2/ China's Customs has released its August data. 🇨🇳🇷🇺trade in Jan-Aug was $68.63b, -3.2% compared to 2019. Decline in trade is slowing down (in Jan-Jul it was -4.5%), and trade volumes are growing for a second month in a row: +4.2% in Jul, +4.1% in Aug. customs.gov.cn/customs/302249…
3/ Key factor of growth is rise in 🇷🇺 imports from 🇨🇳 for the fifth month in a row. In Aug alone it added 17.8% ($5.23b). This is a reflection of a far better state of 🇷🇺 economy than many have feared in spring, as @AndrianovaAnna explains in @business bloomberg.com/news/articles/…
4/ There is also a remarkable August drop in 🇨🇳 imports from 🇷🇺 (-8.1% in Aug to $4.54b). It's a reflection of China's decreasing imports of oil, as 🇨🇳 reserves now are full following a buying spree in spring when Beijing was capitalizing on 🇷🇺🇸🇦 price war.
5/ Other factors include 🇨🇳 teapot refineries (active users of 🇷🇺 crude in 2020) using up their import quotas + China ramping up oil purchases from the U.S. before Nov elections in an attempt to please @realDonaldTrump bloomberg.com/news/articles/…
6/ There's still a lot of unpredictability in the global economy, but if the market conditions remain largely intact, we might expect 🇨🇳🇷🇺 trade to reach nearly pre-Covid level of $108-110b, according to Sergey Tsyplakov (former 🇷🇺 traderep in 🇨🇳, now with @vebrf).
7/ The future of 🇨🇳🇷🇺 economic relationship will be partially driven by the markets, speed of recovery in both countries, and protracted 🇨🇳 market access issues that are now a priority for @GovernmentRF (this @business story provides a good case bloomberg.com/news/articles/…)...
8/ ... but what appears to be more important for 🇨🇳🇷🇺cooperation now is politics, namely toxic clouds in relations between Russia & the West, as well as between China & the U.S.+EU. (the later angle is well covered by many great colleagues, so I won't waste your time on it).
9/ There were indications that 🇷🇺 won't be able to fully use 🇨🇳🇺🇸 rift to its advantage because of the protracted conflict with the U.S. Yet Moscow has tried to improve relations with EU, particularly 🇫🇷&🇩🇪. See excellent explainer by @DmitriTrenin: carnegie.ru/commentary/817…
10/ This opening to Europe, coupled with outreach to 🇯🇵&🇮🇳 in Asia, was meant to balance Russia's external partnerships and help Moscow to avoid growing one-sided dependency on China. Don't get me wrong: nobody in the Kremlin wants less economic and security ties with China...
11/ ... but multiple senior officials agree that in the long run one-sided and increasingly asymmetric dependency on China doesn't serve Russia's national interests, and that Moscow should try to engage other great powers - even if mending ties with the U.S. will not happen soon.
12/ Now there is a toxic combination of factors that may ruin those hopes - and most of these factors are of Russia's own making. The most serious one appears to be @navalny's poisoning, and possible impact on the Kremlin's ties with @AngelaMerkeICDU, @EmmanuelMacron & 🇪🇺
13/ Then there is #Belarus, and a huge temptation to use colossal 🇷🇺 leverage to force embattled Lukashenka for deeper integration between Russia&Belarus - something that might provoke a strong Western policy response, and kill any opportunity for reengagement.
14/ Hopes on 🇷🇺 abilities to build useful partnerships in Asia have been more elusive from the start, but @AbeShinzo's departure and @narendramodi's rift with 🇨🇳 (+ 🇮🇳 problems with COVID) may make Russia even more reliant on one external partner - China.
15/ Poisoning of @navalny is the most acute and pressing issue, as my colleague @baunov explains (although Belarus crisis, depending on future Russian actions, might be more impactful): carnegie.ru/commentary/826…
16/ As a result, China might by accident find itself in a beneficial position to nudge Russia even further into #PaxSinica - just as the self-made disaster that was the Kremlin's Ukraine policy in 2013-2014 has pushed Moscow into Beijing's arms far more than anybody has expected.
17/ Final point. We don't know yet, what exactly happened to @Navalny and who did it. We don't know, what Putin's game plan for integration with Belarus is, and how much Western reaction is accounted for...
18/ What we know, is that when decisions on these issues will be discussed in the Kremlin, key people in the situation room will be direct beneficiaries from Russia's growing isolation. And some of them simultaneously are beneficiaries from expanded partnership with China. END
