China-Russia soybean trade takes centre stage at annual industry gathering near border

China’s premier soybean summit takes place amid heightened international tensions that have forced nations to take urgent steps to diversify their supply chains
Attendees at 6th China Soybean Industry International Summit Forum told that the best is yet to come in China-Russia trade opportunities

China trade

Orange Wang

Published: 10:15pm, 18 Aug 2022

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The strengthening soybean trade between China and Russia saw the issue move high up the agenda at an annual gathering of the Chinese soybean industry, taking place against the backdrop of rising tensions with the West.

Risks are quietly building up in China’s soybean sector, and the United States still has a monopoly on international pricing power while Beijing is striving to reduce China’s dependence on foreign soybeans by raising domestic output, warned China Soybean Association president Yang Baolong.

“If we want to boost the development of the soybean industry … we should proactively go abroad,” he said on Wednesday, speaking at the 6th China Soybean Industry International Summit Forum in Harbin, Heilongjiang province, which borders Russia.

And doing more planting, processing and warehousing in Russia is “a good industry development direction” for Chinese companies, he said at the forum.

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Vladimir Oshchepkov, consul general of the Russian Federation in Harbin, echoed that sentiment while addressing the same event, noting that the two countries have been paying more attention to the joint growing and processing of soybeans in recent years, and that this is likely to enhance their bilateral trade on the whole.

More regions in Russia might engage in the soybean trade with China, thanks to efficient cooperation between the two sides, he said at the conference attended by hundreds of Chinese soybean growers, traders, researchers and officials.

He expected that two new cross-broader bridges between the countries could help increase the trade volume, including that of agricultural products. And he floated the idea of the nations working together on soybean-breeding research.

“I believe that our rich experience, in cooperation, will lead to a steady increase in our soybean supply,” Oshchepkov said in his address.

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The chord of wider China-Russian agricultural collaboration is playing out at a moment when Beijing’s economic relations between Beijing and Moscow – in the face of intense international pressure – have grown robustly since Russia’s invasion of Ukraine, which Beijing did not condemn.

Russia has come under the impact of Western sanctions, while worries about economic interactions between China and the US and its allies appear to be on the rise with diplomatic ties further souring in the wake of high-profile Taiwan visits by US officials.

Before that, China had already pegged Russia as an alternative source to diversify its soybean imports, since the crop became a focal point during the trade war with the US during the Trump administration.

Although Russia’s overall production of the crop – a vital food source for farm animals – is much lower than America’s, some in Beijing hope their northern neighbour will be able to make significant contributions in the future.

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China’s imports of Russian soybeans in June surged by 110.1 per cent in volume terms and 67.3 per cent in dollar terms, year on year, though its purchasing of Russian soybeans declined by 16.4 per cent in volume terms and increased 14 per cent in dollar terms during the first half of the year, according to the China Customs data.

During the first seven months of the year, China’s overall imports from Russia grew by 48.8 per cent to US$61.4 billion, and the value of exports to Russia rose by 5.2 per cent to nearly US$36.3 billion.

Oshchepkov hailed the increase in bilateral trade volume and said that Russia-China relations have reached “unprecedented” heights, with coordination between them reflected in almost all sectors, including politics, economics, trade, science and culture.

And still, he said, the Russian side believes there is room for greater progress in trade.

We see that while [China’s] domestic soybean supply is increasing, international pressure continues to increase

Yang Baolong, China Soybean Association

During the first half of the year, Russia was China’s third-largest import source of soybeans, in volume terms. But those purchases from Russia accounted for just a tiny slice of China’s soybean imports from the rest of the world – dwarfed by imports from Brazil and the US.

Still, Yang with the China Soybean Association said that expanding imports from Russia, Ukraine, Kazakhstan and African countries was being done to build an international market system for non-genetically modified soybeans in which China’s pricing and bargaining power could be enhanced.

During the first seven months of the year, China’s overall imports of soybeans declined by 5.9 per cent in volume terms but grew 18 per cent in value terms due to rising prices.

“We see that while the domestic soybean supply is increasing, international pressure continues to increase,” Yang warned.

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Yang also said that China should consider making better use of foreign resources to build internationally competitive multinational grain merchants, and to grow non-GM soybeans in more countries and regions.

Following such a path would help make China’s soybean industry more intertwined with the global market, potentially resulting in more frictions, he said, adding that China “should be well prepared in our ideas and abilities”.