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Chinese Premier Li Keqiang and Russian Prime Minister Dmitry Medvedev say they are committed to boosting trade. Photo: Xinhua

China, Russia set to double trade to US$200 billion by 2024 with help of soybeans

  • Growth will be driven by greater cooperation in fields of energy, industry, hi-tech and agriculture, Russian Prime Minister Dmitry Medvedev says
  • Comments come during Chinese Premier Li Keqiang’s three-day trip to Russia
China and Russia are planning to double their trade over the next five years, aided by the removal of barriers to the sale of agricultural products, including soybeans, which have been a major feature of Beijing’s long-running tariff dispute with Washington.

Relations between China and Russia have been steadily warming as each has had its individual troubles with the United States, and the latest pledges appear to be a way to take advantage of that shared friction, analysts say.

Chinese Premier Li Keqiang and Russian Prime Minister Dmitry Medvedev were set to sign a joint statement on Wednesday at the end of Li’s three-day trip to Russia.
Relations between China and Russia have been steadily warming. Photo: Xinhua

After the pair met on Tuesday, Medvedev said they had agreed to boost two-way trade to US$200 billion by 2024, from US$107 billion last year.

“The plan is to achieve that mainly through joint projects in the fields of energy, industry, hi-tech and agriculture,” he said.

The two countries also planned to remove barriers to the supply of agricultural products, including soybeans, he said.

“We are consistently working to remove barriers that limit the development of agricultural trade. It concerns the supply of soybeans, wheat and a number of other crops to China,” Medvedev said.

China to exempt US pork and soybeans from extra duties

Danil Bochkov, a contributing author at the Russian International Affairs Council, a non-profit academic and diplomatic think tank in Moscow, said the agreement on soybeans was intended to show the improvement in relations between the two countries, but despite that Russia would not be able to replace the US as a primary supplier of the crop to China.

“Russia is not physically capable of replacing the US because the amount of our soybean production pales in comparison to America’s,” he said.

“Nevertheless, Russia can enlarge its Far East soybean production and increase its exports to China. But this cannot be done overnight obviously.”

China imported about 84 million tonnes of soybeans last year. Photo: Xinhua

China imported about 84 million tonnes of soybeans last year. Traditionally, about a third of its demand is met by the US but as the trade war has escalated, Beijing has looked to other suppliers, including Brazil and Russia.

Driven largely by Chinese demand, Russia is forecast to produce just over 4 million tonnes of soybeans in the 2019-20 growing season, which would be its highest yield ever, according to the US Department of Agriculture.

“As our agricultural sector reports record harvests, it is timely to mention that we are not only capable of satisfying our own needs but can also export, and not just to anywhere but to our closest partner – China,” Bochkov said.

Artyom Lukin, deputy director for research at the School of Regional and International Studies at Far Eastern Federal University in Vladivostok, said that if Russia wanted to take advantage of the opportunity to increase its exports of soybeans to its neighbour, it would need a lot of investment from China.

“Russia has had great expectations with regards to China. In particular, there were hopes that Chinese investment would stream into Russia and its Far East. But so far Russia has seen very little Chinese money,” he said.

“Another problem is that some sectors of the Chinese market, such as red meat, remain closed to Russian producers. If China wants more soybeans and other vital commodities from Russia, it must be ready to invest big time.”

Such spending might have been on the agenda when Li visited Russia, Lukin said.

Russia, China should be allowed to join G7, Putin says

Li was also expected to meet Russian President Vladimir Putin on Wednesday, according to a Kremlin official quoted by TASS, Russia’s news agency.

Under the “new, special level” of China-Russia ties, the countries’ leaders should “always receive senior officials who visit either Moscow or, respectively, Beijing”, the person said.

Despite the recent emphasis on agriculture, trade between the China and Russia has traditionally been dominated by oil and gas. The energy sector accounted for 71 per cent of two-way trade last year, followed by forestry products with 8 per cent and agriculture with 5 per cent, according to official figures from Moscow.

Arkady Moshes, director of the European Union’s eastern neighbourhood and Russia research programme at the Finnish Institute of International Affairs in Helsinki, said Russia played an important role in securing China’s access to gas and oil.

“With the exception of energy and a few other sectors like timber I’m not sure that China needs Russia economically, as much as Russia needs China,” he said.

“The size of China’s economy is simply too big by comparison.”