THREAD The first batch of China's customs statistics for 2019 is out, and the data shows that Beijing-Moscow axis is getting a stronger economic foundation. However, the goal of $200 billion in trade by 2024 set by Xi and Putin seems elusive. Some details below 👇 1/ 
2/ According to data released by General Administration of Customs, 2019 was a difficult year for China's trade. Trade volume fell by 1%, imports have collapsed by 2.8%, while exports grew by just 0.5%, the lowest rate since 2016. Data in English 👉 english.customs.gov.cn/Statics/5892fd…
3/ Still, it's better than many analysts have predicted. Good explainer in the @FT by @tmitchpk & @alicemuwu ft.com/content/39a57f…
4/ Trade with Russia is one of the bright spots in an overall gloomy picture. The trade volume has reached a new record of $110.76b (+3.4%) with exports from China to Russia ($49.7b, +3.6%) growing faster than imports ($61b, +3.2%). Moscow enjoys a surplus of $11.3 billion.
5/ We need to wait for more detailed data to be published by 海关总署, but it looks like the major source of growth in trade was increase in physical volumes of commodities shipped from 🇷🇺 to 🇨🇳, as well as growth in imports of Chinese equipment and consumer goods
6/ Average Brent price fell by roughly $7 in 2019 yoy (commodities led by oil made up for 76% of Russia's exports to China in 2018), but the 🇨🇳🇷🇺trade was still growing which suggests growth in volumes. This fits a familiar pattern for watchers of China-Russia trade ties.
7/ The main driver of gains in 🇷🇺🇨🇳 trade volume in 2017-2018 was expansion of Skovorodino-Mohe oil pipeline from 16.5 mtpa (2017) to 28.3 mtpa (2018). @TransneftRu planned to ship 30 mtpa through this pipeline in 2019.
8/ Push to expand pipeline capacity in order to ship more crude to China can be traced to 2013 deals between @RosneftRu and PRC oil giants. Rosneft's debt to China is one of the key drivers for expanding trade between Beijing and Moscow reuters.com/article/us-ros…
9/ Another source of growth in hydrocarbon exports was Novatek's Yamal LNG project (CNPC & SilkRoadFund hold 29.9%). First deliveries of LNG to 🇨🇳 via Northern Sea Route started in July 2018, and were expected to reach 3 million tonnes in 2019 reuters.com/article/us-nov…
10/ Sources of growth in 🇨🇳 exports to 🇷🇺 will be clearer once more detailed data is out. Circumstantial evidence suggests that it's both industrial equipment as Chinese companies are taking advantage of Western sanctions to squeeze EU competitors in the Russian market...
11/ ... and growth in consumption of Chinese cars, smartphones etc. as cheaper alternatives to Western analogues amid weak 🇷🇺 GDP growth (around 1% in 2019). For example, in 2019 Haval sales in Russia were +282%, Geely +186% (of course, low base effect plays a role too).
12/ Going forward, we have several factors that can help China & Russia to grow trade and break new records. The main driver will be successful launch of Power of Siberia gas pipeline. It will take till 2025 to reach full capacity of 38 bcm/year, but this will be a boost to trade
13/ It's also likely that Power of Siberia may be expanded, or that Russia and China can finally agree on a second pipeline (presumably going through Mongolia). More details in this excellent piece by @KapitonovSA for @CarnegieRussia: carnegie.ru/commentary/805…
14/ Then there will be growth in production in Yamal LNG, as well as launch of Arctic LNG-2. Some important background by @olyatanas & @d_khrennikova via @business bloomberg.com/news/articles/…
15/ Rosneft is also planning to ship more oil to China, including 30% increase of shipments through Kazakhstan starting in 2023, as reported by @Reuters reuters.com/article/kazakh…
16/ As 🇷🇺 industry becomes increasingly dependent on 🇨🇳 technology across the board (from sanctioned energy sector to telecom since @Huawei is likely to lead in 5G), and Russian customers grow familiar with Chinese brands, imports from PRC to RF will continue to grow.
17/ $200 billion in 202024 goal seems elusive, but broader trend is clear: economic foundation for China-Russia partnership is becoming more solid, and increasingly asymmetric at the same time. RU share in CN trade is 2.4% in 2019, 🇨🇳 share in 🇷🇺 trade is close to 20%.
