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less than imported oil on average and 7% less than Saudi Arabian oil in January-March.
In recent months, trade between the countries has also been hampered by Western sanctions against Russia. Late last year, the United States made it possible to impose secondary sanctions on foreign financial companies if they help Russia evade sanctions. According to press reports, China's three major state-owned banks (BOC, CCB and ICBC) have refused to accept payments from sanctioned Russian companies, and Chinese banks have been more reluctant than before to pass on payments that could have any connection to sanctioned companies. Banks have started to demand extensive explanations from the seller and the buyer about which shipments the payments are related to. According to newspaper reports, this has caused long delays in payment traffic between the countries. Some Russian companies have started to relay payments through third countries, which increases costs. This year, Chinese companies have been urged to switch to using the yuan in Russian trade. Last year, a good quarter of international trade was in yuan. According to press reports, this spring many Chinese banks (including ICBC) have also stopped accepting yuan payments from Russian companies and some have stopped their operations in Russia completely. Smaller banks with no other international operations are increasing their market share.
As a result of Russia's war of aggression and sanctions imposed by Western countries, Russia's dependence on China has increased. China (including Hong Kong) already accounts for about 40% of Russia's goods imports. Russia has also increased its importance as China's trading partner, and the country's share is 5% of China's goods imports and 3% of its exports. However, travel between the countries has decreased significantly since the time before the pandemic. According to Rosstat's statistics, last year Chinese tourists visited Russia only a quarter of the number in 2019. Similarly, the number of Russian tourist trips to China fell to less than a third from 2019.
2.4 Russia’s economic successes may encourage the Kremlin to prolong the war in Ukraine
“The Russian economy’s increasingly structural militarisation significantly complicates any efforts to end the war in Ukraine,” Elina Ribakova, non-resident senior fellow at the Peterson Institute for International Economics said in an article in the Financial Times on May 2.
Contrary to the expectations that economic constraints would hinder Russia’s capacity to sustain fighting, the spectre of economic collapse might push Vladimir Putin and his officials to double down on militarisation and seek further confrontation, even if aggression against Ukraine hits a standstill.
Russia’s economy grew by 3.6 per cent in 2023 and is projected to expand by over 3 per cent in 2024. Despite ongoing extensive
15 RUSSIA Country Report June 2024 www.intellinews.com