Russian economy gaining from US-China Trade war

Background

The two biggest economies in the world, US and China are head to head in an outright economic trade war by imposing continuous tariffs on a list of exportable products. However, this has not affected China and Russia relations. In 2017, bilateral trade amounted to $84.1 billion, up by 19 percent from the year before. Russia and China have set a goal to increase bilateral trade to $200 billion annually.

Analysis

In July, the Kremlin had warned that a trade war between the US and China will have consequences for the world economy, however, Russia is ready to protect its interests amid economic uncertainty. Dmitry Peskov, Kremlin spokesman said that, “Russia will take the necessary measures to protects its interests. Especially as such measures exist in the rules and norms of the World Trade Organisation.”

Russia joined other powerful WTO members -- including the European Union, China, India, Mexico and Canada over multiple violations of international trade rules. It had also formally asked the US for "consultations" over proposed tariffs of 25 percent on steel and 10 percent on aluminium.

Nevertheless, in July, Russia and China traded goods worth $58.35 billion. According to Chinese customs data, the value of the traded goods was more than 25% increase in annual terms. The volume of exports from China to Russia for this period increased by 16.6 percent to $26.9 billion. China bought $31.45 billion worth of Russian goods, indicating a growth of 34.9 percent.

Assessment

Our assessment is that, trade conflict between the Unites States and China is likely to further boost the agricultural sector, especially  the grain and oil seed exports from the black sea region. We believe the trade spat has provided new opportunities to sell wheat , corn and soybeans to China and the European Union from the Black Sea region.