia–China
economic relations did not change much since 1990s. Economic influence
and the prestige of China in Russia have certainly grown, but they are still
far from the ability to dictate the development trends and social behavior of
political and business elites in the Russian Federation. Perceptions of China
which dominate in their minds are constantly far behind the modifications
in this country’s economic and social being, the changes in tactics and
accents of her leaderships. On the other hand, steady cultural prejudice
toward Chinese is deeply rooted in the Russian minds, thus making it also
a harmful effect. Currently, the conjunction of Beijing’s (Belt and Road) and
Moscow’s (Eurasian Economic Union and “Greater Eurasia”) geoeconomic
initiatives is enthusiastically considered a new driver of Russia–China
economic relations. But the past experience is too discouraging to believe
that these barriers will be overcome successfully.
Actually, there are mature reasons for Jeff Shubert and the other skeptics
to assume that significant cooperation between the EAEU, the SREB and
the SCO — or even between any two of these — is highly unlikely and the
idea of Greater Eurasia is a fantasy (Schubert, 2017, p. 107). It would seem
such prognosis a priory deprives Russia and China of all hopes for progress
in their bilateral economic relations. In fact, “cooperation between the
EAEU and the SREB” is more a geopolitical framework than an economic
instrument, and the real progress will be made in the spheres which create
the economics of knowledge, and by the partakers that are mostly inter-
ested in such relations: high-tech industries (including energy ones),
transport and service companies, bordering territories and academics.
2050001-23
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Chinese Journal of International Review

Vol. 2, No. 1 (2020) 2050001 (26 pages)

Russia–China Economic Relations in the 21st Century:

Vice-Chairman, Far-Eastern Branch of the Russian Academy of Sciences

Published 13 September 2020

21st century, Russia’s and China’s favorable “economic complementarities”

1. Estimations and Expectations

(1) “High degree of complementarity” (Marantz, 1993, pp. 33–34) between

Moscow–Beijing “strategic partnership”. In aggregate, these two truly

Numerous experts shared general assumption that “serious eﬀorts and

eration in major strategic projects in economy and trade, investment, en-

2. Russia–China Economic Exchange

accessed from the President of Russia website: http://en.kremlin.ru/events/president/tran-

Figure 2. Oil Price and Russia–China Trade Dynamics.

governments, especially from the Chinese side, were theoretically correct,

ground and were always in threat to be suddenly undermined by nu-

Source: Oﬃcial website of Russian Customs, http://www.customs.ru.

limitations of trade articles remained. By now, energy resources form

Source: The Central Bank of Russian Federation statistics, http://www.cbr.ru/eng/statistics/.

Figure 4. Accumulated Foreign Direct Investments (FDIs) in Russia (January 1, 2017).

Source: The Central Bank of Russian Federation statistics, http://www.cbr.ru/eng/statistics/.

($2.3 billion) and constituted less than 1% of the FDDI in Russia12

12 Formore details, see Nakopleno Inostrannykh Investitsii (Accumulated Foreign Investment)

3. Paciﬁc Russia–China Economic Relations

bureaucratic document. Unlike energy projects, it turned out to be

support (at least on words) of cross-border relations. In part, thanks to

Table 1. The Structure of FEFD’s Exports to China (2004 and 2016).

Value Value Value

Oil and mineral fuels 780 52 1,280 31.8 1.6

180 12 1,000 25.1 5.6

Total export 1,500 100 4,000 100 2.7

China almost stabilized, regional imports from this country decreased by

4. On the Chinese Side of the Border

Trade with Russia Export to Russia Import from Russia

Share in Share in Share in

Heilongjiang 23,283.2 60% 9,003.46 51.9% 14,279.72 66.2%

Liaoning 2,430.95 2.1% 1,178.86 2.0% 1,252.09 2.3%

Share in PRC trade 30.8% 21.0% 43.4%

Source: China provincial statistics.

Source: China provincial statistics.

14 However, according to experts, the statistics of Chinese investment is extremely inaccu-

the statistics: https://www.cbr.ru/Eng/statistics/?PrtId=svs.

ingly. However, a year later, thanks to 21% growth in Russia–China trade,

Table 3. Russia’s Top Trade Partners (2018, Million USD).

Total Trade Export Import

Percentage Percentage Percentage

China 109,658.6 15.9 China 57,058.1 12.7 China 52,600.5 22.1

Japan 21,272.6 3.1 USA 12,505.7 2.8 Kazakhstan 5,295.9 2.2

Source: Russian Federation Customs Statistics, http://www.customs.ru.

Source: Russian Federation Customs Statistics, http://www.customs.ru.

are extremely important for the continental regions of Russia [Transbaikal

Table 4. Paciﬁc Russian Territories’ Trade with China (2014–2017).

Territory 2014 2015 2016 2017 2014 2015 2016 2017

receives via Skovorodino–Mohe pipeline and Kozmino Port on the Paciﬁc

Figure 13. China’s Share in FEFD’s Imports (2016, in Percentage of Volume).

ment used to make about “increasing ﬂow of Chinese investments” into

coast, people in Primorye view China as the most preferable country to

ritory Alexander Tarasenko called his region “geopolitically oriented to-

happened to remain a virtual product of academic’s intellectual exercises

border and Transbaikal region, Amur and Jewish Autonomous Oblasts on

sustain deep and full-scale economic cooperation.

Crisis (Moscow: Carnegie Endowment for International Peace).

People’s Republic of China on the Further Expansion of Comprehensive Partnership and

Regional Cooperation have a Brilliant Future (Bell)”), http://www.scio.gov.cn/31773/