Increasing China-Russia Trade, Investment Opportunities as EAEU FTA Kicks In

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By Dezan Shira & Associates

Following meetings between Chinese President Xi Jinping and Russian President Vladimir Putin in Beijing last Friday, the two countries issued a joint statement that announced an agreement to raise the share of national currencies in trade payments and further develop bilateral trade.

The statement discussed the “further strengthening of the Russian-Chinese cooperation in the financial sector, promoting increase of the share of national currencies in trade payments, investments and financing, expanding collaboration in such fields as payment systems and insurance”, among the tasks faced by the two countries.

Xi and Putin also agreed to set the trend for rising China-Russia trade turnover, and further improve its structure to look for new growth areas and collaboration in trade and economic cooperation. The two countries specifically plan to “boost efforts aimed at harmonizing strategies, programs, and measures to develop national economies and particular sectors; create favorable environment for Russian and Chinese enterprises; jointly promote big projects in accordance with subjectivity principles of companies, the market-oriented approach, commercial-based work, and observance of global practices; and sustainably expand the scope and raise the level of Russian-Chinese investment collaboration”, as well as to create favorable conditions for trans-border bond issuance.

The issues of “deepening cooperation in the oil and gas, coal, electricity areas, as well as in the fields of renewable energy resources, energy equipment, and energy efficiency” were also mentioned in the statement.

Putin stated that China and Russia can reach a bilateral trade turnover of US$100 billion by the end of this year, stating that “in January-March 2018, the volume of Russian-Chinese trade grew by 31 percent. If this rate is maintained, by the end of the year we will be able to reach a record figure – the level that we spoke about over several years – US$100 billion.”

Putin recalled that last year trade turnover between Russia and China amounted to US$87 billion, further stating, “the supply of products with a high processing degree – machines, equipment, vehicles, increased. More than 70 priority projects worth over US$20 billion are being implemented through the intergovernmental commission for investment cooperation.”

“The China-Russia trade space has previously been made up of energy deals,” said Dezan Shira & Associates Founder and Chairman Chris Devonshire-Ellis. However, he noted, “we are seeing an expansion of this into other commercial markets such as finance, IT, automotive, and machinery. China has also just signed a free trade agreement with the Eurasian Economic Union. This creates further business opportunities for companies in these sectors in both markets and is a welcome and overdue development. It is time for Russian companies to be looking at China and vice-versa.”

China Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout Russia and China. Please contact info@dezshira.com or visit our website at www.dezshira.com.



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